Switch 2 Reportedly Too Good a Deal, Investors Want That Fixed
Overview & Key Takeaways
Amid rising industry costs and a declining stock price, Nintendo may face shareholder pressure to increase the price of the Switch 2 console.
A Bloomberg report notes that Nintendo's upcoming financial earnings release--scheduled for May 8--comes at a challenging time. While the company's shares have declined for several months, its first-party game releases, theme park attractions, and The Super Mario Galaxy Movie have all performed well. However, the Switch 2 console is being sold at a loss globally.
The Switch 2 is priced at $450 in the US and $318 for the region-locked Japanese version. While sales have been strong overall--despite a lukewarm Christmas period--investors believe Nintendo should reduce losses or achieve profitability per unit. This may prompt Nintendo to follow Microsoft and Sony by raising the Switch 2 price by at least $50. Unlike the original Switch, which launched at a profit, Nintendo has opted to absorb costs on the Switch 2 and focus on profits from games and accessories.
Amid rising industry costs and a declining stock price, Nintendo may face shareholder pressure to increase the price of the Switch 2 console.
A Bloomberg report notes that Nintendo's upcoming financial earnings release--scheduled for May 8--comes at a challenging time. While the company's shares have declined for several months, its first-party game releases, theme park attractions, and The Super Mario Galaxy Movie have all performed well. However, the Switch 2 console is being sold at a loss globally.
The Switch 2 is priced at $450 in the US and $318 for the region-locked Japanese version. While sales have been strong overall--despite a lukewarm Christmas period--investors believe Nintendo should reduce losses or achieve profitability per unit. This may prompt Nintendo to follow Microsoft and Sony by raising the Switch 2 price by at least $50. Unlike the original Switch, which launched at a profit, Nintendo has opted to absorb costs on the Switch 2 and focus on profits from games and accessories.
According to Bloomberg's report, there are conflicting opinions on how a price increase could be received as Nintendo aims to strike a balance between attracting consumers and appeasing shareholders. Hideki Yasuda, an analyst at Toyo Research Advice, believes that Nintendo's stock price will continue to decline unless the Switch 2 price is adjusted upwards, while Wedbush Securities analyst Michael Pachter believes that Nintendo would be "foolish" to go ahead with price hikes.
A potential compromise could involve raising the US price of the Switch 2 by $50 and discontinuing the Japan-exclusive version, which is sold far below cost. Nintendo has indicated that price increases are possible, particularly given ongoing component shortages driven by increased investment in AI technology and other global factors.
The discontinuation of the $500 Switch 2 bundle with Mario Kart World has been viewed as a subtle price increase. Additionally, Nintendo is encouraging purchases of higher-margin digital titles.
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