Latest in Gaming

Image credit: Getty

Nintendo loses billions in value after 'Pokemon Go' truth bomb

Nintendo made it clear on Friday that it didn't actually develop everyone's favorite augmented reality game.
5911 Shares
Share
Tweet
Share
Save

Sponsored Links

Getty

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 the Pokemon 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.

On Monday, the first trading day after its letter went public, Nintendo's stock fell as much as 18 percent. It's the steepest hit to the company's shares since 1990, Bloomberg reports.

Many people associate Pokemon with Nintendo, and for good reason: The company has published the games since their inception in the 1990s and it owns a third of The Pokemon Company itself. However, Nintendo simply didn't have a hand in developing or publishing Pokemon Go, as we noted in our previous reports on the company's stock boosts. Nintendo and Google did invest roughly $30 million in Niantic as it worked on Pokemon Go.

Nintendo will produce and distribute the Pokemon Go Plus accessory, a plastic wearable that connects to a smartphone via Bluetooth, and then lights up and vibrates when players encounter PokeStops or Pokemon in the wild. Pokemon Go Plus will cost $35 and Nintendo had already rolled any potential revenue from the peripheral into its financial forecast ending March 31st, 2017.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.
Comment
Comments
Share
5911 Shares
Share
Tweet
Share
Save

Popular on Engadget

New York state bans sales of flavored e-cigarettes

New York state bans sales of flavored e-cigarettes

View
After Math: Shut it down, shut it all down

After Math: Shut it down, shut it all down

View
The best USB-C hubs and docks

The best USB-C hubs and docks

View
'Gears 5' will add new modes and maps in its first six months

'Gears 5' will add new modes and maps in its first six months

View
Hulu's 'Castle Rock' season 2 teaser shows the origins of 'Misery'

Hulu's 'Castle Rock' season 2 teaser shows the origins of 'Misery'

View

From around the web

Page 1Page 1ear iconeye iconFill 23text filevr