Nintendo Co is suffering from a lot of pressure. The condition they are facing is the worst in 26 years. The company has already announced that it does not have expectations from Pokemon Go. It doesn’t think that Pokemon Go would result in steady profits that will help them to increase their earnings.
Nintendo would have to deliver 200 billion yen, which is the annual net income for justifying its market value. But unfortunately, the company expects only 35 billion yen in this year. Analysts think that the number will be around 30 billion.
In 2009, the profit of Nintendo reached 279 billion yen. The Wii and DS game systems were topping the charts during that time. Amir Anvarzadeh, head of Japanese equity sales thinks that Nintendo cannot hit that mark again.
There is no great profit in Pokemon Go which debuted recently. After Pokemon Go debuted in Japan, Nintendo said that the financial impact of the game will be limited. The challenge of Nintendo is to convince investors that the massive success of Pokemon Go will work as a revenue-generating model for mobile games featuring Zelda and Super Mario characters that have not yet released.
An analyst, Eiji Maeda commented that Nintendo should develop and operate a game which has its characters. The main reason why one cannot quantify the benefits of Pokemon Go is because there is a lack of clarity about how the revenue will be shared between the producers of the game Nintendo and Niantic Inc, Pokemon Co.
According to a rough estimate by David Gibson, a Tokyo analyst, 13 % of the Pokemon Sales must go to Nintendo. This implies that if Pokemon Go generates 396 billion yen annually, Nintendo will get around 47 billion yen.
Nintendo needs to roll out some more hit games for smart phones in order to increase their earnings. Pokemon has a global reach and is loved by all. Nintendo also has famous characters such as Zelda and Mario. They will have a boost in their earnings when these characters will appear on smart phones.