Nintendo is expected to face challenges when presenting its upcoming financial results, not due to a failure of the Switch 2, but because profit margins are insufficient without a price increase. Nintendo is grappling with several issues. Firstly, Nintendo’s stock is experiencing its worst streak in the last decade. Compounding this is an even more significant problem: investors are reportedly so dissatisfied with the company that they are seeking to force an increase in the price of its portable console.
Nintendo is the only company that has not raised the price of its next-generation console, and there are many reasons for this. In essence, its console is much cheaper to manufacture, which has allowed for enormous profit margins. So much so that they have been able to afford to maintain the console’s price even as the costs of components, materials, and shipping have increased. Nintendo continues to make money with each Switch 2 sold, but less so. This means profit margins have declined. And yes, investors want to put an end to this, and the only apparent solution is to raise the console’s price.
Nintendo May Address Potential Switch 2 Price Increase on May 8th
Nintendo is scheduled to publish its fiscal year results on May 8, 2026. Thus, discussions are arising just before a key investor meeting. The console, for now, maintains an official price of $449.99 (€383) in the United States. In Japan, Nintendo launched a Japanese version for 49,980 yen (€272) and an international version for 69,980 yen (€381). In Europe, the price is €469.99.
The key point is that Nintendo has not confirmed any price increase. In its last Q&A session with investors, Shuntaro Furukawa acknowledged that the rise in prices for memory and other components could pressure profitability if it lasts longer than expected. However, he also made it clear that no decision has been made regarding changing the Switch 2’s price. The company states that any adjustment would be evaluated comprehensively, considering not only profitability but also the installed base, sales trends, and market conditions. It’s also worth remembering that the memory chip crisis, in the best-case scenario, is expected to last until 2028.
This places Nintendo in a delicate position. On one hand, the company needs to protect hardware margins amidst high costs, especially with pressure on memory and the supply chain. On the other hand, raising the price of a console in its second year could slow down platform adoption, precisely when Nintendo needs to expand its user base to sell more software, services, and content in the long term. In fact, Nintendo itself acknowledges that the second and third years of the Switch 2 are particularly important for expanding the installed base.
Switch 2 Sales Outside Japan Are Weaker
Nintendo has admitted that Japan performed better than expected, while sales outside Japan were somewhat weaker. This impacts margins because a significant portion of hardware acquisition is done in dollars. Therefore, a higher proportion of sales in Japan, with a weaker yen, can have a negative impact on gross and operating profit.
Due to a drop in demand, Bloomberg reported in March that Nintendo had reduced its quarterly Switch 2 production by over 30%, decreasing manufacturing from 6 million consoles per quarter to 4 million units. The reason cited was weaker-than-expected Christmas sales in the United States. This factor further complicates a price increase: if demand is already showing signs of cooling in some markets, raising the price could improve per-console profit margins, but it would also further reduce the pace of adoption.
One of Nintendo’s strategies might be to maintain the original price of the Switch 2 but push for users to purchase bundles that include a game for $499.99. To achieve this, they would reduce the availability of the standalone Switch 2, removing it from the market and prioritizing the sale of bundles at a higher price, along with games like Mario Kart World. In this way, Nintendo would at least seek to avoid the perception of price hikes like other companies in the industry.
