Nintendo has recently disclosed a global price increase for its upcoming Switch 2 console, scheduled to be implemented starting in September. The cost in the United States will escalate from $449.99 to $499.99, while in most European nations, it will surge from €469.99 to €499.99. The company has also confirmed that the Japanese version of the Switch 2, as well as all editions of the original Switch, will witness a price hike from May 25. As reported by BBC, the revised pricing for the United Kingdom, where the current price stands at £395.99, is pending confirmation.
The principal reason behind the price adjustment is the significant rise in memory chip expenses. Random access memory (RAM) and storage, crucial components in any console, have doubled in cost during the initial quarter of this year alone, as outlined in the BBC report. Industry experts anticipate that prices may surge by up to 63% in the ongoing quarter, driven by heightened demand from AI data centers. This surge in demand has led to supply constraints not only for gaming consoles but also for smartphones, laptops, and vehicles.
According to a report by Reuters, major memory manufacturers like Samsung, SK Hynix, and Micron have pledged substantial investments to enhance production. Nevertheless, establishing a new production line usually requires at least a year. Consequently, cost pressures are unlikely to alleviate in the short term.
Regarding the price hike, Nintendo president Shuntaro Furukawa has officially asserted that the decision to raise prices is influenced by elevated component expenses, particularly in memory, as well as fluctuations in exchange rates. Additionally, the company has encountered challenges due to the tariff proposals by US President Donald Trump announced around the time of the console’s launch. Analysts have also highlighted that disruptions caused by the conflict in Iran might impact supply chains, states the BBC report.
Nintendo has formally apologized to its customers, attributing the price adjustments to “market conditions changes.” The company anticipates that the price increments will contribute approximately 100 billion yen ($638 million) to costs in the current fiscal year, maintaining profitability at a level similar to the previous year.
Nintendo is not the only company raising prices. In March, Sony revealed plans to elevate the price of the PlayStation 5, with the standard version seeing a $100 increase to $649.99 in the US. Sony has also adjusted UK prices upwards by £90. CEO Hiroki Totoki has indicated that while the company has secured memory supply for the ongoing fiscal year, high prices are expected to persist into the next year. Sony is exploring strategies to lower costs beyond memory.
Meanwhile, Valve, the owner of Steam, has postponed the launch date of its PC-console hybrid device announced last year.
Nintendo faces substantial risks as the Switch 2 is still in its early stages, and its user base, mainly composed of casual gamers, is particularly sensitive to price changes, according to Serkan Toto from Kantan Games consultancy, as per the Reuters report. This situation puts pressure on Nintendo to release major first-party games to stimulate demand. The company aims to sell 16.5 million Switch 2 units this year, a decrease from 19.9 million last year, alongside 60 million software units.
Despite the hurdles, Nintendo reported selling nearly 20 million Switch 2 consoles since its launch last June, generating a profit of 424.0 billion yen ($2.7 billion), marking a 52% rise compared to the previous year. The impact of the price hikes on this momentum remains uncertain.
