Nintendo Stock Plummets as Pokemon Go Hype Wanes

Pokemon Go is the hottest thing on the streets right now, racking up more users than either Tinder or Twitter and even attracting giant corporate sponsors, like McDonald’s. As of right now, it’s extremely hard to imagine when – or whether – the fad the game has clearly generated will finally come to a close.

Well, that future may be arriving way sooner than anticipated.

Bloomberg brings us the news that on Friday, July 22 (the day Pokemon Go launched in Japan), Nintendo announced that the “financial benefits” from the title will be “limited.” The pronouncement sent its shares tumbling – by 18% in Japan, the maximum limit allowed, and 11% in the United States. That’s a total of $6.7 billion, lost in just one 24-hour period, and it’s even more striking when one factors two key items into the equation: before this past weekend, the title had nearly doubled Nintendo’s market value, and the loss is the single biggest dip for the company in the past 26 years.

An even lower blow: McDonald’s is also feeling the heat from the development; its stock has dropped by 12% in the Land of the Rising Sun.

Pokemon go wild pokemon

Not everything is doom-and-gloom, however: Nintendo’s stock in Go’s developer, Google spinoff Niantic, is limited, meaning that it will be largely shielded from any future wild market gyrations, and there’s the possibility that analysts and investors are currently overreacting to the surprising news; by the time everything is said and done, the big N just might still have a considerable amount of extra wealth from the Go’s release even if the hype is dying off as players come to terms with the lack of gameplay and depth in the app itself. There’s also the little fact that the Pokemon franchise is more than two decades old - it has ridden more than its fair share of highs and lows over the years, and it extends well past gaming to several other media, such as television, film, and consumer products.

But such soaring short-lived successes (see: Miitomo, the other temporarily hot Nintendo app released earlier this year) turning into unimaginable defeats have been a hallmark of Nintendo’s entry into the home console market, specifically, and the video game industry, generally; the Nintendo Entertainment System’s 1985 release heralded an era of unparalleled riches for the company, as did the 2006 release of the motion-controlled Wii, but both abruptly ended when other, more aggressive competitors joined the fray or when the product’s fad simply burnt itself out. In this context, Pokemon Go’s financial performance can be seen more as general rule instead of exception – and it might be enough to spook investors away for a good while to come.

Then again, with a Pokemon movie already on the way, along with future promised updates announced at Comic-Con and whole new catalogues of Pocket Monsters to catch, this first mobile Pokemon installment can very well provide the inertia for the next 20-year cycle, providing the same exact type of funding that the Game Boy and DS handhelds have when Nintendo’s consoles invariably stuttered or outright failed. The future of the company can just be a simple continuation of its performance over the past several years: not quite dead, but not quite thriving.

Pokemon Go is available for download on Androd and iOS mobile devices.

Source: Bloomberg

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