Nintendo Shares Plunge on Pokemon Go Warning

Pokemon GO Nearby Tab

Pokemon GO Nearby Tab

Pokemon GO is Nintendo's first venture into mobile gaming as the company had until recently been keen to protect its console business from cannibalisation. Nintendo owns 32 percent of The Pokemon Company and is reported to hold a similar sized stake in Niantic, the US lab that developed the Pokemon Go game.

Nothing that Nintendo said in its announcement on Friday was new information - there isn't a Nintendo logo to be found anywhere within Pokémon Go itself, and the status of the game's ownership has been clear since it was announced a year ago. The company had been reluctant to license its popular characters for games on other devices and was slow to catch the smartphone wave. Niantic was a Google internal startup before being spun off, and the search giant remains an investor.

The Pokemon Company is going to receive a licensing fee as well as compensation for collaboration in the development and operations of the application. At one point following the game's release, company shares surged by more than 120 percent, adding $23 billion to Nintendo's market value.

That said, Nintendo's shares are still up 60 percent, even after the sharp decline. "Put on you shoes, step outside, and explore the world with Pokemon Go", the company tweeted.

"Taking the current situation into consideration, the company is not modifying the consolidated financial forecast for now", the statement said.

The game was released in stages across the world for a number of reasons, including how the Pokemon GO servers appeared to unable to cope with the massive take up of the service and also how the game attracted the attention of various hacker groups.

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.

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