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Pokémon Go isn't strongly affecting Nintendo's bottom line, company says

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At least not yet

Pokémon Go is a massive hit from both a mind share perspective and a financial standpoint. But while many people associate anything Pokémon-related with Nintendo, the company said today that the game’s success isn’t having a material impact on its financial forecast — at least not yet.

"Because of [Nintendo’s equity in The Pokémon Co.], the income reflected on [Nintendo’s] consolidated business results is limited," Nintendo said today in a note to investors.

Nintendo’s market capitalization has doubled since the launch of Pokémon Go

Following Pokémon Go’s debut in early July, the game quickly became a worldwide phenomenon. With every new country that it launches in, it rockets to the top of the App Store charts (including Japan, where the game arrived earlier today). That applies for both popularity — Pokémon Go racked up more downloads in its first week than any other app in the history of the App Store — and revenue, with analysts estimating that the game is raking in millions of dollars a day.

The stupefying success of Pokémon Go has provided a massive boost for Nintendo’s financial status. The company’s stock price jumped 25 percent during the game’s first week of release; last Friday, Nintendo became the highest-traded company in share value this century, with 476 billion yen ($4.48 billion) of Nintendo stock changing hands. Nintendo’s market capitalization has doubled since the launch of Pokémon Go, soaring from approximately $20 billion to $42 billion.

However, Nintendo doesn’t make Pokémon Go, and industry analysts say the company’s earning potential from the game is relatively limited. Here’s why.

Both Apple and Google take a 30 percent cut of sales on their respective app stores, so 30 cents of every dollar spent on Pokémon Go in-app purchases goes to either Apple or Google. Niantic Labs, which was previously owned by Google, is the developer and publisher of Pokémon Go. Niantic licensed the Pokémon brand from The Pokémon Co., which owns the rights to Pokémon and also worked with Niantic to make the game.

Nintendo, Google and The Pokémon Co. invested $20 million in Niantic last fall, with the promise of an additional $10 million if Niantic met performance milestones. (Niantic has not disclosed the stakes that those three investors hold in the company.) Nintendo owns 32 percent of The Pokémon Co., with fellow Pokémon Co. founders Game Freak and Creatures Inc. holding the remainder.

Nintendo will soon have a direct hand in a Pokémon Go-related enterprise: The company is producing and distributing the Pokémon Go Plus, a $34.99 wearable accessory for the game (image above). The Pokémon Go Plus connects to a smartphone via Bluetooth and alerts players if they’re near a PokéStop. The device is scheduled to be released by the end of July.

However, Nintendo said today that its financial forecast for its current fiscal year — a forecast the company made back in April, well before the smashing success of Pokémon Go — already accounted for Pokémon Go and the Pokémon Go Plus peripheral. At the time, Nintendo said it expected net sales of 500 billion yen (down 0.9 percent year-over-year) and operating income of 45 billion yen (up 36.9 percent) for the fiscal year ending March 31, 2017.

"Taking the current situation into consideration, the Company is not modifying the consolidated financial forecast for now," said Nintendo.

We’ll see if that changes after the release of the Pokémon Go Plus.

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