Tech

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

Someone needs to start throwing some Pokeballs at Nintendo's share price after the stock jumped as high as its daily 25 percent limit, the biggest gain since the gamemaker started trading 33 years ago.

Investors are getting excited about the success of Pokemon Go, a new augmented-reality smartphone game that integrates the original Pokemon story line -- of chasing mythical creatures -- into real-world surroundings using a phone's camera and GPS.

Pokemon Pop
Investors are getting excited as Pokemon Go gets massive smartphone downloads
Source: Bloomberg
Intraday times are displayed in ET.

Apparently armed robbers are also pretty excited about the game, leveraging the location-tracking feature to find victims, the Washington Post reported Sunday.

But while it's topped app download charts and set social media ablaze, Pokemon Go is just one game. And it recalls the one-hit wonder of the Nintendo Wii console released a decade ago.

Wii's novelty value came from having users physically play virtual games of tennis, baseball, golf and all manner of real or made-up sports. It was fun, it got the kids off the couch, and it inspired friends to gather for Wii parties.

But the novelty didn't last, and neither did the stock's rally. The quick rise and fall of Wii, and the disappointing uptake of its successor Wii U, helped give birth to Pokemon Go.

Nintendo Reality
Wii's short-term popularity drove up the stock before it came crashing back to earth
Source: Bloomberg

Part of Nintendo's foray away from its own console and handheld hardware, Pokemon Go comes from the Japanese gamemaker's new, almost reluctant, strategy of releasing games for devices it didn't make itself -- that is, smartphones. Like many one-hit wonders, such as Words With Friends, short-term addiction doesn't often translate into long-term revenue.

One way to understand how little meaning should be ascribed to massive app download figures is the reviews for Pokemon Go, which are by no means overwhelmingly positive. Even many of those who gave it a full five-star rating had gripes about the game, and people who whinge about a free game aren't likely to spend money on the in-app purchases that are the game's underlying business model.

So before investors start believing Nintendo is suddenly worth 34 percent more than it was a week ago, they need to go back in time and see how things have panned out for similar hyped-up hits.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Paul Sillitoe at psillitoe@bloomberg.net