The world has gone completely insane over the new Pokémon Go
- by Alexander Jakins
Nintendo's stock soared another 13% in Tokyo on Tuesday thanks to hype about the immensely popular Pokémon Go mobile game.
Nintendo shares, which also trade in the U.S., are up nearly 65% in just the past week.
The stock, to quote the evil Team Rocket, is blasting off again! But does this surge for Nintendo make sense?
Before this week, Nintendo was known mostly as the company that’s fighting with Sony and Microsoft in the console wars and for creating games like Donkey Kong and Super Mario.
But now it has a new hit - Pokémon Go is a great sensation - ranking as the top free downloaded app on both Apple's App Store as well as Google's Play store for Android devices.
And there have been reports about how Pokémon can pass Twitter's daily user count.
But does this justify the gigantic move for Nintendo's stock in the past few days? It's as if investors are all crying out one of Pokémon’s catch phrase about the company's stock at the same time ... Nintendo, I choose you!
Here's why investors are so excited. The real money for Nintendo is in the purchase of add-on features for the game.
It's a model that many mobile game developers use. Make the game free for download, get them hooked and then sell extra items to enhance the game to generate big revenue.
Nintendo also plans to soon start selling a Pokémon Go Plus wearable device that uses Bluetooth to connect to a player's phone.
And the clear hope is that the game's immense popularity could lead to the proverbial halo effect for Nintendo, people who may not have been familiar with the company's many offerings deciding to buy more Nintendo products.
Pokémon is the classic gateway drug, if you will. In other words, there are ample opportunities for Nintendo to make some serious coin from a free game. There's also the fact that Nintendo is an owner of the private company that developed Pokémon Go -- Niantic.
Nintendo invested $20 million in Niantic last year. So did a joint venture known as the Pokémon Company - which manages the trading cards, TV series and other licensing and brand opportunities. Nintendo owns a stake in that too.