Nintendo stock has pulled back since the company released its last earnings report on July 27 and investors have returned to earth following the Pokemon Go mania. It seems most investors are finally starting to understand that any impact the game will have on Nintendo is likely to be limited because it didn’t actually make the game. However, some believe the mobile game’s huge success will kick-start momentum at the Japanese game and console maker.

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A “virtuous cycle” at Nintendo thanks to Pokemon Go

In a report dated August 2, Morgan Stanley analyst Mia Nagasaka and team said they believe Pokemon Go‘s success is important for Nintendo because it will probably boost its confidence in demand for the intellectual property tied to its game consoles. As a result, they expect to see “proposals for new ways of playing.”

They believe the mobile game’s success has triggered a “virtuous cycle for the company as a whole because it enhances overall recognition of its intellectual property, which is tied to its game consoles. Further, they believe it boosts Nintendo’s confidence in being able to develop massive demand for its IP assets for game consoles on smart devices.

Additionally, they see synergies on existing hardware and software business as already there is an uptick in demand for 3DS and 2DS hardware and software in the U.S. and Europe, which they attribute to Pokemon Go. Both handheld devices have older Pokemon titles on them, and Nintendo expects demand for them to rise even further when Pokemon Sun and Moon launches in November.

The Morgan Stanley team also notes that Nintendo has been experimenting with in-game advertising as well with Wii no Ma, which may offer a new stream of revenue for the Japan-based company.

Pokemon Go Plus release delayed

Nintendo is also delaying the launch of the Pokemon Go Plus device and dedicated hardware for the Pokemon Go app from the end of July to September so that it can prepare for demand volume and functionality. However, UBS analyst Sumito Takeda notes that core players of the game will likely buy the device despite the delay, but not being able to sell it right as demand is hot around the globe is a huge negative because now offers the biggest opportunity of sales because of the nature of mobile games and also the unique experience offered by the game.

He also says that launching it with limited volumes could result in auction prices soaring, making it more about money rather than the game’s fantasy nature. The analyst believes Nintendo is more interested in building its relationship with gamers rather than just “pocketing small change,” which is why it may have opted to make this decision.

Nintendo won’t release the NX unless it breaks even

The Morgan Stanley team noted that Nintendo management said they won’t launch the NX console unless they can break even. They expect the console not only to offer better performance than current consoles but also emphasize “the originality of the hardware” and new ways of playing games. Details on the launch are expected in the fall.