Nintendo (7974): Is it Possible that Nintendo Owns More of Niantic Than Many Think?
There has been a lot of sell-side research on how Nintendo is likely to get paid from Niantic for Pokémon GO, but almost all of it revolves around Nintendo’s ownership of The Pokémon Company (TPC).
Arguably a more relevant question is, how much of Niantic does Nintendo own?
Everyone talks about Nintendo owning 32% of TPC as if that were its entire interest in Pokémon. To understand the ownership of Pokémon, it is really important to bear in mind the following:
- Nintendo, ultimately, needs to be able to ensure that Pokémon is only available on Nintendo-approved platforms.
As a consequence, saying that Nintendo owns 32% of TPC, while technically correct, doesn't actually give you a correct answer as to Nintendo's aggregate economic interest.
Given there is little information available, in this report we take a stab in the dark in evaluating Nintendo’s exposure to Pokémon Go which we reckon may possibly come primarily through its ownership directly and indirectly of stakes in Niantic. Furthermore, that this ownership may be greater than is generally thought.
Key Points
- The key elements of the Niantic deal.
- The “gateway” decision.
- What did Nintendo get for its 10% stake in DeNA? Read-across to the deal with Niantic.
- Nintendo’s strong bargaining position.
- Ownership – we do the numbers in an attempt to show what a 23% economic interest is worth.
Nintendo is mainly engaged in the development, manufacture, and sale of home-use game hardware/software and peripheral equipment as well as software under the name of "Nintendo DS," "Nintendo 3DS," "Game Boy," "Nintendo 64,"" Game Boy Advance," "Wii," "Nintendo GameCube," "Game Boy Color" and "e-Reader (trading card games)." Co.'s principal software trademarks include "Pokemon," "Super Mario Bros.," "The Legend of Zelda," "STARFOX64" and others. Co. also provides online games and repair services. In addition, Co. is involved in the manufacture and sale of Japanese playing cards called "Karuta," playing cards and board games, as well as the management of intellectual property rights.
Founded in 2009, Pelham Smithers Associates (PSA) provides market intelligence on Asian technology, focusing in particular on Japan. The industries covered by our team of specialists are: consumer electronics, telecomms, pharmaceuticals, internet, electronic parts and materials, automotive technology, retail and capital goods.
PSA produces both company and sector reports. The focus of PSA’s research is to identify winners and losers as new technologies impact the top and bottom lines of corporations. Critical to our research is the clear explanation of how these new technologies work and how they impact companies and industries.
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