Pokemon Go for phones is overnight success for Nintendo

An image from Nintendo’s Pokemon Go mobile gaming app. [SCREEN CAPTURE]

Nintendo, which hasn’t yet thrown itself fully into the world of mobile gaming, is giving people a good idea of what a smartphone hit looks like with the success of Pokemon Go.

The company has added more than $7 billion in market value since last week’s debut of a new smartphone app for its Pokemon fantasy monster character franchise. The game, which lets users track down virtual monsters in their vicinity, has topped the free-to-download app charts for Apple in the U.S. and Australia since its release on July 7, according to market researcher App Annie.

Nintendo’s shares responded with their biggest intraday jump since at least 1983, when the stock started trading in Tokyo, climbing as much as 25 percent on Monday. Investors are taking Pokemon’s early success as a sign of things to come for a company that has yet to commit the most popular characters from its Mario or Zelda franchises to mobile gaming apps.

“Clearly Nintendo has managed to pull off something very special that has created a craze in the mobile gaming market in matter of days,” Amir Anvarzadeh, manager of Japanese equity sales at BGC Partners Inc., wrote in a note to clients. “This game may not be big enough to move the earnings dial in the short term but sentiment-wise it could prove very potent at this stage for Nintendo when hopes of major success on mobile have been very deflated since last year.”

The game recreates Pokemon’s underlying story of players scouring the world in search of “pocket monsters” to train and battle with each other. App users are encouraged to wander their own surroundings and unlock new Pokemon characters using location tracking on their smartphones. Reports have already surfaced of players taking road trips and even renting boats to get to to hard-to-reach destinations in pursuit of virtual Pokemons.

Pokemon Go is free-to-download and play, but additional items are available for purchase within the game. Nintendo also plans to release a plastic wristband device that will alert gamers to Pokemon activity. The game is currently only available to users in the U.S., Australia and New Zealand.

Pokemon Go was developed by Niantic Inc., a former Google startup behind the popular +Ingress game, which also involves location-based gameplay. Nintendo, together with its affiliate Pokemon Co. and Google, last year invested in Niantic.

Pokemon is no stranger to the small screen - it has been one of the most popular franchises for Nintendo’s portable gaming machines. Pokemon X and Pokemon Y are the best selling titles for the 3DS, selling a combined 14.7 million units. Other Pokemon titles Omega Ruby and Alpha Sapphire ranked third with 11.8 million units, according to data on Nintendo’s website. Pokemon games for the older DS mobile gaming device topped 46 million units.

Nintendo’s first foray into smartphone apps left investors underwhelmed. Miitomo, a free-to-play smartphone messenger, debuted in April at the top of smartphone rankings before quickly declining in popularity. Nintendo said the app, which attracted more than 10 million users in its first month, will serve as communication platform and a portal for its games on mobile devices and consoles.

A smartphone hit can’t come fast enough for Nintendo. The company is forecasting sales of Wii U and 3DS player to decline this fiscal year, while its next-generation NX gaming device won’t debut until 2017. The company’s next two mobile games will be Animal Crossing, a community simulation game series where players earn currency by trading and mastering skills like fishing, and a role-playing title called Fire Emblem. Bloomberg