25 Jul Nintendo loses billions in value after ‘Pokemon Go’ truth bomb
Pokemon Go is an unprecedented success, but Nintendo recently admitted it won’t directly profit from the augmented reality game, leading to a loss of $6.7 billion in Nintendo’s market value on Monday. Nintendo’s market value rose by $7.5 billion on July 11th, just after Pokemon Go went public and became an instant, massive hit across the globe. Since its launch,Pokemon Go has added nearly $12 billion to Nintendo’s market value, meaning today’s dip, while sizable, isn’t a total disaster for the company.
Nintendo published a letter to investors on July 22nd offering a reality check on the company’s involvement in Pokemon Go: Namely, it didn’t develop or publish the game. Instead, Nintendo has a 32 percent stake in The Pokemon Company, the business that markets and licenses thePokemon franchise to outside developers. The Pokemon Company will receive licensing fees and compensation for collaborating with developer Niantic on Pokemon Go, and Nintendo will see just a sliver of that revenue.
“Because of this accounting scheme, the income reflected on [Nintendo]’s consolidated business results is limited,” the company wrote. Nintendo said it would not modify its financial forecast.