Gotta catch ’em all

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Gotta catch ‘em all is surely a familiar reference to millions and millions of people around the world. I mean, who hasn’t heard of Pokémon? I’d say big portion of us belonging in the Y- and Z-generation are very familiar with it because of the TV-series, the trading card game or the actual Pokémon games that came out on GameBoy. The brand has always had success all around the world, but who would have known that one of the biggest beasts was yet to be unleashed… and that beast obviously is: Pokémon GO.

Maybe some background information would be preferable, for those of you who have been living under a rock, or in a cave, or maybe you have been stranded on an uninhabited island after a plane crash in South Pacific, with only a Wilson volleyball as your company. So, Pokémon GO is a free-to-play, location-based augmented reality game developed by Niantic for iOS, Android and Apple Watch devices. It was initially released in some selected countries in July 2016. The point of the game is to use mobile device’s GPS to locate, capture, battle and train Pokémon, who appear on the screen of the players mobile device, as if they were real in the same location of the world as the player. The players can also purchase additional in-game items, for real money of course.

Now, the mobile app market has been booming. There’s TONS of applications and software on various different platforms like for example iOS and Android, and the mobile games have been in the center of them. Finnish companies like Rovio and Supercell have been the kings of that market, gaining massive popularity with their games like Angry Birds and Clash of Clans, and the same way when they arrived and took the market by the storm, the Niantic’s “baby” did as well.

Within the first month of the games launch date, which was on July 6, the game made and eclipsed over 200 million dollars in global revenue, and over 100 million downloads across different platforms and devices making it not just the newest kid on the block, but also the king of the mobile application world. (Digital Trends, 2016.) It racked up more downloads in its first week than any other app in the history of the App Store, and also the revenue. I’d say most people who are familiar with Pokémon always associate it with Nintendo, naturally, they own 1/3 of The Pokémon Co., with fellow founders Game Freak and Creatures Inc. that hold the remainder. (Polygon, 2016.)

However, the interesting thing is how the games launch affected Nintendo’s stock. Pokémon GO isn’t exactly a Nintendo product, they did not make it; they just have an undisclosed investment in Niantic, the mobile developer company. In the first 24 hours, Nintendo’s stock jumped nearly 8% in the US, where the Japanese company’s share trade as ADRs. Following day, they jumped another 18%, and couple days later they had rocketed another 58%. On July 15, Nintendo managed to set a record for the most traded equity, in a time span of a single day by value of shares (not their volume) on the Tokyo exchange. (Yahoo! Finance, 2016.)

So what ended up happening was that the big boost that the game brought to Nintendo’s stock along with its market cap became the biggest business narrative about the game and its impact. Which you definitely could argue that should have never happened. The market moved the stock mostly based on the misconception that Nintendo was actually behind the game. On July 19, the launch of Pokemon GO was delayed in Japan, and the shares fell 13% in a single day and continued its fall. A week after when Nintendo disclosed that the game really has had only minimal financial benefits to them, the Tokyo shares plunged down 18%, which is their largest hit they have taken since 1990, which obviously is saying something, along with US-listed shares dropping 11%. One could say that it might have been inevitable after the game’s success had inflated the stock that drastically. (Yahoo! Finance, 2016.)

In the end, the company’s earning potential from the game is relatively limited. Google also has invested in Niantic, and all the profit made from the game is being split between The Pokémon Company, Niantic, Nintendo and of course Apple and Android, who are the distributors of the game. Nintendo has been able to climb up from the big drop that they had, and now they also have a direct hand in the Pokémon Go. They produced and distributed the Pokémon Go Plus, which is a 35 dollar wearable accessory for the game which was released in September 16. However, from stock market point of view, it hasn’t had any real effects on the shares of Nintendo so far. (Polygon, 2016.)

This phenomenon is thought to be the first time an augmented reality product has affected as strongly on a public company’s stock. Another close example of such is when Facebook acquired the VR headset maker Oculus Rift, but that story my friends, is saved for another time.

All in all, as a young adult I personally feel like the hype has definitely died down, and there’s charts that show that Pokémon GO is already in decline. Is it still very popular? Absolutely, but it will be interesting to see if Niantic or Nintendo are able to spark some new fire under it in the future.

Sources:

http://www.digitaltrends.com/gaming/pokemon-go-200-million-revenue/

http://www.polygon.com/2016/7/22/12257546/pokemon-go-nintendo-revenue-financial-forecast

http://finance.yahoo.com/news/nintendo-stock-pokemon-profit-niantic-000000259.html

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