Nintendo said on Friday that the Pokemon Go phenomena would have little impact on its bottom line, causing share price to fall by nearly 16 per cent this morning. But the company issued a brief statement after the close of trading Friday warning that the impact of the game’s success on its profits would be “limited”.
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Amidst all the problems that the Pokemon go has been facing in terms of people falling off Cliffs and driving into other cars while playing the game, the Pokemon go is still Armor Singh popularity on its way around the world. Nintendo owns 32 percent of The Pokemon Company and is reported to hold a similarly sized stake in Niantic, the US lab that developed the Pokemon Go game.
Nintendo is due to post earnings for the first quarter on Wednesday.
Niantic, the game’s developer, still hasn’t announced the game’s release date in Japan.
Nintendo dived 17.06 percent to 23,405 yen after it had more than doubled in a huge rally following Pokemon Go’s release earlier this month – making it more valuable than Sony at one stage.
The stock has since returned to earth, and shares are now up a more modest 60 percent from July 6. It also said sales of Pokemon Go Plus, a Nintendo-produced accessory for the game, have already been factored into its existing profit forecast.
It also stands to make money from a device to be used with the application called “Pokemon Go Plus” but “the income reflected on (Nintendo’s) consolidated business results is limited”, it said.
Investors reacted to a company announcement on Friday night saying that the game’s contribution to consolidated earnings would likely be limited, despite it being a huge hit in Japan and overseas. Pokemon Go’s conversion rates, which track dollars per user or how many users buy items, aren’t yet publicly available, and may never be made so. While it is expected to see upside from Pokemon GO it will also have to contend with a strong yen which eats into the value of earnings garnered overseas.
Nintendo added that it had taken the “current situation into consideration”, but had decided not to upgrade its financial forecast.
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If The Pokemon Co has done a poor job of extracting more from the likes of McDonald’s amid the Go craze, then there’s not a lot Nintendo can do about it. Even if Pokemon Go does not directly contribute to Nintendo’s earnings, it owns other characters like Super Mario and Zelda.
