Gaming

Nintendo’s Stock Plunges After They Admit ‘Pokemon Go’ May Not Catch Them Much Cash

The stock market is all about perception – if the public believes a company is doing things right, the actual dollars and cents don’t really matter. Just look at how much Twitter and other Internet companies that barely break even are worth for proof of that. Well, ever since Pokemon Go became one of the biggest gaming phenomenons in history, Nintendo has benefited in a huge way, with their stock more than doubling in price in July. It just makes sense – I mean, Pokemon Go is a Nintendo game, right?

Actually, it isn’t. Yes, Nintendo has always been the company most associated with Pokemon, but the franchise is actually the property of The Pokemon Company, which Nintendo only owns 32 percent of. The other two-thirds are owned by original Pokemon developer Game Freak, and Creatures, the company responsible for most Pokemon spin-off merchandise.

On top of that, Apple and Google take 30 percent of all ioS and Android apps, and Pokemon Go developer/publisher Niantic also gets 30 percent. So, in the end, Nintendo only nets about 10 percent of Pokemon Go‘s profits. Considering some predict that app could make up to a billion dollars a year, that’s still a lot of money, but not as much as many investors were expecting.

Now, Nintendo could have just kept quiet and let the cash river continue to flow (which would have probably been illegal, but who’s judging?), but they had to go and open their fool mouths, issuing this clarifying statement:

Pokemon Go is developed and distributed by Niantic, Inc. The Pokémon Company, which is an affiliated company of Nintendo Co., Ltd., holds the ownership rights to Pokémon. Nintendo owns 32 percent of the voting power of The Pokémon Company. Because of this accounting scheme, the income reflected on our consolidated business results is limited. Taking the current situation into consideration, Nintendo is not modifying the consolidated financial forecast for now.”

The result? An 18 percent plunge in Nintendo’s stock price over the weekend. Whoops. I mean, I’m all for honesty, but saying financial benefits will be “limited,” then refusing to even update their financial forecast is being a little overly humble. Again, even if Nintendo is only getting 10 percent of the Pokemon pie, that could still be worth $100 million. More importantly, Pokemon Go has proven traditional Nintendo-exclusive franchises can very successfully make the jump to mobile. It’s okay, Nintendo. You can give yourself a little pat on the back.

(Via The Guardian, Venture Beat & Business Insider)

×