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Nintendo's value jumps $7.5 billion on success of Pokemon GO

By Michael Finnigan

Share prices at Japanese video game maker Nintendo, owned by the sixth generation of the Yamauchi family, have surged 36% since the release of a Pokémon-themed smartphone game last week.

The unexpected success of Pokémon GO, Nintendo's second smartphone title, in which users hunt virtual 'pocket monsters' in real-world locations, has added nearly $7.5 billion worth of market value to the Kyoto-based firm.

Investors are taking the early success of Pokémon Go as a sign the 127-year-old family business, which has traditionally refused to licence its intellectual property to third parties, is now set to dominate the smartphone videogame market.

The Super Mario creator has suffered in recent years amid poor sales of its family-focused Wii U console, after a lacklustre advertising campaign, and an increasing drive towards free mobile games.

Pokémon Go is a joint project by The Pokémon Company, set up in 1998 to manage Pokémon-related businesses, and Niantic, a spinoff of Google parent Alphabet. The Pokémon Company is 38% owned by Nintendo and has earned 4.6 trillion yen ($45.6 billion) since its inception.

In a sign of the game's broad appeal, Pokémon GO is already more popular than dating app Tinder in terms of daily active users and is close to rivalling social network Twitter, according to information technology company Similar Web.

Nintendo is also looking to develop its health care business through Pokemon GO, a market it believes will help them reclaim and retain customers, as the app encourages users to burn calories through walking.

While the game is undoubtedly a hit with consumers, news outlets have exploded with stories about the unexpected quirks of Pokémon GO: one teenager stumbled across a dead body when playing the game, while another incident saw criminals congregate near a pokemon meeting spot in order to rob young teenagers.

Nintendo was founded by Fusajiro Yamauchi and originally produced playing cards. Today it is one of the world's largest video game company by revenue, bringing in ¥16.5 billion ($149 million) in operating profit in 2016, down from ¥41.8 billion a year earlier.

One year ago today, Nintendo's first non-family chief executive Satoru Iwata lost has battle with cancer at the age of 55.

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