You’ll have to forgive me for not having a podcast ready this week. I was too busy with my Pokemon Go tasks that I was just too busy. Actually, I am finalizing a podcast but wanted to share this update instead as I find Pokemon Go fascinating, even though I really have no idea what it is.
In case you are not the cool, hip person like I am, you may not be familiar with Pokemon Go. Again, I really have no idea what Pokemon Go is. The first I knew anything about it was a reference on my Twitter last week from an NFL football player who mentioned something about people driving around for Pokemon. Then this weekend my older son ran out of the house because there was a “crab” at the end of our block. My younger son was on a bike ride with some of his friends Monday afternoon when they ended up in a conversation with a walker who was out playing. I noticed people on my FB thread Monday night were wandering around the downtowns of their respective towns searching for Pokemons. What?
So, what exactly is Pokemon Go? It is a phone app where users (I believe they call themselves players) search for animated Pokemon characters superimposed on real-life images on their phones. The app itself is free. Revenue comes from purchases players can make within the app, such as incense to lure characters to come closer. That is really all I know about the game.
What really caught my attention is how Nintendo’s stock price has spiked the past few days. It jumped 25% on Monday and increased another 13% on Tuesday in the Tokyo market. It is actually up about 60% in the last week. This has increased the company’s value by about $12 billion during this streak. While their share price has rocketed it is yet to be seen how much this impacts their revenue.
What becomes more interesting is Nintendo is not actually the sole owner of Pokemon as it controls roughly 1/3 of the company which owns the characters. Nintendo also did not develop the technology for Pokemon Go as they are simply an investor in the creating company, which actually spun off from Google. Nintendo does intend to create a $35 hand-held device called Pokemon Go Plus to make it easier for users to play the game.
While Nintendo’s share price has jumped dramatically and there is obviously an interest in this app, the question of how much this will truly add to the revenue bottom line for Nintendo is what analysts are trying to answer and they are having a difficult time doing so. Because this is the perfect storm where Pokemon Go is a new experience, has grown in popularity so quickly, and Nintendo is not the sole owner, the analyst projections range from doubling Nintendo’s net profit to this being little more than a summer fling. What will really determine is how many people will pay for this game for the weeks and months to come. While the analysts are trying to figure this all out, NPR has perfectly described this by saying users are getting outside…so they can ignore it. Ah, summer love!