Nintendo shares soar on Pokemon Go success

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Dozens of people dressed up as Pikachu, the famous character of Nintendo's videogame software PokemonImage source, Getty Images
Image caption,
Pikachu, the famous character of Nintendo's videogame software Pokemon

Shares in Japanese gaming company Nintendo jumped by nearly a quarter on Monday following the success of its new Pokemon Go smartphone game.

It debuted at the top of gaming charts in the US last week and is set to be released in Japan soon, although it is not available yet in the UK.

Pokemon Go requires users to try to catch on-screen characters like Pikachu using their real-world locations.

Millions of users have already downloaded the game.

The game was downloaded onto more US Android smartphones than the dating application Tinder within a day of its launch, according to data from Similar Web.

It has already generated headlines from armed robbers using it to lure gamers into a trap, to a person discovering a dead body in a river while searching for a Pokemon character.

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The rally in Nintendo's shares since the debut of Pokemon Go on 6 July has added more than $7bn (£5.4bn) to the company's market value.

Evan Lucas, a market strategist at IG has called the investor speculation around the app "amazing" but said that the company will need to do more to justify the jump in its share price.

"The question with all apps is monetisation. In-app purchases will be key to its long term monetary success; clearly the market believes there will be a windfall," he told the BBC.

Image source, AFP

There is also a question as to how much profit Nintendo will actually receive from Pokemon Go given it was not the main developer of the augmented reality game.

It has partnered with US-based game developer Niantic and the Pokémon Company, which owns the rights to the characters.

Nintendo, which is also behind the iconic Super Mario game, has traditionally relied on sales of its gaming consoles.

However, sales of those have been slowing in recent years as more gamers move online and onto portable devices.

Analysts have criticised the company for lagging its rivals like Sony and being late to the game in catering to the growing smartphone market.

In March, Nintendo released its first-ever mobile game Miitomo, which has done well. It gained a million users within three days of its launch.

The Japanese company has said it plans to launch four more smartphone games by the end of March 2017.