What does Pokémon Go’s decline mean for Nintendo?
When it comes to tech investment, one should always tread carefully. Nothing underpins this notion more than Nintendo’s rapid rise and fall following its initial release of Pokémon Go.
According to industry experts, one of the reasons for Pokémon Go’s perceived impact on Nintendo was that many investors merely assumed that Nintendo 100% owned the Pokémon franchise, even though it only partially owns The Pokémon Company. It’s easy to understand why many overemphasised Nintendo’s net profits from the success of Pokémon Go – after all, Nintendo are known for their first-party titles such as Mario and Zelda.
Nintendo Share price (daily) since August:
However, while no one can blame Nintendo for these wild fluctuations, it seems that Pokémon Go might be suffering the same fate as a supernova; that is, shining brightly and boldly before being dissolved into oblivion.
The problems were publicly revealed around late August 2016, when many blog and news agencies reported that Pokémon Go’s user base had dropped off by a whopping 10 million. User drop-offs for video games are natural, though, much like how initial interest in a movie wanes.
Warning to traders
The question, then, might not be so much about what this means for Nintendo; instead, it should serve as a warning to investors who blindly jump aboard the bandwagon without understanding the long-term growth strategy of an application.
Naturally, companies like Nintendo want to prop up the future of the brand – whether through hubris, building consumer confidence, or both. Overall, Nintendo has already reaped great benefits from Pokémon Go, and their soon-to-be-released console, the Nintendo Switch, could potentially find a way to link Pokémon Go with a paid game on the console itself.
This kind of link is not unprecedented; in fact, Nintendo has done this several times. One such example was combining the GameBoy with the Nintendo 64 to unlock otherwise unattainable in-game assets. Furthermore, Nintendo can get people to use their new console using this bridging tactic. If the Switch can release a compatible Pokémon game very early in the console’s lifespan, it has the potential to make amends for the poor commercial performance of the Wii U, and it could yet again drive Nintendo’s stock price up again.
With Pokemon Go posting good ‘grossing’ figures in the US, it looks as though the Nintendo share price could see further volatility – and trading opportunities – over the coming weeks and months.