No matter where you go, it seems like everyone has been playing Pokemon Go, and it is definitely paying off for Nintendo. Right after the game was launched last week, the company's stock rose 9.3% and now the share price rose to 24.52%, the company's highest surge since 1983. This adds some $7.5 billion to the market value. The game is topping the charts in the US, Australia, and New Zealand. It has already been installed on 5% of Android phones in America.
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That's huge for Nintendo who has been under the radar lately. But you should remember that the game is not only a product of Nintendo. The app was created by Niantic and built with the Pokemon Company. Nintendo is an investor in both companies. The game is free, so any money will be made by in-game microtransactions. If you run out of Pokeballs and there's an Onyx near you, you are going to pay those few dollars so you can grab him.
According to some calculations, Pokemon Go will have to generate between $140 and $196 million each month in order to have a significant impact on profits. Mia Nagasaka of Morgan Stanley told CNBC that Pokémon Go is estimated to make between $3.9 and $4.9 million on just the first day. In order to become a huge success, it will have to keep that pace.
Still, there are other ways they can do it, including working with businesses to draw players to their locations.
The key is that they have to keep players interested in Pokemon Go until they are able to do that. Some people have been comparing the game to Nintendo's Wii, which was released in 2007. The company's stock soared before quickly falling back to normal two years later. Still, hardware tends to stick around longer than a mobile app does. The success might be better compared to something like Words with Friends, which was hugely popular for a few weeks and then seemingly vanished.
There is potential there, however. It is one of the most beloved franchises in the world and it is really well known. Plus, it has nostalgia going for it.
The hope is that they are able to get the server issues under control and keep the game straightforward enough that it is accessible to people who only have a working knowledge of Pokemon.
Whatever the outcome, Nintendo has at least a phenomenon on its hands. The company has a few more titles slated for release in the coming months, so it could be the next mobile giant - if it can keep people interested.