What effect has Pokémon Go had on the markets?

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Even though it’s not officially available in South Africa yet, you’ll likely have heard of the phenomenon that is Pokémon Go. This augmented reality game played via an app on Android and Apple iOS smartphone platforms has attracted millions of players since its July 2016 release in Australia, New Zealand and the US. By Jessica Foreman

Back to the future

Pokémon has of course appeared in different guises over the years having previously been available on Game Boy, a cartoon programme, and a low-tech trading card game. In this app version, players roam around using their phone’s GPS to hunt virtual monsters. While free to download, there are in-app purchases to get the best from the game and these are the sources of revenue.

Financial success

To call Pokémon Go a financial success is an understatement, and those holding shares in its parent Nintendo saw an almost vertical price rise graph as the game’s meteoric success on launch added over $7 billion to the Japanese multinational’s value.

For traders and investors, the interesting thing here is that Nintendo doesn’t directly own Pokémon Go; it owns a stake in the Pokémon Company, the producer of the hugely popular game, and its developer and distributor Niantic – a spin-off of Google.

So while Nintendo’s stock performance since the launch of Pokémon Go has garnered the headline news, the game’s success could positively affect the stock of associated companies including the ubiquitous Google – a sort of ‘wheels within wheels’ situation.

Of the various companies mentioned above involved in Pokémon Go’s development and arrival, it’s estimated that Nintendo’s ‘cut’ from money spent by users could be the smallest compared to the others including Apple and Niantic.

There’s likely more scope for continued growth for Nintendo and the other companies involved. Merchandising spin offs could be huge, its forthcoming launch into enthusiastic game playing territories such as Europe and Japan could see growth climb further, and who is to say other big brands might not want to get involved?

For example, a large hotel or coffee shop chain could be attracted by the idea of the geographically-based game sending them potential customers. Increased revenues from possible deals made could potentially push the stock price up further.

It could pay to keep an eye on the business news relating to Nintendo and the related companies’ activities as they seek to maximise the game. Experienced financial experts such as IG can help make the most of investing or otherwise depending on how the Pokémon Go phenomenon develops.

Beyond Nintendo

Other companies could possibly benefit; for example, the already huge smartphone market could increase as more people buy one or upgrade to play the game thus improving stock prices in companies like Apple.

Data demands made by the game are already an issue – it’s cited as a key reason why Pokémon Go isn’t yet available in South Africa, Europe and other territories – so data providers could experience accelerated growth and thus a rise in their stock values.

It’s certainly a phenomenon that could have a widespread effect on the markets beyond its creators’ stock prices.

The potential downside

That said, the Pokémon Go growth could be spectacular but short lived; will it become established or prove a spectacular but brief fad? Keeping a finger on the pulse will be important; rest assured market experts will.

By the way, there is a way to get onboard sooner if you’d like to play the game and can’t wait until Pokémon Go is available in South Africa.

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