They say that the truth shall set you free. Well, this time the truth actually cost Nintendo billions of dollars.
Nintendo finally spilled the beans on Pokemon Go and got punished for it by the stock market as Nintendo lost billions in a shockingly short amount of time.
Nintendo cleared the air and stated this Friday that the company indeed was not involved in the development of the augmented reality mobile video game that took over the planet two weeks after its launch date.
Lets try to make a sense of what has happened in the last four days or so.
Pokemon Go, the augmented reality mobile video game for Android (and Apple’s iPhone), became the most downloaded game in the history of the United States of America well within a month of its release date.
There is no question about the fact that Pokemon Go has become a cultural phenomena. When people are queuing up in front of the water cooler, they aren’t talking about Melania Trump’s historic speech or how her husband, Donald Trump, is possibly going to build a wall that would cover the country’s entire border with Mexico.
No. People are talking about this wildly successful augmented reality video game, Pokemon Go. Pokemon Go has become the new weather. Even weather itself wasn’t ever discussed as much as Pokemon Go has been discussed in the last two or three weeks.
Nintendo, through no fault of its own since people assumed it themselves that Nintendo was the company that has behind Pokemon Go, gave out a statement that didn’t actually say that Nintendo was not behind Pokemon Go launch, but did say that Nintendo won’t profit, directly, from the success that Pokemon Go has had.
The augmented reality game, Pokemon Go, that has swept country after country was thought to be the working of Nintendo, a company that gave the world characters such as Mario and Zelda.
As a result, Nintendo lost about $6.7 billion in market value on Monday.
That still wasn’t as big as the rise Nintendo experienced as a result of Pokemon Go on July 11nth when Nintendo’s market value went up by $7.5 billion.
All of that happened as soon as Pokemon Go was unleashed onto the world and became the most popular mobile game of all time within no time.
Despite the drop in market price, Nintendo should thank their lucky stars that they at least had some ownership in The Pokemon Company because since Pokemon Go augmented reality game’s launch date, Pokemon Go has been able to add a massive $12 billion to the market value of Nintendo.
So even with Monday’s disaster, it isn’t the end of the world for Nintendo. The company, aside from the net benefit in terms of market value, still received a lot of free media exposure because of Pokemon Go.
Nintendo was somewhat forced to consider the matter honestly by letting their more than optimistic investors that the company won’t be benefiting much from Pokemon Go. Nintendo sent out a letter to its investors and declared the truth about the company’s involvement in Pokemon Go.
The truth was pretty simple (and short too): Nintendo did not make the game, develop the game or publish the augmented reality mobile game.
Instead Nintendo, in an attempt to take attention off this revelation, stated that it co-owned The Pokemon Company.
Nintendo indeed has a 32 percent share in the ownership of The Pokemon Company. The Pokemon Company is the primary player in the marketing and licensing of the Pokemon franchise.
The Pokemon Company is fundamentally a business that allows outside developers to work on their franchise either in the form of video games or other forms of media.
As a result, it will be The Pokemon Company and not Nintendo who will profit handsomely from the financial success of Pokemon Go.
The Pokemon Company will benefit the most from licensing fees and earnings from its partnership with Niantic Labs, who actually developed Pokemon Go.
Nintendo, having only 32 percent share in The Pokemon Company, would rightly receive just a small slice of whatever revenue Pokemon Go brings in.
Nintendo said in its statement that because of the accounting scheme that is currently present, the financial results from Pokemon Go’s success would have a “limited” impact on Nintendo’s consolidated business income.
Nintendo also announced that the company would not adjust Nintendo’s upcoming financial forecast.
Nintendo’s stock price fell by 18 percent the following Monday after Nintendo released the aforementioned statement in a letter written to its investors on Friday. Monday, coincidentally, was also the very next day after the letter from Nintendo to its investors was made available to the public.
Bloomberg reported that this 18 percent hit to Nintendo’s stock was the heaviest hit Nintendo had suffered since 1990.
For those who don’t follow gaming industry news closely, the name Pokemon seems synonymous with Nintendo.
But can these people be really blamed?
Nintendo has been the major player in publishing games related to Pokemon since the 1990s and owns The Pokemon Company with two other partners.
Despite that, the fact remains that Nintendo had little to no involvement in the development of Pokemon Go. In fact,internet search engine giant Google might have a bigger hand in the development of Pokemon Go than Nintendo.
More than a year before Pokemon Go’s launch date, Google had come up with an April’s fool prank which involved finding Pokemon monsters out in the real world with the help of Google Maps.
It has been rumored that the idea for Pokemon Go augmented reality mobile game sparked from that video.
With that said, it is true that Google along with Nintendo, invested about $30 million in Niantic Labs as the company’s developers worked hard on making Pokemon Go happen quickly.
Nintendo is finally starting to contribute something to Pokemon Go as it has been revealed that the new Pokemon Go Plus accessory for the augmented reality game will be produced and distributed by none other than Nintendo.
The accessory is basically a plastic wearable that can connect to a smartphone device via Bluetooth. The band like add-on is then able to light up and vibrate when Pokemon Go players are near a PokeStop or a Pokemon out in the real world.
The device will cost around $35 and this time Nintendo has been rather proactive in handling the situation as it has already included any potential revenue from the sales of this add-on peripheral in its financial forecast report that ends on March 31st, 2017.
The experience from Pokemon Go will certainly help Nintendo learn that the mobile game market is actually a viable one.
And that a deserving product in this market can bring in tons of revenue for any company let alone a giant like Nintendo.
Nintendo, in the past, has been criticized for being too narrow-minded since it spent the majority of its resources in developing games for 3DS. And while Nintendo did profit from its Mario and Zelda games, it did not have the wherewithal to bring these popular brands to the Android market or even to the iPhone market.
Now, the video game market is nicely poised for Nintendo to benefit from Pokemon Go’s success for its upcoming games, on its Nintendo 3DS gaming platform, like Pokemon Sun and Pokemon Moon even though these games will be developed by Games Freak and published by The Pokemon Company.