Updates: Pokémon Profits Underwhelm and Chipotle Still Recovering

July 26, 2016

As anybody with a social media presence knows well, Pokémon Go’s massive popularity has only grown since it landed in American app stores earlier this month. On July 22 the augmented reality game launched in Asia, racking up ten million downloads in Japan on a single day. Still, not everything about the app’s Asian expansion was ideal: Pokémon Go remains banned in China, by far the region’s most lucrative market.

And that’s not the only bad news currently confronting the game’s publisher Nintendo. As we wrote in a post a couple weeks ago, Pokémon Go sent the company’s stock surging to historic levels even as its profit potential remained suspect. Last week Nintendo confirmed these fears in a statement that admitted Pokémon Go’s success would have little impact on its bottom line. The news caused share value at the Japanese company to plummet by nearly 18 percent, its most significant decline since 1990. While Nintendo stock remains up by 60 percent since the app’s release, Pokémon Go’s poor profit projections could sink share prices even further.

Chipotle has been mired in a similar situation ever since a widespread E. coli outbreak shattered consumer confidence in its brand. Second quarter sales at the burrito chain dropped by about 17 percent in comparison to the same period last year as many Americans remain cautious about its quality. Chipotle aims to combat these doubts by expanding its marketing reach and rolling out a rewards program for frequent customers. Executives say that the while the program has excelled in attracting repeat business, the average check at Chipotle dropped by three percent in July. So while promotions like these may bring people back to the burrito giant, it still doesn’t help to heal the company’s ailing bottom line.

 

Questions:

  1. How can Pokémon Go become a profit-generating machine for Nintendo?
  1. Will Chipotle’s customer reward program eventually become worth the cost?

 

Sources: Tom Mendelsohn, “Pokémon Go: Nintendo Stock Tanks After It Issues Profit Warning,” Ars Technica, July 25, 2016; Emma Hinchliffe, “Chipotle Is Still Struggling To Recover From Its E. Coli Scandal,” Mashable, July 21, 2016. Photo by JD Hancock.

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