Pokemon Go vindicates Nintendo
Firms shift into mobile game proves a massive hit
TOKYO, July 13, (AFP): With Pokemon-mania sweeping the planet, Nintendo’s nascent shift into mobile gaming has proved a massive hit, vindicating the Japanese videogame giant’s decision to unshackle itself from a long-standing consoles-only policy.
Since its release last week, smartphone game Pokemon Go has been winning legions of fans around the world, downloaded millions of times and topping the rankings at official online shops.
The game hasn’t even been released in Japan yet, but Pokemon franchise creator Nintendo is reaping the rewards as its Tokyo-listed shares skyrocket in response to the app’s sizzling debut.
The stock was up nearly 60 percent in just four sessions as of Tuesday.
That eye-popping rally has boosted Nintendo’s market value by billions of dollars and underscored how investors see the game as crucial to its fledgling migration on to mobile devices.
The free app was adapted to the mobile internet age by US-based Niantic Labs, a company spun out of Google last year.
“Investors have big expectations that Pokemon Go will open a new chapter in Nintendo’s future growth,” said Takashi Oba, a senior strategist at Okasan Securities in Tokyo.
In March, the Kyoto-based creator of Super Mario and Donkey Kong released its first mobile game “Miitomo” — a free-to-play and interactive game that allows users to create avatars — as it tries to compete in an industry that has increasingly moved online.
That followed the firm’s announcement last year that it was teaming up with Japanese mobile specialist DeNA to develop games for smartphones based on its host of popular characters.
Markets
“Markets are thinking that since Pokemon Go is a big hit, Nintendo’s original smartphone games will also sell,” said SMBC Nikko Securities analyst Eiji Maeda.
The mobile strategy marked a Uturn for a company that had resisted the move for years, insisting that games for smartphones and tablets risked hollowing out its core business and damaging the value of its games.
But its balance sheet suffered and Nintendo’s Wii U console failed to match the popularity of the original, forcing a rethink.
“Sales have been slowing, Nintendo was long focused on console games and has not seen a big hit since the Wii series,” Oba said.
Nintendo President Satoru Iwata, a leading figure in the videogame industry who died of cancer last year at the age of 55, was a firm backer of the consoles-only view.
Iwata had overseen the success of Nintendo’s Wii and a surge in revenue before smartphone games started eating away at the company’s success.
But months before he passed away, Iwata publicly acknowledged that consoles alone were not the future.
“The world is changing, so any company that is not coping with the change will fall into decline,” he said at the time.
The move was seen also seen as critical for Nintendo to offer up stiff competition to console-maker rivals Sony and Microsoft.
One of Nintendo’s biggest hits over the years has been Pokemon, which spawned two decades of games and branded merchandise.
Monsters
Pokemon Go uses smartphone satellite location, graphics and camera capabilities to overlay cartoon monsters on real world settings, challenging players to capture and train the creatures for battles.
But despite the huge success of the game, Nintendo’s share surge was overdone as it will have a limited impact on the firm’s bottom line, said Nomura Securities analyst Junko Yamamura.
“Pokemon Go was mainly developed by Niantic,” Yamamura said in a commentary.
“The recent share price rally accordingly looks excessive based on profits from Pokemon Go alone.
“(But the game) may have implications for subsequent titles and for the mobile games industry as a whole.”
Pokemon Go has taken the world by storm since its release last week: The Pokemon-themed mobile game that tasks players with catching Pokemons reportedly already has more Android app installs than Tinder in the US, and the game’s surprise success pushed Nintendo’s stock up 25 percent Monday. But Pokemon Go isn’t the first augmented reality game, and it likely won’t be the last. In fact, the startup behind the game is already eyeing partnerships with other entertainment companies for new game franchises.
From Field Trip to Pokemon GoPokemon Go has been a huge boon for both Nintendo and the Pokemon Company, which holds the rights for the animated franchise. Lesser known is that the game is actually being produced by Niantic Labs, a San Franciscobased startup that was incorporated as a Google subsidiary in 2011 and spun out of the company last year when Google reorganized under the Alphabet moniker. Niantic is being funded by Google, Nintendo and the Pokemon company as well as Fuji TV and a few other high-profile investors.
Niantic’s team includes some key members of Google’s former Maps team. While at Google, Niantic first built Field Trip, an app that would notify users of murals, historic buildings and other interesting places around them while walking through a city — think of it as a kind of city guide for mobile devices that sends out alerts whenever you walk by something noteworthy.