Japan McDonald's Shares Hit 15-Year High on Poké mon Tie-Up

TOKYO—Shares in the Japanese unit of McDonald's Corp. hit a 15-year high Thursday, but ended lower, after the company announced a tie-up with "Poké mon Go," in the latest speculative frenzy over companies that could profit from the smartphone game.

McDonald's Holdings Co.'s stock price rose as much as 10% to 3875 yen ($36), its highest level since August 2001, before reversing to close down 1.1% at ¥ 3475.

The fast-food chain's restaurants across Japan will be "Poké Stops" and "Gyms" for "Poké mon Go," meaning players can visit to collect items and battle other players, according to people familiar with the situation. McDonald's said Wednesday that it would "collaborate" with "Poké mon Go," without elaborating.

The tie-up will likely prove a blessing for McDonald's, which has struggled in Japan due to food-safety scandals and an increasingly segmented customer demand.

"Poké mon Go" is a location-based, augmented-reality game in which players use smartphones to search for virtual creatures layered over images of the real world. Created by Tokyo-based Poké mon Co. and San Francisco-based Niantic Inc., the free-to-download game features characters from Nintendo Co.'s 20-year-old Poké mon franchise.

Analysts say "Poké mon Go" has already become the most popular smartphone game in the U.S. since its launch two weeks ago. It is expected to be released in Japan as soon as this week.

In addition to restaurants, other physical locations could benefit from a tie-up with "Poké mon Go", they say.

"'Poké mon Go' could help shore up local economies through tie-ups with particular merchants and tourist spots," said Tatsuyuki Negoro, a professor at Waseda Business School who specializes in internet business strategy. "Imagine many people visiting places they've never been. Its ripple effects wouldn't be small."

Niantic, which was spun off from Alphabet Inc.'s Google last year, said it would seek more global sponsors for the game, which it sees as an important source of revenue. Players can also make small, in-game purchases of digital items that make playing the game easier.

Niantic declined to comment on why it picked Japan to introduce such sponsorships for "Poké mon Go," citing that the game hasn't been released in the country yet.

The company had previously struck successful partnership deals with other major Japanese companies, including SoftBank Group Corp. and Mitsubishi UFJ Financial Group Inc., with another location-based, augmented-reality game, Ingress.

The popularity of "Poké mon Go," which third-party data providers say has been downloaded tens of millions of times, could prove problematic for some. The U.S. Holocaust Memorial Museum, which was made a key location for the game by accident, has asked people not to play on its premises.

For merchants such as McDonald's, concerns include players loitering too long without eating or large numbers blocking access or nearby traffic.

McDonald's Japan unit declined to comment on potential problems.

Still, so far "Poké mon Go" has been good for stock prices, at least. Shares in Nintendo have soared and are expected to make further gains when the game is launched in Japan.

"We are extremely happy," Yoshihide Suga, Japan's chief cabinet secretary, said Thursday when asked about "Poké mon Go"'s potential to contribute to a wide range of industries.

Kosaku Narioka contributed to this article.

Write to Takashi Mochizuki at [e-mail]

(END) Dow Jones Newswires

July 21, 2016 04:05 ET (08:05 GMT)

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