Nintendo's $7.5 billion Pokemon boost depends on Asia. Shares of the Japanese gaming group have risen by over a third after its Pokemon GO mobile game proved a smash hit in the United States. Conquering Japan will be its next challenge.
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Pokemon GO, based on Nintendo's popular franchise about catching, training and battling imaginary creatures, is proving highly addictive. Data tracker SimilarWeb estimates the game, which launched on July 6, will soon have more daily active users in the United States than Twitter. Even more impressive is that Pokemon GO players are spending an average of 43 minutes per day on the game — more than they devote to Whatsapp and Snapchat.
It's not hard to see why. The smartphone-based game is essentially a real-life experience akin to a neighborhood scavenger hunt. Aspiring "trainers" must go outside and catch characters like Pikachu and Bulbasaur using the location, mapping and camera functions on their phones. Though the game is free to download players can pay for extras like Pokeballs, which are needed to build up their inventory of monsters, or Stardust which is used to prepare Pokemon for battle. It has become the top-grossing app on Apple's iTunes store almost overnight.
"Data tracker SimilarWeb estimates the game, which launched on July 6, will soon have more daily active users in the United States than Twitter. Even more impressive is that Pokemon GO players are spending an average of 43 minutes per day on the game — more than they devote to Whatsapp and Snapchat."
The financial value for Nintendo is harder to locate, though. The Japanese group has a 33 percent stake in the Pokemon Company, which jointly developed the game with Niantic, a venture spun out of Google late last year. Both Nintendo and Pokemon Company also hold undisclosed stakes in Niantic.
The true financial test will be the game's launch in Japan, which accounted for 40 percent of the $30 billion spent on mobile gaming in the world last year, according to Macquarie analyst David Gibson. If Pokemon GO ranks number one in its home market, Gibson reckons the game would add 10.5 billion yen ($104 million) to Nintendo's full-year net profit – boosting this year's bottom line by roughly 30 percent.
Most importantly, though, the excitement looks set to transform investors' views about Nintendo's ability to design games for smartphones, rather than just its own consoles. With characters like Donkey Kong and Super Mario still to come, Pokemon GO may be just the start.
Commentary by Robyn Mak, a columnist for Reuters BreakingViews. Follow her on Twitter @mak_robyn.
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