Nintendo shares plunge on Pokemon Go profit warning
Nike aims for traction with first retail store
NINTENDO shares plunged yesterday after it warned that the Pokemon Go mania sweeping the world would not translate into bumper profits, popping a dizzying rally that more than doubled the Japanese firm’s market value.
The stock dived 17.7 per cent to close at 23,220 yen ($218) in response to a warning after markets closed on Friday that the hugely popular smartphone game would have only a “limited” impact on the Japanese videogame company’s bottom line.
Markets had cheered the app’s global success as a great sign for Nintendo’s longawaited move into the mobile games market.
The stock soared as investors bought the narrative, pushing it above 30,000 yen at one stage – doubling Nintendo’s market capitalisation and making it more valuable than Sony.
But analysts warned that the rally was overdone since the actual impact of the game on Nintendo’s finances would be moderate at best – a point it confirmed on Friday.
Nintendo is the creator of the Pokemon franchise but the game, released on July 5, was developed and distributed by US-based Niantic, a spinoff of Google.
Nintendo has invested in Niantic and owns about one- third of the Pokemon Company, which will get licensing fees for loaning out the cuddly monsters’ brand.
Downloading the app is also free so Nintendo and others are banking on users gravitating to paid-for services in the game itself.
While it stands to make money from a device to be used with the application called “Pokemon Go Plus”, Nintendo said “the income reflected on [its] consolidated business results is limited”.
“The company is not modifying the consolidated financial forecast for now,” its statement said.
Since its launch Pokemon Go has sparked a worldwide frenzy among users who have taken to the streets with their smartphones.
Rare safety guide
The app uses satellite locations, graphics and camera capabilities to overlay cartoon monsters on real-world settings, challenging players to capture and battles.
Pokemon Go was seen as a shot in the arm to Nintendo – which also created the Donkey Kong, Super Mario and Legend of Zelda brands – after it abandoned a longstanding consoles-only policy and opened the door to licensing some of its characters for mobile game use.
“I think Nintendo issued that statement because it was uneasy with how high the shares were rising,” said train them for Hideki Yasuda, analyst at Ace Research Institute.
“There has been a view that Nintendo cannot succeed in the smartphone business.
“Even if Pokemon Go does not directly contribute to Nintendo’s earnings, it owns other characters like Super Mario and Zelda. These things were factored in and boosted its shares.”
Yasuda added the firm’s shares may rally again after an “adjustment period”.
The smartphone app has now been launched in more than 40 countries, but until last week Japan – where Nintendo started the mythical creature franchise 20 years ago – was kept waiting.
Pokemon, short for “pocket monsters”, has been a constant in Japan since being launched as software in 1996 for Nintendo’s Game Boy console.
Authorities in a number of countries have expressed safety and other concerns about the craze.
Players from San Francisco to Lagos have been warned after trespassing, including some youngsters crossing the Canada-US border. Some walked into sensitive military facilities and a nuclear power plant, while other players found themselves the victims of robbery or violent crimes.
The Japanese government issued a rare safety guide warning over dangers gamers could face, from heat stroke to online scams. AMERICAN sporting goods giant Nike has opened its first dedicated retail store in Cambodia in what observers have described as another sign the Kingdom’s strong economy and rising incomes had not gone unnoticed by international retail giants.
The opening of the outlet store in central Phnom Penh marks the first time that Nike goods such as sport shoes and apparel – including items produced at local factories – can be purchased from a dedicated brand outlet.
According to Julie Chung, Charge d’ Affaires at the US Embassy in Phnom Penh, Nike’s retail launch underscores the Kingdom’s economic development and its ability to attract major name-brand American products and investment.
“This is a testament to the economic transformation that is taking place here . . . a transformation we hope the United States and American companies can continue to help support,” she said at the store opening on Saturday.
Ronald Marvin, executive director of the American Chamber of Commerce, said the Nike store’s arrival was a positive sign that American businesses have confidence in the Cambodian market.
However, on a retail level, some analysts said the choice of opening a flagship store on Monivong Boulevard, rather than in an upscale mall or neighbourhood such as Aeon Mall or Boeung Keng Kang 1, could signify that Nike was still testing the market before going all in.
“The fact that they are not opening a flagship store in a more prime location could be because they just want to establish a presence in Cambodia for the meantime,” said Sofia Perez of property consultancy advisory Knight Frank Cambodia.
She said that while Nike’s brand-name appeal would certainly help business, it should not be relied on as the sole marketing tool.
“The choice in location and the store size will definitely affect brand image, which is important for consumers because for a higher price, they would also expect a more exclusive shopping experience among other added benefits,” Perez said.
She added, however, that if Nike can develop an effective marketing strategy with added consumer benefits, “they could definitely increase the pressure on their competitors”.