Nintendo seems to have thrown out their cautious business philosophy for the launch of the Switch 2.
Bloomberg talked to multiple financial analysts about Nintendo’s plans for the Switch 2. Many of them anticipate that Nintendo is raising the price of the new console by at least $ 100. Therefore, while the original Switch model remains at $ 299, the Switch 2 will sell for at least $ 399.
Analysts who have gone on record for this include Dr. Serkan Toto, Yijia Zhai of UBS and Robin Zhu of Sanford C. Bernstein. Toyo Securities Hideki Yasuda went even further and claimed that the price could go up to $ 499. That’s because the Switch 2’s SOC is considerably more expensive at $ 130 to 150, compared to the $ 80 price of the original Switch’s SOC.
We cited Yasuda last week for claiming that Nintendo hopes to sell 6 million units of the Switch 2 at launch. Bloomberg found that Zhu has even higher expectations than that. He believes that Nintendo has prepared first day inventory of 6 to 8 million units.
Context is key, and in this case, it sheds light on the scale of Nintendo’s gamble. The original Switch sold 2.7 million units in its first month. The PlayStation 4 and PlayStation 5 each sold approximately 4.5 million units in the first quarter that each console was on the market.
So, Nintendo thinks they can beat the biggest sales records both they and Sony have set with the Switch 2. But that’s not an entirely unreasonable prediction to make, because the Switch itself has outdone Nintendo’s entire history in terms of sales success.
What does make this interesting is how it diverges from Nintendo’s business philosophy. In the past, Nintendo was conservative when it came to manufacturing their consoles. In their entire history, they deliberately delivered less consoles than expected demand at launch, to calibrate what they would have to make for the following years.
This philosophy lined up with many of the other ways that Nintendo did business, dating back to even before Nintendo made video games. In 1965, Nintendo made a toy named Lefty RX, a toy car that could only turn to the left. As designed by future Game Boy designer Gunpei Yokoi, the toy car deliberately scrimped on parts because players would only need to have their toys turn one direction on a circular track.
Now, it may be the case that these analysts are wrong about many of the things they’re predicting here. But if that prediction about making 8 million units is true, it means that Nintendo is finally ready to take those higher risks for higher potential rewards.
Historically, Nintendo has been easy prey for resellers because they don’t build up high stocks for their consoles at launch. So this will solve that issue, but more importantly, it will mean that Nintendo could build an army of Switch 2 players straight out the gate, to rival the large numbers of active users on PSN and Steam. And that increases the pool of potential buyers of Nintendo’s first party games, which are also known for their incredible long tails in terms of sales.
Nintendo may no longer be holding presentations as grandiose or impressive as they used to, with Shigeru Miyamoto going on stage to brandish Link’s sword and shield, or Reggie File-Aime and the late Satoru Iwata staging a Hollywood fight scene. But this current incarnation of Nintendo may be the most ambitious it has ever been, shooting for the moon, and maybe some purple coins along the way too.
