Nintendo Will Make Less Money From Each Switch 2 Sale Despite The Price Increase

Summary

• The Nintendo Switch 2 has a "lower profit margin" than the original Switch.
• This means that it will make less money from each Switch 2 sale than it did on original Switch sales.
• Nintendo is projecting that the Switch 2 will shift 15 million units in its first fiscal year.

Nintendo anticipates that it will sell 15 million Switch 2 units in the first fiscal year of its release. This is roughly the same as the original Switch sold in a ten-month period, making this a particularly conservative estimate for the widely anticipated next-gen console.

This comes from the company's latest financial results briefing Q&A, in which Nintendo president Shuntaro Furukawa answered questions about projections going into the Switch 2's launch. Here, Nintendo was questioned about this estimated figure and why the Switch 2 is priced the way it is.

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Nintendo does explain this, but it also reveals something which may come as a surprise - it's still going to make less money from each Switch 2 sale. This is despite the Switch 2 being priced at $449.99, whereas its predecessor had an introductory price of $299.99.

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In the Q&A, as spotted by ResetEra user mazi, Furukawa was asked why Nintendo projects that its operating profit ratio will decline.

"The reason we expect the operating profit ratio to decline year-on-year in our consolidated earnings forecast is because the proportion of hardware sales is projected to increase with the launch of Nintendo Switch 2 and we expect the gross profit ratio to decline due to Nintendo Switch 2 hardware having a lower profit margin than Nintendo Switch hardware," Furukawa says.

This would explain the price increase for Switch 2 games, with Mario Kart World and some other titles being priced at $79.99.

On that note, Nintendo hopes that the Switch 2 will "get off to the same start" as the original Switch. It also defends the price point, saying that this is necessary.

"Prices for Nintendo Switch 2 products are determined through an overall evaluation of factors in each region," Furukawa explains. "When determining hardware prices, we consider not only the manufacturing cost, but also various factors such as consumers' impression of the price, the vast differences in exchange rates compared to the Nintendo Switch launch, and the market conditions in each region."

Nintendo Switch 2