Nintendo’s Pokemon hit affords early taste of smartphone success

TOKYO — Nintendo, which has not yet thrown itself fully into the world of mobile gaming, is giving people a good idea of what a smartphone hit looks like with the success of Pokemon Go.

The company has added more than US$7 billion (S$9.42 billion) in market value since last week’s debut of a new app for its Pokemon fantasy monster character franchise. The game, which lets users track down virtual monsters in their vicinity, has topped the free-to-download app charts for Apple in the United States and Australia since its release on July 7, according to market researcher App Annie.

Investors are taking Pokemon’s early success as a sign of things to come for a company that has yet to commit the most popular characters from its Mario or Zelda franchises to mobile gaming apps.

“Clearly Nintendo has managed to pull off something very special that has created a craze in the mobile gaming market in matter of days,” wrote Mr Amir Anvarzadeh, manager of Japanese equity sales at BGC Partners, in a note to clients. “This game may not be big enough to move the earnings dial in the short term but sentiment-wise it could prove very potent at this stage for Nintendo when hopes of major success on mobile have been very deflated since last year.”

Real World Pokemon

The game recreates Pokemon’s underlying story of players scouring the world in search of “pocket monsters” to train and battle with each other. App users are encouraged to wander their own surroundings and unlock new Pokemon characters using location tracking. Reports have already surfaced of players taking road trips and even renting boats to get to hard-to-reach destinations in pursuit of virtual Pokemons.

Pokemon Go is free-to-download and play, but additional items are available for purchase within the game. Nintendo also plans to release a plastic wristband device that will alert gamers to Pokemon activity. The game is currently only available to users in the US, Australia and New Zealand.

Pokemon Go was developed by Niantic, a former Google startup behind the popular +Ingress game, which also involves location-based gameplay. Nintendo, together with its affiliate Pokemon Co and Google, last year invested in Niantic.

Pocket Monster

Pokemon is no stranger to the small screen — it has been one of the most popular franchises for Nintendo’s portable gaming machines. Pokemon X and Pokemon Y are the best-selling titles for the 3DS, selling a combined 14.7 million units.

Nintendo’s first foray into smartphone apps left investors underwhelmed. Miitomo, a free-to-play smartphone messenger, debuted in April at the top of smartphone rankings before quickly declining in popularity. Nintendo said the app, which attracted more than 10 million users in its first month, will serve as communication platform and a portal for its games on mobile devices and consoles.

A smartphone hit cannot come fast enough for Nintendo. The company is forecasting sales of Wii U and 3DS player to decline this fiscal year, while its next-generation NX gaming device will not debut until 2017. The company’s next two mobile games will be Animal Crossing, a community simulation game series where players earn currency by trading and mastering skills such as fishing, and a role-playing title called Fire Emblem.

“Nintendo’s history is peppered with big comebacks when all seemed lost and we have (too) much respect for its developers to argue with these early signs of Pokemon euphoria,” wrote Mr Anvarzadeh. “Although the game is free to download, it looks well-structured to potentially monetise on its early success through in-app purchases.” BLOOMBERG