Why the 'Pokemon Go' Phenomenon Makes a Hollywood Movie Deal Less Likely

Pokemon The First Movie Stull - Photofest - H 2016
Courtesy of Photofest

Pokemon The First Movie Stull - Photofest - H 2016

Nintendo and The Pokemon Company have their hands full with the global launch of the hugely successful game app and a number of other ventures.

The phenomenal success of the Pokemon Go augmented reality (AR) app, the biggest mobile game in U.S. history, has reignited interest in a Hollywood live-action movie based on the globally popular franchise. But the smash hit may make a movie less likely to come to fruition in the near future as Nintendo and The Pokemon Company concentrate on leveraging the success of the game into profits.

One U.S.-based producer involved in the race to license the franchise said, "Pokemon Co. and Nintendo are not focused on movie rights currently" and that "the company doesn't want a movie deal distracting its execs, nor does it want a deal to potentially detract from the game. They view a movie deal only as a downside at this stage."

A licensing deal, likely to be in the $5 million to $10 million range, would be inconsequential compared to the potential earnings from Pokemon Go.

In Thursday morning trading in Tokyo, Nintendo stock was up another 9 percent, taking its gains since the launch of Pokemon Go last week to 65 percent and adding approximately $12.8 billion to the valuation of the company. Nintendo is set to cash in through its stakes in The Pokemon Company and in Niantic Labs, the San Francisco-based developer of Pokemon Go.

The Pokemon Go app is free to download, but players can make in-game purchases to gain advantages, a business model that has proved extremely lucrative in the Japanese mobile gaming sector. The app already has more than 20 million daily users in the U.S., taking it past Twitter's numbers, while the only other markets where it's been rolled out are Australia and New Zealand.

The global launch is expected to add tens of millions of new users, including in Japan, where the franchise has a huge fan base. (According to The Pokemon Company, around 45 percent of total franchise sales, which covers movies, games, cards and a vast array of branded goods, are accounted for by Japan.)

Pokemon is also already a successful movie franchise in Japan, where the 18 installments have taken the lion's share of their $735 million in box office. The 19th film in the series, Pokemon the Movie: Volcanion and the Exquisite Magearna, will hit screens in Japan on Friday.

Pokemon films are made, as is usual in Japan, by a production committee, which includes The Pokemon Company, anime production house OLM, manga publisher Shogakukan and TV Tokyo — the network that broadcasts the anime series.

A source at one of the production committee companies said, "I don't think The Pokemon Company is listening to licensing offers at the moment" but declined to elaborate on the reasons.

A spokesperson from The Pokemon Company headquarters in Tokyo wouldn't comment on remake offers from overseas, saying, "We're focused on working with our partners in Japan on the movies here."

In April, Nintendo president Tatsumi Kimishima, a former executive of The Pokemon Company and head of Pokemon USA, told Japanese newspaper Asahi Shimbun that the company was planning to expand its role in the movie business. He hinted in the interview that Nintendo could produce 3D anime films based on popular characters such as Mario and Zelda but didn't mention Pokemon.

In the same month, Nintendo announced a sale of the majority of its stake in the Seattle Mariners baseball team, which will reportedly raise more than half a billion dollars.

In March, Nintendo announced plans for its first ever theme park, a collaboration with Universal Studios Japan (USJ) in Osaka. Based on Nintendo characters, though there was no mention of Pokemon, investment in the new attraction is reported to be in the range of $500 million, which would make it more expensive than USJ's hugely successful Wizarding World of Harry Potter.

All this is likely to mean — much to the chagrin of Hollywood producers chasing the hot Pokemon property — that a licensing deal is way down on the list of priorities for the Japanese rights owners.