After doubling in value due to the popularity of Pokemon GO, Nintendo’s shares have tumbled after the company pointed out the smash-hit game would have only “limited” benefit for its earnings.
It neither makes, nor owns, Pokémon Go though it does have a stake in Niantic, the firm that developed and distributes the augmented reality game.
The shares fell 17.7 percent on Monday after the Kyoto-based gaming company said it did not plan to revise its earnings outlook for now. They would probably have fallen more but hit the daily trading limit. Nintendo is due to report its quarterly results on Wednesday.
Not everyone is convinced. “The market has overreacted to the Nintendo statement,” said David Gibson, a senior analyst at Macquarie Securities Group, noting the game in Japan had broken records with 10 million downloads in one day.
“I believe that Pokemon GO will be material in the company’s earnings given the current trends for the game.”
Analyst Darren Sinden thinks Pokemon GO will be a strong positive for investors: “Of course the hard part of all of these things is monetising them, but I believe Nintendo has set a precedent and I hope they will be able to capitalise on that going forward.”
Pokemon GO is Nintendo’s first venture into mobile gaming as up till now it did not want to risk losing users of its main business – video games consoles.
But Darren Sinden says they can now capitalise on the wildly popular game: “What I think they have done with Pokemon GO here is establish a precedent, that a console company can enter the world of online gaming. More importantly a game that is augmented reality. So I think they have proved the business case, they have got some other great characters that may be able to make the jump from the console world into the online and hand-held gaming world.”
Nintendo has the potential to make big money from other strong character franchises such as Super Mario and Zelda as it moves deeper into mobile gaming and its share are still up by 60 percent from when Pokemon GO was first launched in the United States, Australia and New Zealand on July 6.