Nintendo Co., Ltd.'s share price last week soared following the release of its new virtual reality game Pokemon GO. Its stock went up 70%, boosting Nintendo's market value from £13 billion to £19.6 billion.
According to a report by BBC News, last week's share price gain was the highest that the Japanese video game company experienced in more than 30 years since it launched the hit fantasy role-playing game "Dragon Quest" in the United States. When "Dragon Quest" was released in August 1989, Nintendo shares had achieved a near-35 percent rise.
Pokemon GO is a treasure hunt game where players must hunt monsters appearing on their smartphones. The new virtual reality game was released in the U.S., Australia, New Zealand, and then in United Kingdom, and has since been leading the free-to-download app chart.
In his column on Forbes Magazine, Andy Swan wrote that since Pokemon GO was launched earlier this month, there has been a "staggering 4,800-percent increase in purchase intent mentions that are associated with Nintendo brands and Nintendo products." This number, he said, continue to grow on an almost everyday basis, which suggests that enthusiasm for the game is going viral, without any sign of slowing down.
Swan also pointed out that over the same time period, overall Nintendo purchase intent mentions grew from seven percent to almost 20 percent. This means that not only are users talking about Nintendo brands more and more, but they are actually actively engaging with the product at a much higher rate.
This, according to Swan, is a strong signal that Pokemon GO is "more than a flash in the pan," and that it has the great potential to generate revenue.
The game's revenue comes from in-app purchases of various credits that would help players develop their Pokemon monsters, build their strength, and beat other players.
Swan also noted that this is not a one-weekend hit. The key for shareholders, he said, will be to see if Nintendo can sustain the initial frenzy and excitement accomplished by the game.
Meanwhile, Swan wrote, the risk is that Pokemon GO frustrates players who are fickle or that Nintendo encounters trouble in monetizing the game. However, the upside is huge as many believe that the game is just the "leadoff hitter" in a new wave of victories for Nintendo.
Pokemon GO was developed by the Pokemon Company and Niantic. The former is 32 percent owned by Nintendo.
Know what Pokemon GO is about by watching this video: