Nintendo shares plunge 16% on Pokemon Go warning

The logo of Japanese gaming giant Nintendo is displayed at a show room in Tokyo on July 20.
The logo of Japanese gaming giant Nintendo is displayed at a show room in Tokyo on July 20.PHOTO: AFP

TOKYO (AFP) - Nintendo shares dived on Monday (July 25) after it warned that the Pokemon Go mania sweeping the world would not translate into bumper profits for the Japanese videogame giant.

The stock plunged about 16 per cent to 23,720 yen in early trading after it more than doubled in a huge rally following the game's release earlier this month - making it more valuable than Sony at one stage.

Markets cheered the game's global success as a good sign for Nintendo's nascent move into the mobile games market.

But the company warned in a brief statement on Friday evening that the impact of Pokemon Go's success on its bottom line would be "limited".

Nintendo is the creator of the Pokemon franchise but the game was developed by US-based Niantic, with the Japanese firm's affiliate, Pokemon Company, on track to receive licensing fees for the game.

Nintendo owns about one-third of the Pokemon Company.

It also stands to make money from a device to be used with the application called Pokemon Go Plus but "the income reflected on (Nintendo's) consolidated business results is limited", it said.

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

Since its launch three weeks ago, the game for mobile gadgets has sparked a worldwide frenzy among users who have taken to the streets with their smartphones.

The free app uses satellite locations, graphics and camera capabilities to overlay cartoon monsters on real-world settings, challenging players to capture and train the creatures for battles.