Nintendo has announced a global price increase for its Switch 2 console starting in September, citing rising memory chip costs due to AI data center demand as the primary reason. The company also expects a decline in Switch 2 sales and reported lower-than-expected financial forecasts.
Key Takeaways
Nintendo announced global price increases for its Switch 2 console starting September due to rising memory chip costs driven by AI data center demand. The company expects a decline in sales and reported lower-than-expected financial forecasts, impacting stock prices.
- Nintendo raises Switch 2 price from $449.99 to $499.99 in the US
- Company forecasts an 11.4% decline in net sales and a 27% drop in net profit
- Shares fell 8.4% in Tokyo, marking the lowest since August 2024
- Nintendo expects to sell 16.5 million units this fiscal year, down from 19.86 million since launch
- Analysts have mixed views on Nintendo's conservative guidance and future game releases
The price of the Switch 2 will rise from $449.99 to $499.99 in the US, €469.99 to €499.99 in Europe, and ¥49,800 to ¥59,880 in Japan. Nintendo has sold almost 20 million Switch 2 consoles since its release last June.
Nintendo's financial forecast for the year ended March 2027 reflects an approximately $637.8 million impact due to rising component prices and tariff measures. The company now forecasts a decline in net sales by 11.4% and a 27% decline in net profit, missing analyst expectations.
Nintendo is not alone in facing these challenges. Sony also announced price increases for its PlayStation 5 console earlier this year, citing similar market conditions. Both companies are grappling with the impact of surging memory prices on their gaming businesses as AI data center demand constrains chip supply and drives up costs.
According to CNBC, Nintendo's shares fell 8.4% in Tokyo after the company announced the price hikes and a lack of high-profile games. The stock closed at its lowest since August 2024, marking a 34% decline this year. Investors are concerned about the predicted fall in sales of the less than one-year-old console.
Nintendo forecasts 16.5 million unit sales of the Switch 2 in the current fiscal year, down from 19.86 million since its launch in June last year. Serkan Toto, CEO of Kantan Games, told CNBC that the price hike is likely to lead to softer demand. However, Morningstar analyst Kazunori Ito believes Nintendo's guidance is overly conservative and expects Switch 2 sales to hit 19 million units.
Another metric the market watched closely was Nintendo's software or game sales because blockbuster titles can help drive sales of hardware. The Japanese gaming giant said it expects software sales across the original Switch and Switch 2 to total 165 million units in the fiscal year ending March 2027, marking an 11% year-on-year fall. Despite this, Nintendo has had early game successes with titles like 'Mario Kart World' and 'Pokémon Pokopia,' which sold over 4 million units in five weeks after its release in March.
How this summary was created
This summary synthesizes reporting from 6 independent publishers using AI. All sources are cited and linked below. NewsBalance is a news aggregator and media literacy tool, not a news publisher. AI-generated content may contain errors or inaccuracies — always verify important information with the original sources.