Now that Pokémon Go has released in many countries, including Nintendo’s homeland of Japan, Nintendo has issued a statement to curb expectations when it comes to the money it derives from the insanely popular game. It has previously issued a forecast back in May for this fiscal year (running from April 1, 2016 until March 31, 2017). In it, Nintendo expected to make about the same levels of income and profit as the prior year, despite forecasts showing a massive decline in Wii U console and software sales. They explained that they expected the mobile market and the upcoming NX platform to make up the shortfalls from its console division.
With the Pokémon Go craze at full tilt, Nintendo’s stocks have risen significantly over the past few weeks as investors try to get their hands on shares. Nintendo is trying to be transparent and let them know not to expect a huge spike on its financials because of the way income is reported from its stake in the Pokémon Company. There are a lot of fingers in this pie, including Niantic, Apple, and Google, all of which gets a cut of the money. It seems Nintendo is just being cautious and reminding investors that even though Pokémon Go is a worldwide phenomenon, it doesn’t automatically translate into massive profits on Nintendo’s income statement. It’s very likely Nintendo correctly estimated the amount of money coming in and is sticking with its initial projections.
Niantic, Inc., a U.S.-based company, has begun to distribute the “Pokémon GO” application for smart devices in Japan today.
This mobile game application is developed and distributed by Niantic, Inc. The Pokémon Company, which is an affiliated company of Nintendo Co., Ltd. (the “Company”), holds the ownership rights to Pokémon. The Pokémon Company is going to receive a licensing fee as well as compensation for collaboration in the development and operations of the application.
The Company owns 32% of the voting power of The Pokémon Company. The Pokémon Company is the Company’s affiliated company, accounted for by using the equity method. Because of this accounting scheme, the income reflected on the Company’s consolidated business results is limited.
Also, a peripheral device for use with the application, “Pokémon GO Plus,” which will be produced and distributed by the Company, is scheduled for release. All of the above are reflected in the financial forecast ending March 31, 2017 as set forth on April 27, 2016.
Taking the current situation into consideration, the Company is not modifying the consolidated financial forecast for now. The Company will make a timely disclosure when the Company needs to modify its financial forecasts.