Pokémon Go is more than a gaming sensation, a pathway to crime or even an accidental source of exercise. It’s something that could make Nintendo Co., Ltd (ADR) (OTCMKTS:NTDOY) stock relevant to American investors once more.
While most consumers are familiar with Nintendo, most U.S. investors aren’t especially interested. Aside from the fact that it’s not an exchange-listed stock, NTDOY has been cast in a less-than-compelling light of late, as rivals have consistently beaten the once-great company at its own game. The 2006 launch of the Wii gaming console has been considered by some to be Nintendo’s peak.
As it turns out, though, this aging video game veteran still has a few tricks up its sleeve, recently unveiling a video game — Pokémon Go — that largely merges two red-hot arenas: mobile, and virtual reality.
And, this game comes just before the launch of a new gaming console that could truly make NTDOY stock relevant again.
Pokémon Go Is a Hit
Although it only launched on Thursday of last week (and then not even all over the world), Pokémon Go has already been installed on 5% of the U.S. devices running Android, it has already passed Tinder in installs and is set to take over Twitter Inc (NYSE:TWTR) in daily active users. And while the actual fiscal upside is still unclear, the market’s response to the buzz has already driven a strong double-digit increase in the value of NTDOY shares.
Something is happening.
Pokémon Go combines the popular character-gathering battle game with the real world. By using a smartphone’s GPS, players can “capture” a creature they can’t see with their own eyes, but can plainly see as an animated character on their device’s display screen. A quick finger-flick captures the Pokémon, which can then be used to do battle with other players.
Silly? Sure, a bit, but it’s also a lot of fun. People are getting out and about, and occasionally bumping into some new friends on the same hunt for the imaginary creatures.
The game hasn’t been without its early downsides. Some players have been lured into dangerous situations while tracking down Pokémon, and robbed as a result. Another player stumbled across a corpse.
Nevertheless, the game is a hit despite the occasional gaffe thus far. Even if only a small number of players ever make an actual in-app purchase, it could still be a relative windfall for Nintendo.
Bodes Well for Virtual Reality
Yours truly has long contended that virtual reality devices like Facebook Inc’s (NASDAQ:FB) Oculus Rift or the foray into VR from Sony Corp (NYSE:SNE) are interesting, but that their real upside has been limited to even just a small sliver of the video game market. I still don’t think there’s a massive amount of practical use for virtual reality outside of games, but given the buzz created by Pokémon Go so far, so-called augmented reality may be more embraced than first imagined. The next natural step from there, of course, is full-blown virtual reality.
But that’s not necessarily where the biggest money is.
Even Digi-Capital acknowledges its guess should be taken with a grain of salt, as there is no actual virtual reality/augmented reality to gauge yet. But the firm expected the advent of digitally created reality to become a $150 billion annual business by 2020.
The amazing part: Digi-Capital expects augmented reality (which is what Pokémon Go is) to make up 80% of that market, while virtual reality only makes up 20% of that future market.
It’s not a terribly tough premise to believe once it’s given some thought. While the promise of augmented reality brought to the table by Google Glass went away in 2015 when the company shut the project down, more than a few developers as well as consumers were on board. Perhaps more important, few observers dismissed the concept as laughable.
Maybe Nintendo has struck an important nerve with Pokémon Go it didn’t even plan on striking as firmly as it did. Now that it has, though, has it become the frontrunner for the bigger and better AR market while other gaming technology makers have been taking aim at the less-fruitful VR market?
It’s something to keep an eye on.
Looking Ahead for NTDOY Stock
Dedicated augmented reality hardware may not have even been on the company’s radar and would therefore take a while to bring such a product to the market. However, in that Sony, Facebook and a few others are all already so heavily invested in virtual reality, Nintendo may have a surprisingly clear path to this niche.
In the meantime, though, the video game maker’s mobile efforts just gained a ton of credibility, and did so right before the launch of the NX … the first gaming console from Nintendo since it unveiled the Wii U in 2012. Though little is known about the NX, what little we do know about it is impressive.
Bottom line? While it might be premature to say Nintendo is returning to its glory days just yet, it’s not too soon to add NTDOY to your watch list now that the company is rebuilding its relevancy.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
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