Nintendo shares slump on Pokémon revenue disappointment

Shares of Nintendo nose-dived on Monday following disappointment about the revenue impact anticipated from the red-hot Pokémon Go game that’s become a craze.

The problem? It turns out that Nintendo is warning that Pokémon Go might not be as much of a cash cow as Wall Street had initially hoped.

Less revenue from Pokémon Go potentially means less profits than anticipated — and investors decided to punish Nintendo’s shares as a result.

Nintendo stock plunged 12 percent in over-the-counter trades in New York.

Japan-based Nintendo issued a warning on Friday that the impact on its revenue from Pokémon Go might be “limited.”

The effect could be muted, the video game company warned, because of the indirect nature of the relationship between Nintendo and the makers of the Pokémon Go game.

Pokémon Co. is an affiliate of Nintendo, holds ownership rights to Pokémon Go, and is entitled to a licensing fee and other compensation for its role in developing the addictive game.

Plus, Nintendo has a 32 percent ownership interest in Pokémon Co. under an arrangement for accounting purposes.

“Because of this accounting scheme, the income reflected on the company’s consolidated business results is limited,” Nintendo said in its prepared release on Friday.

The Pokémon Go video game encourages players to go outside into real environments such as shopping malls, parks, streets, or other public locations in order to catch Pokémon characters.

Catching the virtual characters has always been the primary point of a Pokémon game.

The twist with Pokémon Go is players go into the real world to catch the imaginary characters.

The game also has stirred a bit of controversy because some players have gone to memorials or interfered with traffic in their quest for the video game characters.

Despite the plunge on Monday, shares of Nintendo nevertheless are up roughly 60 percent from July 7, when the game launched and investors became exuberant about the video game company’s prospects due to Pokémon Go.

 

Photo: Pokémon Go image is seen at the pokemon.com website.

 

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