Pokémon Go gives Nintendo extra life
Adds about $12B in value; Google, Apple, AR go along for ride
Pokémon Go hasn’t just turned augmented reality on its ear. It has revitalized the Nintendo brand, adding billions of dollars in market value to the gaming company in days.
And the smartphone game, in which players search for animated characters superimposed on real-life images on their phone screens, also adds to the fortunes of Google and Apple.
So far, Kyoto, Japan-based Nintendo, a minority holder in the developer of the game, has been the prime beneficiary. The value of Nintendo shares catapulted $12 billion, to about $30 billion — a prodigious payoff to its slow-evolving mobile gaming strategy — since Go debuted last week.
Nintendo shares jumped 13% in trading Tuesday after a 25% surge Monday, sending the Tokyo stock market rocketing for two consecutive days and feeding expectations for copycats from other gamemakers.
Hopeful investors anticipate a windfall in advertising and licensing revenue for Nintendo, part owner of Niantic Labs, which created Pokémon Go, and a 32% owner of Pokémon Co., which controls the merchandising of Pokémon characters. Nintendo also plans to sell a $35 handheld device called Pokémon Go Plus.
“This shows a big shift for Nintendo, from being a hardware company to a software company,” says Bryan Buskas, chief customer officer at AdColony, a division of Opera Mediaworks, where he oversees $250 million-plus in revenue from gaming companies.
Closer to Silicon Valley, Google and Apple are likely to benefit from the popularity of the game. They operate the app stores from which the free game is downloaded. Tuesday, Pokemon was No. 1 on the Apple Store and Google Play and had been since its Thursday launch.
Google benefits twofold: through its investment in Niantic, which spun out from Google last year, and the mainstream adoption of outdoor mapping technology and augmented reality, says Jan Dawson, chief analyst for Jackdaw Research. “AR crossed over into the mainstream and Pokémon Go proves that outdoor mapping data works,” he says.
Go’s financial windfall could extend to the AR, gaming and mapping industries and, ultimately, enhance the fortunes of dozens of companies, says Ben Reichert, founder of Game CoLab, a video game incubator.
“It might take awhile to quantify the financial impact, but it could have economic implications for gaming and AR as they try to keep this phenomenon going,” he says.
The breakthrough success of Pokémon Go underscores a reju- venated gaming industry.
Shares of game developers Sony, Activision Blizzard and Electronic Arts out-performed an otherwise flat Nasdaq in the second quarter after those companies reported healthy secondquarter financial results amid a proliferation of new gaming titles for smartphones, home-media consoles and virtual-reality headsets. The largesse trickled down to Nvidia, a maker of graphics chips used in powerful computers favored by gamers.
Wedbush Securities analyst Michael Pachter predicts a wave of Pokémon Go “knock-offs” that will be “quickly forgotten” but will boost interest in AR-themed games. And he warns that Pokémon Go’s huge success could be fleeting because its continued popularity is dependent on the weather. “I think it will fade when the weather turns cold.”
“This shows a big shift for Nintendo, from being a hardware company to a software company.” Bryan Buskas, AdColony