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Pokémon woe for Nintendo as profits slip

Japanese videogame maker Nintendo, owned by the sixth generation of the Yamauchi family, has reported its worst first quarter loss in five years as it struggles with weak demand and a stronger yen.

Japanese videogame maker Nintendo, owned by the sixth generation of the Yamauchi family, has reported its worst first quarter loss in five years as it struggles with weak demand and a stronger yen.

Despite the success of its smartphone game Pokémon Go, which is reportedly making about $1.6 million per day, Nintendo saw revenues fall by 31% to ¥62 billion ($586 million) in the three months to the end of June.

The 127-year-old business attributed the loss to its struggle to find new buyers for its traditional consoles and the negative impact of stronger currency, which caused the company to lose ¥35 billion in the first quarter.

While Nintendo has seen its market cap almost double in the three weeks since Pokémon Go’s launch, all is not rosy at the Kyoto-based company: the complex licensing-ownership structure around Pokémon Go means the game may not have a significant impact Nintendo’s bottom line. 

Pokémon Go was developed by Niantic, an American software developer spun out of Google, in which Nintendo owns a 13% stake. Nintendo also holds a third of shares in The Pokémon Company, which has licenced the franchise to Niantic for an undisclosed sum. Investors may have overestimated the game’s impact on the company’s future earnings.

One way Nintendo is hoping to capitalise on the “Pokémon Go” effect is with Pokémon Go Plus, a clip-on accessory for the augmented reality game, which will go on sale in September instead of this week. It also points to the company’s desire to capitalise on untapped revenue streams.

While the buzz around Pokémon Go is likely to impact Nintendo’s strategy moving forward, the company is pinning its future on the Nintendo NX, the codename for a mysterious new console it is due to release in March next year.

A report from Eurogamer yesterday suggests the console is likely to be a handheld-console hybrid that will support on the move, its own proprietary apps and connection to a television.

After resisting smartphones for years, the success of Pokémon Go and the NX all point towards reinvention for the family-owned company: it is already planning to release five mobile titles through March 2017.

In testament to the company’s mobile future, Pokémon Go has already racked up 75 million downloads in just three weeks, making it one of the most successful smartphone games of all time, according to app analytics firm Sensor Tower.

Nintendo was founded in 1889 by Fusajiro Yamauchi and originally produced playing cards.


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