Nintendo president Shuntaro Furukawa explained the company’s decision to raise hardware prices, attributing it to current market conditions rather than a single factor.
During an earnings call Q&A following its recent financial results, Furukawa confirmed that Nintendo’s approach to Switch 2 remains unchanged: first expanding the hardware install base, then driving software sales.
“If the increase in costs were seen as something temporary that would subside relatively soon, then we could have pursued other options, such as working to improve productivity and expand the installed base while maintaining hardware prices,” he explained.
“Unfortunately, the recent surge in memory and other component prices […] and trends in the foreign exchange market and the price of oil, are all factors that we anticipate will continue over the medium to long term.”
Furukawa continued: “We felt that the profitability of our hardware would suffer significantly if we maintained our existing pricing, potentially impacting our business operations over this time frame. For the sustained growth of our dedicated video game platform business, it is important to maintain a healthy earnings structure for our overall business. For this reason, we made the difficult decision to reflect a portion of our costs in the selling price.”
“If the increase in costs were seen as something temporary that would subside relatively soon, then we could have pursued other options”
“While uncertainties remain regarding future trends in component prices, we recognise that they could have an impact not only this year but next year as well. As for what comes after that, we will make necessary preparations to ensure that we can respond flexibly to whatever situation arises.”
Furukawa also noted Switch 2 unit sales reached 19.86 million after its launch last year, surpassing both the initial forecast of 15 million and the revised forecast of 19 million.
“[This number] was exceptionally high compared to our past hardware launches. This performance was supported by a variety of overlapping factors, including the fact that Switch 2 launched while many people are still having fun playing the Switch, and the ability of Switch 2 to play Switch software helped make the transition easier.”
He credited the releases of the Switch 2 edition of Animal Crossing with its free update, and Pokémon Pokopia, as key drivers of hardware sales in the latter half of the fiscal year.
However, Nintendo forecasts Switch 2 sales of 16.5 million units for the next fiscal year. Furukawa said this “takes into account current sales momentum and the sales performance in the second year of our past dedicated video game systems.”
“The pace of adoption of Switch 2 is extremely fast, even when compared to the Switch, and we do not see any particular concerns about its momentum at this time.”
Furukawa concluded: “The way that Pokémon Pokopia has contributed to hardware sales reaffirms our belief that the availability of software that people want to play is a key factor supporting the transition to Switch 2.
“Going forward, we have many new titles for Switch 2 prepared, and we will carefully convey the appeal of each title to encourage people to transition to Switch 2 at their own pace.”
In that context, we will work to increase the Switch 2 installed base over the medium to long term and increase software sales and the number of annual playing users.”
