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Here’s What’s Countering the Popularity of Nintendo’s Pokemon Go

October 26, 2016

Japanese students play Nintendo's Pokemon Go game in Tokyo on July 22, 2016. TORU YAMANAKA AFP/Getty Images

Japanese video game maker Nintendo cut its annual profit outlook on Wednesday as income-eroding yen strength overwhelmed an earnings bounce from its popular Pokemon GO smartphone game.

The creator of Super Mario lowered its operating profit outlook for the year through March to 30 billion yen ($288 million) from a July estimate of 45 billion yen.

The unexpected popularity of Pokemon GO sparked expectation of a renaissance at Nintendo (NTDOY), causing it share price to more than double in July. Investors saw it as a sign that the Japanese company would allow gamers to play titles such as Super Mario on devices other than its own waning consoles.

Nintendo’s president, Tatsumi Kimishima, said that earnings from affiliates in the most recent financial quarter totaled 12 billion yen, most of which came from Pokemon-related businesses.

“Pokemon GO got a bigger reception than we had expected,” Kimishima said at a news briefing in Osaka after the company announced its latest earnings.

The company, nevertheless, posted a 812 million yen loss in the three months to Sept. 30 versus a 7.83 billion yen profit in the same period a year earlier, as a gain in the yen’s value bit into earnings.

That result compared with a Thomson Reuters Starmine SmartEstimate of 2.11 billion yen in profit drawn from six analyst estimates.

Nintendo said it expected the U.S. dollar to trade at an average of 100 yen over this financial year, and the euro at 115 yen. It previously forecast 110 yen and 125 yen respectively.