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EPTE Newsletter: Pokémon Go a New Direction For Nintendo

Nintendo released its Pokémon Go app in July 2016, and Apple says it was the most downloaded app ever in a first week. More than 25 million people download and play the game every day; most of them are under the age of 25. They spend hours staring into their smartphones while roaming the streets hoping to capture Pokémon. The game promises to get people off the couch and outside. The game is very addicting, and some play for hours at a time. Unfortunately, there have been a few incidents where injuries occurred because players are not paying attention where they were walking.

The app is now available in more than 36 countries. The Pokémon Company is a Japanese company owned by Nintendo, but the app was not available in Japan until last week. Developers of the game had to stagger its release in an attempt to minimize the load on its servers. The Japanese government issued a warning to players. Their one-page flyer warns players of potential danger they could encounter as they try to search for Pokémon.

Nintendo shareholders are enjoying the ride on this wave—their stock price has doubled over the last few weeks. Nintendo was the most traded Japanese stock in any one day of this century! The volume of Nintendo stock traded exceeded $6 billion—this is more than 25% of all the trades in Tokyo Stock Market. Certainly, it is the new record as daily trade of the single company.

It may be too soon to pick out the winners and losers for 2016; however, if Pokémon continues its popularity, Nintendo will post strong results for fiscal year 2016 after five year of lackluster performance. 

The mobile app segment is a change in strategy for Nintendo. The company gained its success from game consoles that plugged into TVs. They competed against Sony and Microsoft, and were very successful in the home video game console. The smartphone changed everything. Streaming became the norm, and Nintendo was slow to adopt this new venue to deliver games. New applications created for smart phones have taken over the game market. The success from Pokémon Go will force Sony and Microsoft to reevaluate their strategy in the video game industry.   

After a few stumbles in the mobile app business, Nintendo has finally hit a home run.  Industry analysts are predicting that mobile game revenues will overtake console games.

Now for the bad news, back in my world. Electronics manufacturers are concerned with a drop in business because Pokémon Go doesn’t require any electronic devices or controllers if the customers already have smartphones. Nintendo plans to continue the manufacturing of their game consoles, but they are predicting a drop in revenue from this segment. Other game manufacturers will have to transition from game consoles to mobile app platforms to remain profitable. This will be disappointing for EMS companies, component suppliers and circuit board manufacturers. Electronic products related to the video game industry are a significant contribution to the bottom line for many affiliated with the electronics industry. Engineers are creating ways to deliver products and information to the consumer even faster and cheaper.  It’s OK to replace the way we do things with better ways, but unfortunately, the technology eliminates many jobs from the electronics industry.

Headlines of the week

(Please contact haverhill@dknreseach.com for further information about the news.)

1. OKI (Major electronics company in Japan) 7/7

Has agreed to acquire the printed circuit business from Nippon Avionics, which manufactures high-end circuits for aerospace equipment.

2. Showa Denko (Major chemical company in Japan) 7/7

Plans to expand the business of artificial lighting plants of vegetables in the overseas market. The plants use LED lighting to control the conditions.

3. Brother (Major electronics equipment manufacturer in Japan) 7/8

Has developed a large-scale hydrogen base fuel cell system, CS B2018, for industrial uses. The size of the device is 1/6 compared to Li Ion batteries.

4. RIKEN (Major R&D organization in Japan) 7/11

Has developed a new bio-chemical process to activate the surface of titanium metal for in-plant medical devices.

5. Murata (Major component supplier in Japan) 7/14

Has decided to build a six-layer plant in Toyama prefecture to increase manufacturing capacity. The demand of the components is still growing.

6. Toshiba (Major electric and electronics company in Japan) 7/14

Has developed a new hydrogen generator for fuel cells introducing an electrolysis process of alkaline solution. It produces 100 Nm per hour.

7. Tohoku University (Japan) 7/15

Has co-developed a new conductive graphene material with sponge structure. It doubles the capacitance of capacitors.

8. Tosoh (Major material manufacturer in Japan) 7/15

Has developed a new gas barrier material, TG-4E, for flexible displays such as organic EL panels.

9. RIKEN (Major R&D organization in Japan) 7/19

Has co-developed a new thin film actuator. It works permanently getting the energy from temperature fluctuation.

10. Hiroshima University (Japan) 7/19

Has co-developed a new practical hydrogen generation process from ammonia using ruthenium based catalysis.