Analyst: Nintendo Only Gets About 10% Of Money Spent on Pokemon GO

Pokemon GO is taking the world (or, at least the USA for now) by storm. Generating millions of dollars of revenue each day, the game is nothing short of a cash cow. Unfortunately, according to Macquarie Capital Securities Analyst David Gibson, Nintendo likely only sees about 10% of the money spent directly.

[Hoffmann]

Their own fault.

[_-EDMIX-_]

LMFAO! I can't stop laughing right now!

I was praising Nintendo all damn day based on this deal, all the money they were making, low risk, no money spent on hardware etc.

then I hear they only getting 10%.....good god Nintendo, you had 1 job.

Maybe their next mobile game they can do themselves and get 100% profit or near it. Sad too, this deal sounds very, very bad for them and I seriously can't believe what I'm reading.

Nintendo has a legit problem with incompetence. Someone find out if this is true or not as I just can't believe a company would be so stupid as to do such a deal...seriously folks! This is so wild, I feel its likely not true or misread or something.

If true, R.I.P Nintendo. The dudes running this company seriously need to be replaced or jump off a cliff or something. We need new blood running Nintendo, those who have been there I feel are the direct reasons behind the companies latest failures.

[Segata]

Man you're clueless. Easily one of the stupidest comments I read all month.

[wheresmymonkey]

So they're making millions off a low risk venture that has seen their stock price rise 25% in a couple of days and has put the company firmly in the spotlight, with a lot of positive response from gamers and the general public.

You do realize there's a new Pokemon coming out soon right. Think all the people that have got back into pokemon via go. are more or less likely to buy that game... This is what is known as a long con.

This is as far from incompetent. It's a calculated play to generate good feeling towards the company and raise the level of one of its most prized IP, before a new release this fall.

[Yukes]

It's still 10% of a shed load for doing very little, and a raising in their profile. It's about more than the raw revenue.

[Apex13]

I'm not sure if you actually know anything or bother researching but I suggest you so. Nintendo is 1 of 3 companies who own the copy right to the Pokemon Francise. They are getting more than 10% and even if you assume 10%vwas true then tell me what is 10% of $7.5 billion added to Nintendos stock value in the last 2 days not including the 35% it went up again last night? There is nothing worse than hating for the sake of hating and not being able to back it up with your own knowledge. Kind of makes one slightly stupid.

[_-EDMIX-_]

I would have bought out that company a long time ago if I was Nintendo.

I don't even get why they haven't.....smh.

MS bought the Minecraft IP..

Activision bought KING...

Yet Nintendo is doing classic Nintendo and just failing at everything. For why folks?

So the best choice is don't buy out Pokemon? O_o?

They sure wasted that Wii money on a lot of trash....

[blawren4]

_-EDMIX-_
Have you ever thought that the other investors in the Pokemon company are not interested in selling? I wouldn't.

[MrMagz]

Even if the only profit Nintendo gets is the 10% share (which is not actually accurate), 10% of the reported 1.6 million on iOS alone per day only in the US is still a lot of money for a project like this, or any project for that matter.

[deafdani]

Hate and stupidity go hand in hand, as evidenced by the abundancy of both traits in your post.

Well done.

[rainslacker]

Wouldn't laugh that much. This is just an analyst assumption. This analyst has no clue as to the deal in place for this game to exist. 10% seems extremely low for a publisher cut. 50% is more typical, with the dev maybe getting 20% if they're lucky(10% is more typical), and the rest going to other costs. There are other company interests involved as well, but with Nintendo being the publisher, it's pretty safe to assume they receive at least 50%.

More often than not, it doesn't matter what company interests are involved unless those companies are putting up a sizable portion of the funding. The publisher almost always gets 50%, because they're the one's marketing and distributing the game.

[Godmars290]

@Hoffmann:

Using labels somehow passes for legitimate counterpoint nowadays...

Well, was the same back in the day, but, whatever.

[jb227]

What's 10% of "a buttload of cash"?

I think they'll be alright, damned Pokemon's are all over the place these days. Every news feed is crammed w/ stories on those things.

[blackout]

WOW WOW WOW. How is that even possible. Who runs this company?

[Segata]

Well because they are 1/3 the owners of the Pokemon Company. They still get a huge chunk of change from it.

[LOL_WUT]

What's even more sad is that they'll most likely won't invest that money towards a true Pokemon console game ;)

[shmowboyfebop]

@LOL_WUT

why would they?

[_-EDMIX-_]

smh. Whats even sadder is they don't even own all of Pokemon.....

What on earth is going on at Nintendo?

MS bought Gears Of War IP......

That isn't even NEAR what Pokemon is.....

Nintendo needs to get their priorities straight.

[Whymii]

Clearly Nintendo have not made much profit on Pokemon all these years and been unable to leverage their close relationship with the brand. I'm sure they have no plan to leverage off the success of Pokemon Go with their new console/s or that Sun and Moon won't get a single sale more through renewed and broadening interest in the Pokemon brand.

[OtakuDJK1NG-Rory]

Nintendo owns 100% of the IP of Pokemon but the shares is split through Nintendo, Game Freak and The Pokemon Company.

Either way doesnt matter Nintendo still getting at least 200k-300k from it.

[Mr Pumblechook]

I genuinely didn't know this - ta!

[Erik7357]

"r Nintendo still getting at least 200k-300k from it"
Okay thats like in a day amount AT least thats gotten from this app, this app makes around $ 2 million dollars alone in a day just in America.

[Mystogan]

I think the Pokémon Company owns the Pokémon IP. And Nintendo owns part of the pokemon company. I think the only reason we're seeing Pokémon on Mobile is from pressure from the Pokémon company.

[hangdang]

Mystogen, you think the Pokemon company is strong-arming Nintendo? Are yous serious?

[_-EDMIX-_]

"Either way doesnt matter Nintendo still getting at least 200k-300k from it."

sorta does.....

They own the IP......they should be getting 100% of the profit, they should be contracting the team to make the game.

smh.

This is just sloppy business and its becoming very clear why this company is shrinking in terms of its install base.

@Mystogan- could be, I didn't even know Nintendo didn't fully own the Pokemon Company.

@hangdang- could be if you factor Nintendo doesn't fully 100% own them.

This isn't MS to 343 or Sony to Naughty Dog.

Nintendo doesn't 100% own this company, merely a part of it.

As to why....I have no clue.

[OtakuDJK1NG-Rory]

No. The Pokemon Company was created by Nintendo for the sake of expanding and marketing the Pokemon franchise. Nintendo owns them but they operate as their own much like Atlus under Sega. Iwata and Miyamoto are reason Nintendo owns Pokemon.

[LOL_WUT]

Congrats to Nintendo! Even though I don't play mobile games, you can tell they have a real winner here with Pokemon Go. Everyone at college seems to be talking about it even my professor lol ;)

[KilluaX3]

Your professor? Is his name Oak?

[wonderfulmonkeyman]

I don't know whether to laugh or cringe, but either way, well played with that pun.

[SynestheticRoar]

Now trolls sweating what Nintendo makes from mobile games. Pathetic.

[benji101]

Yeah... Because analyst makes up bs. Nintendo owns part of the publisher of the game and the IP> The game was designed by a group of people one of whom was Iwata. It is a nintendo game it was released on the day Iwata passed away.

[Austin48]

Good job Nintendo on making a crappy mobile game.

[Hoffmann]

They did not make it. Due to that, the Pokemon look a lot better than in any Pokemon game on a Nintendo console ironically.

[Timesplitter14]

So they'll only make $99 billion per day out of this...

[ZeekQuattro]

Well someone had to try and downplay Nintendo's stock jumping 20% in two days. lmfao

[GrimmyReaper]

Huh, but isn't Pokemon made by Nintendo?
It says "30 for Apple, 30 for dev, 30 for pokemon and 10 for Nintendo"

But doesn't Nintendo own Pokemon? So wouldnt it be 40? Genuinely asking

[Hoffmann]

The game is not even made by Nintendo.

[Segata]

Nintendo is 1/3 the owner of the pokemon company and they own part of this developer.

[rainslacker]

It's sort of a tricky thing to analyze, because there are other corporate interests involved than just NIntendo.

The dev likely gets about 10%, which is typical, or even less because they may have just been contracted, and may just get like 3-4% plus their contract fee, which is also typical, although the percentage may be lower for a game expected to do very well, and I've seen it as low as 1.5% for a game with high expectations.

Publisher almost without fail takes 50% of the profits(not revenue, although sometimes revenue). Nintendo is the publisher.

However, the Pokemon company licensed out the product, and probably demanded a fairly large cut of the profits(or possibly the revenue). What that cut is, is up for wild speculation with no details, and it could cut into the percentage that Nintendo gets, but highly unlikely it's cutting it from at least 50% all the way down to 10%.

But, there is the fact that Nintendo does own part of the Pokemon company. While Nintendo won't receive money directly from the profits or revenue that the Pokemon company brings in, it still increases the value of their share of the company, thus the value of Nintendo itself, and they likely receive dividends on whatever that value is....although I'd have to look up how much those dividends would be.

The mobile companies hosting the stores to download it on are getting 20% as that is their standard cut of all sales....although it varies in other countries.

[OtakuDJK1NG-Rory]

Yes but that 30 goez to The Pokemon Company. They are responsible for Pokemon franchise for Nintendo. Sort of like sub company.

[DarXter]

So even though it is more than 10% (since they also own 33% of Pokemon Company as the article states) even their stocks rising already made them more than 8 billion within 2 days... Let alone the increase in value of Pokemon Companies assets...

[rainslacker]

Stocks aren't directly appreciable to the added or decreased value. The stocks will likely see a slump going forward, as for the time being, there is more demand for the stock, which drives up price, and it could keep going up regardless of what this new game brings into the company. Same happens with new IPO's. Like facebook saw so much demand, that the prices skyrocketed at first, but there is no way their company could ever pull that much should a sale of assets be required. It eventually went back down to something more reasonable after the people trying to get in on the hype subsided, and those early investors who knew how to take advantage to make a quick buck sold off all their stock.

Actual stock value does not necessarily represent what a company is making, or what it's actual assets are worth when looked at in short term time frames. Generally though, the stocks do marginalize into what the actual assets are worth based on tangible and intangible assets, and the amount of revenue and profit that a company brings in.

An actual stock evaluation would be required to see how this move actually affected Nintendo, and those tend to happen yearly by some 3rd party company after a company releases their annual reports. The fluctuations you see on a daily basis, or when something significant happens is based on what the stock is being sold for, which isn't the actual companies worth. Stocks are more of a speculative thing when looked at day to day, and many times it's can be about what potential the company has to make a certain amount of money....often true for new stock offerings when there are no or few tangible assets and no revenue.

[Dan_scruggs]

Yeah and I sure the brand exposure is going to equal 0 extra dollars even if we assume the analyst is right.

[jcnba28]

This article couldn't be more inaccurate lol

[wonderfulmonkeyman]

I know, right?
We've even got a bunch of wanna-be amateur businessmen in here downplaying it, alongside other trolls who claim to know what's being talked about and how this is somehow a sign of Nintendo dying.
It's gotten really pathetic.XD

[Big_Game_Hunters]

This analyst is wrong. Aye kaplan wants their business degree back lmao.

[ruefrak]

I have a strong suspicion that all these investors that are pumping up Nintendo's stock right now are not aware that Pokemon isn't fully owned by Nintendo. Everyone assumes it's a Nintendo game, but only partially.

[R00bot]

Pokemon as an IP is fully owned by Nintendo. Niantic, the makers of this game are roughly 30% owned by Nintendo, the Pokemon company is also roughly 30% owned by nintendo, although Nintendo has a large amount of stock in the other companies that co-own the Pokemon company. At least I'd say Nintendo is making around 40-50% of the profits.

[rainslacker]

They probably are. The one's doing the pumping are the ones doing the selling, so they'd want to sell for more than the stock is worth. The stock is high right now because of the success, which can denote future gains, and that makes people want to buy more, which keeps driving up the price regardless of the companies worth, and it continues to rise until no one will buy it at a higher price.

Eventually it will go back down, and that's perfectly normal.

In any case, this analyst is way off the mark. There is no way that Nintendo would publish for such a low amount, even if they had no other money invested in it at all. Beyond that, Nintendo's actual worth increases indirectly through their partial ownership of other parties invovled, so for the most part, one can say if Nintendo is getting 10%, that their 1/3 ownership of Pokemon also raises their worth 33% of whatever that particular company brings in...and I am pretty sure that company is getting at least 30%, and Nintendo likely getting 30-50% for being the publisher.

[Movefasta1993]

Nintendo is run by crack addicts.

[mochachino]

Kinda sad that Apple gets as much as the developer.

[Activemessiah]

10% is still a fortune

[Godmars290]

May actually be worse than the deal they tried with Sony that lead to the PS1.

[Segata]

Well that made no sense. Second of all PS1 in itself was not the undoing of Nintendo that gen. PS1 could have easily ended up like CDi or 3D0. They were both similar systems to PS1 but Sega and Nintendo handed it to them. What hurt N64 was going cartridge. Sega making a complicated system to develop for also worked on PS1's favor. Oh and PS1 specs are the specs Sega of America proposed to Sony in a partnership deal to make a console. Sega of Japan shot that down and went with their own specs. So if Sony did partner with Sega and N64 went CD. There would be no PlayStation 1 at all. Heck if Sega just made the thing easy to develop for PS1 would have fallen by the wayside. Sony just had the pieces fall in place. The hardware itself didn't offer much more than what existed already.

[Godmars290]

"that lead to"

Do you not know what that means? Cause and effect?

[feraldrgn]

So are they losing money on the game?
If not, then what's the problem?

[3-4-5]

* The ignorance in this thread is amazing.

I didn't realize that many people had a lack of understanding about how the business world actually works.

Them owning 10% = Free money + very little risk + increase stock prices for only risking very little = good business move.

* Some of you try way too hard to bash Nintendo, Sony & Microsoft.

[rainslacker]

I'm more concerned with the people that take an analysts assumption as gospel.

10% as a publisher is unheard of.

The lack of understanding of how the stock market works is understandable.

The lack of knowledge that Nintendo doesn't actually "own" pokemon outright is understandable.

The lack of knowledge of how business and it's worth is understandable.

The inability to look beyond the 10% with all other factors involved, which were layed out in the article and be able to relate that to how much it would drive up their stocks even if it was at 10% is where people are dropping the ball.

[Tzuno]

Yakuza cuts are expensive you know :)

[Segata]

What is with you trolls and the Yakuza crap? They have zero involvement with Nintendo. It's Index and SEGA they have involvement with.

[DefenderOfDoom2]

I am pretty sure Michael Pachter will weigh in on this topic in the near future.

[rainslacker]

I heard he got run over by a car while playing Pokemon Go! and walking out in front of a bus. He predicted it would happen, but since the game is so addictive he didn't care.

[Surt]

HAHAHA!

[gedden7]

Another doom and gloom nintendo article... lol How much profit did MS get from Xbox brand? 0%... How about that lol Sony if the ps4 is done. THEY ARE DONE.

[MoveTheGlow]

That's a fine strategic partnership to have. What did Nintendo do? They owned the IP and made the deal. Now people everywhere have Pokemon on the brain again, in the midst of Pokemon Sun and Moon looking like a strict reiteration on a formula that's growing a little obsolete on the 3DS.

The Pokemon Company licenses the designs, provide some music, provides brand/artistic guidance to Niantic. The infrastructure and maintenance is all on Niantic in tandem with Google. Nintendo, moving forward, gets viewed as super-relevant by investors, Niantic gets the revenue to improve and expand Pokemon Go, and what does Nintendo have to spend any money on in order to get that 10 percent after a couple of months? Advertising, maybe? Customer support, or does that just go to Niantic anyway? I don't think this is a failure. Now, the privacy issues... that's another story.

[Gwiz]

Not that i'm even interested in the Pokemon franchise as a whole but they did well on this.
(Not saying their handheld division is irrelevant)

[MrMagz]

The problem with these numbers is that they don't take everything into consideration. Yes, Nintendo does only get 10% of the profit from the game directly, but 30% goes directly to the Pokemon Company. Nintendo owns a large share of the Pokemon Company, as well as a majority share of Game Freak, which also owns a large share of the Pokemon Company. Nintendo will most likely gain more money from the residuals of owning these other companies than actually from the game itself.

[kaiserxblue]

So what? Even if that's true which I highly doubt Nintendo gets leftovers. They are manking a shit ton of cash, lets say Pokemon Go makes 3 million dollars a day and they get that 10% as suggested, that's $300,000 for Nintendo x 30 = 3 million dolars a month. Not to mention is not out in the rest of the world which most likely will multiply 3 ties more so the way I see it it's not a big deal.