Nintendo made what can technically be called a mistake, by telling the truth this past Friday. In an effort to be open and fully transparent, the Japanese gaming company reminded its investors that they did not create Pokemon Go. The response to the statement could clearly be seen this morning by Nintendos stock dropping eighteen percent.
Since the release of Pokemon Go, Nintendo has seen their stock double despite them having little to no involvement in the development and upkeep of the game. The masterminds behind the viral game, are a similarly named company, Niantic, which oversaw the launch of the game and are responsible for the day to day maintenance that is required to keep the game alive and relevant in the future.
In the statement, Nintendo explains that the “Pokemon Company” holds the rights to all things Pokemon related and is only an affiliated company of Nintendo. They continue to say that they only hold 32-percent of the Pokemon Company, meaning Nintendo will have very limited impact on the future of the game. This statement, in particular, is what likely spooked some investors.
An excerpt from Nintendo’s official statement:
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.
While an 18-percent drop may not seem detrimental, it’s still a significant blow. The drop translates to roughly a $6.7 billion USD decline in the companies market value. Considering the companies value had doubled not long before the statement was made, the decline in value isn’t likely to put the company in the poor house. However, that extra few billion is sure to be missed. To read the full official statement from Nintendo, you can head here.
Featured Image Via Flikr/Kate Haskell
