Ever since the release of Pokemon Go a couple weeks ago, Nintendo stock prices have blown past the roof adding billions to its bank account. But, the share prices of Nintendo took a plunge today as the company revealed its financial forecast for the current fiscal year.
Nintendo has published a financial report stating the minimal impact, Pokemon Go’s bombastic growth and expansion will have on the revenues and profit of the company. Just to give you a flashback, investors had earlier rushed to join the rat-race for investing into the idea that will become a global phenomenon. The same set have now re-evaluated the situation and rushed to extract their profits from the same.
In the official release, it stated that The Pokemon Company is an affiliate company and Nintendo owns only 32 per cent of the voting power. In one blow it shattered investor dreams, who thought Nintendo had developed the game. In the truest sense though, it truly has just lent the IP and copyrights of the ‘pocket monster’ to the game developer Niantic Labs. It further goes on to add that,
The Pokemon Company is going to receive a licensing fee as well as compensation for collaboration in the development and operations of the application.
The financial impact of this news has been simply disastrous. The stock has gone down 18 per cent depleting about $6.7 billion from its market value. This has wiped out about 50 per cent off the total $17.6 billion market capitalization. This is the biggest plunge in the company’s shares since 1990 as well as since the launch of the game.
Investor reaction though, is strange, considering that the company’s involvement in the creation of the game has been clear from the start. You wouldn’t even find its logo in the game. So with the release of this statement, it seems that the company didn’t want to stay mum and (unintentionally) mislead the investors into thinking that they are the ones operating the phenomenon alone.
But there is nothing to worry for the future financial growth of the company as it has now realized that it should share IP rights, work with other developers and make a move towards mobile gaming. It has now partnered with mobile developer DeNA to work on the game release of Animal Crossing and Fire Emblem franchises. The investors instead of taking the road back, should keep their faith in the company intact and understand the mindset that Nintendo is now following.
Pokemon Go has been a world-wide phenomenon since its launch. The idea of the game originated from the April’s Fool prank setup by Google last year, but the AR game is breaking any and all records set by an app release. It is now the most downloaded app in the iTunes App Store history, has more than 50 million Android app downloads, more DAUs than Twitter and more engagement than even Facebook. The company is soon looking to add new functionalities, Pokemons and pokestops(including hospitals) to the game very soon.