Nintendo's Pricing in the Switch 2 Era

Market analysis / Editorial review

By Senior Market Contributor Martin Strnad Featuring an editorial addendum by Jdawg

With Nintendo’s recent announcement of Switch 2 hardware and game pricing, the gaming industry enters a new era of higher price points. Adult gamers are likely aware that the decades-long seeming fixture of $59.99 pricing could not withstand inflation indefinitely. It is now necessary to take a realistic look at what Nintendo is doing, why they are doing it, and what the impact will be—both on gamers’ budgets and on the industry itself.

Let's start with the obvious: To many gamers, the now-worn argument by game publishers about game quality rising year-over-year, release after release, does not strike us as any too true or impressive. Technical gains are more modest in recent decades, for one. Game production costs are another factor sometimes used to pitch higher game prices, but this sounds fishy in sight of major gaming companies now routinely laying people off in order to reap higher profits on both a quarterly and annual basis. All while overtly monetizing so many aspects of every single game they make! Yet there is a kernel of truth to point: Costs have gone up. In Nintendo's case, being widely regarded as one of the most transparent gaming companies out there – one where the CEO openly shares that he'd rather lower his own salary than lay off good developers – this issue didn't really come into play during Switch's initial lifetime. For the explanation of why Nintendo likely felt the need to raise prices, then, we need to examine the fundamentals on what goes into the Switch 2. Let us start by examining its predecessor: At launch in 2017, the Switch's hardware was already a bit dated. In spite the high-quality of gaming experiences first-party Nintendo games traditionally offer, these hardware limitations also attenuated any additional expenses that would have come in the form of demanding more detailed visual assets such as 3D models, textures, animations or bigger game maps. The kind we have come to expect as more standard in AAA games for PC, PlayStation and Xbox platforms.

On top of that Nintendo's in-house game development approach is somewhat unique among the large gaming firms. They often tend to treat the early design and development phases of their projects like trial-sized A/B tests. So, for example, the initial creative brief is given to two separate teams. By the time 'both' projects hit alpha stage, management does their review and decides which to take on. The selected game is given the go-ahead while they will scrap the other half of the work done. All while moving people from the scrapped version of the game into the other team to work on the final product. Thus the costs are borne internally, and the stronger candidate always moves forward in-house.

The question is then, is anything different with the Switch 2? Yes, and it comes down to the hardware capabilities! Let's dive in... the Switch 2 has three times the RAM, larger and quicker-fetching storage, and a 30% higher display resolution on the built-in screen, for a start. It doubles the refresh rate of the original with an option of variable refresh to mitigate screen tearing. The biggest upgrade is going to be the APU by nVidia. According to Nintendo it is capable of 10x more raw compute than the first model with a lot of potential performance overhead given their nVidia Tenser Cores, which are able to run AI tasks like resolution upscaling. So based on this outline, we can clearly see that the games created for Switch 2 will almost certainly be more resource-intensive. They can, and likely will be much bigger in terms of game content, as is already demonstrated with the choice of Mario Kart World as their main launch title. Taken from a hardware cost standpoint alone, the $499 USD/EUR per unit figure is not only acceptable in my opinion, but an understandable one given its expanded capabilities.

-“Taken from a hardware cost standpoint alone, the $499 USD/EUR --------per unit figure is not only acceptable in my opinion, but an -----------understandable one given its expanded capabilities.” Thus, while it is positioned quite well amongst its competition of all the hybrid consoles of the past 3 years, comparatively speaking, it does come across as looking a bit dated when put next to what is available on the market now. This includes PC Handhelds. While Nintendo's margins are such that they are sure to rake in a decent profit on every Switch 2 sold, no matter how good the hardware specs are, we can look to its competitors for a little contrast. At this point in time, the Steam Deck is already a three years old. Even at launch, their model was running on an AMD APU manufactured on a 7-nanometer process, which is exactly the same production mode Nintendo is harnessing now. Nintendo, therefore, doesn't shy away from using the chip industry's natural slow progression to their advantage, picking up mature technology at scale, at what is likely a strong mark-down. It is for this reason the APU in the Switch 2 is also made on the now-older, and cheaper 7nm process. Their profit margin is discernable in this sense, and points to us being able to fully expect a mid-gen upgrade, possibly featuring an OLED screen. I predict with the likelihood of an enhanced APU coming off the 5nm process line being added in as well. This as the chip manufacturing industry moves away from the 7nm process to ones tinier still. By timing its release at the threshold of a chip-generation transition, Nintendo is positioned to maximize profit per unit sold over Switch 2’s lifecycle. With the Switch 2, Nintendo offers both continuity in quality and a more future-ready platform, albeit at a higher launch price.

What about the game prices?

While this in part explains the hike in game prices, most industry observers find themselves calling out Nintendo, alongside many gamers. The $80 USD/EUR price-point for digital editions of games, not to mention the $90 USD/EUR for physical copies are felt to be too steep. The main argument against this being the fact that the needle hasn't moved on PC and console games of the previous generation, still resting in the $70 USD/EUR price-range. Most striking perhaps is that some of the physical copies of Switch 2 games are rumored to be only be available as game 'keys,' where considerable amounts of game data will still need to be downloaded from Nintendo servers. This is despised by lifelong game collectors, who fear it devalues their collections for the future and removes any real sense of ownership. On these points, we have to concede that gamers have a reason to be upset. While the manufacturing cost of physical cartridges Nintendo traditionally uses to distribute their games is understandably much higher than the Blu-ray discs used by their competitors' systems, it only really makes sense to put the price point higher once the cartridge itself has enough capacity for all the necessary game data. Along with containing all of the game data at the launch edition of the game. This is something Nintendo has yet to do.

To delve in a little further, we should examine the expense involved in the making of these cartridges. Based on best available data, production costs of Switch cartridges likely range from as little as $4 at the bare minimum specs for a legacy cart (assuming no downline cost increase,) all the way up to $16¹ USD for more larger, newer, more advanced cartridges such as those intended for the Switch 2. The premium may be justifiable on the basis of the faster, and higher volume of storage memory contained in these. By comparison the now-ubiquitous Blu-ray disc has a reported production cost hovering around $2-4 USD. Not counting box or any bundled materials. If we count in the price of distribution and margin for the retail stores, we can break it down as follows:

Retail price of physical copy of a game: $90 USD

Manufacturing costs: ~$15 USD per cartridge+$5 USD per box/box art/additional inserts

Retailer margin: Typically 30%; Result in this case being estimated as: 90*0.3 = $27 USD

Publisher (Nintendo) profit share: 90-20-27 = $43 USD This figure, then, constitutes 48% of the base price.

This reveals that Nintendo is trying to maintain the traditional retail average of 50% profitability from each physical copy sold, and pricing them accordingly. While the figure is higher than previous versions, it starts making sense in terms of numbers as seen from the corporate perspective. It becomes harder to criticize Nintendo, here, for when there's not enough revenue, there is a real risk of having too few, or lower-quality games! For a brand like Nintendo, whose reputation is staked on quality, this would be a deeply detrimental move.

Looking at prices for digital copies, however, which are at $80 USD/EUR per game, along with Nintendo's obvious overall push towards digital distribution, this is expected to bring them way higher profit. Taking into account the minimal cost of operating a digital distribution network combined with the volume Nintendo does (at over 150 million units of Switch 1 sold over its lifetime, and an average of 9 games/sold per-unit,) the expenses per-copy sold are much lower. So we are left wondering if the current prices are really economically necessary, or are these some shady tactics by Nintendo, hastening on the demise of physical media by pricing many gamers out of it? So why not settle on the $70 USD/EUR price point?  The genesis of this move may lie in the current global supply-chain, and partly stems from the local Japanese economy which has been punished by high inflation on consumer goods ever since the COVID crisis. This is exacerbated even further by the conflict in Ukraine and recent US import-tariff drama. We can only assume that Nintendo is bracing itself for the future, and catching up with the general inflation on all goods over the past decades.

If that is true, does this price hike by Nintendo signal a green light for the market to speed past the $70 mark and pace Nintendo all the way to $80 - $90 USD/EUR per-game? Microsoft, for one, in the wake of this has just announced price hikes of their own, with XBox games soon to rise to $80. At the same time raising the price of XBoxes by about 20%. The answer here, so far, is yes.

A changing handheld landscape

Given Nintendo's track-record with high-quality first-party games, we can most likely rest assured that the higher prices will translate well to quality of output, a stark contrast to many of its competitors for whom higher prices and monetization schemes seem to do exactly the opposite to the quality of gaming experiences they offer. So I suggest we look at the big picture. In the same price range in the handheld market, for example, in the 3 years since Steam Deck opened the floodgates of PC gaming to handhelds, every year more PC hardware manufacturers introduce their take on this format. What challenges does Nintendo now face within the market they’ve dominated since the days of the original Game Boy? Realistically, it’s a fractured field of emerging competitors. The Steam Deck is considered a success, but after 3 years, its sales are estimated at around 4 million units. That’s less than 3% of what the Switch 1 sold over its full lifetime. Factoring in other devices—such as the ROG Ally, Lenovo Legion Go, and MSI Claw—brings the total estimated sales of all non-Nintendo handhelds to approximately 6 million units over the same 3-year period.

Looking at it another way, and to make the comparison easier, let us calculate average yearly sales side-by-side. Nintendo Switch 1 sold 150 million units over its 8 years on the market, bringing the average yearly sales to 18.75 million units. Meanwhile, all PC handhelds combined over the past 3 years have sold approximately 6 million units in total, averaging 2 million units per year. Just under 10% of the handheld market compared to the Switch’s ~56.25 million units sold in that timeframe. Lifetime handheld sales, Switch 1- on:

Device	Units Sold	Market Share	Source
Nintendo Switch	150.86 million	~94.7%	Nintendo Life
Steam Deck	3.7–4 million	~2.3–2.5%	The Verge
Asus ROG Ally	~1 million	~0.6%	Wikipedia
Lenovo Legion Go	~0.6 million	~0.4%	Forbes
MSI Claw	~0.2 million	~0.1%	The Verge
Other PC Handhelds	~0.5 million	~0.3%	The Verge
Total	~157.86 million	100%

As small as these numbers may seem right now, this is actually a whole new ballgame! The figures are significant enough to persuade Sony and Microsoft, titanic competitors of Nintendo's, to attempt entry into this segment as well. Both companies have publicly announced that they are working on their own PlayStation and Xbox handheld devices! Exciting news for gamers, and sure to pose a strong challenge to Nintendo's long-held reign on the console hybrid mobile gaming market! Sony already has some experience in this segment via PSP and Playstation Vita, both great devices for their time, but both also not successful enough to grant a direct continuations. Microsoft, meanwhile, is entering this market segment for the very first time. So what to expect from these portable gaming machines and how will they influence the market?   “Microsoft, meanwhile, is entering this market segment

for the very first time. So what to expect from these portable ------gaming machines and how will they influence the market?”

We expect Sony will finally learn from their past mistakes, and allow their handheld to run the very same version of games as the PlayStation 4 and 5. A shared library will definitely aid sales, especially in an era of “gaming dads” who have already fully embraced the current PlayStation Portal handheld as a means to squeeze in some gaming time when the TV is occupied by other family members. But we definitely see bigger potential from Microsoft's new Xbox handheld this time around. Despite it being their first entry into this segment and with lower active user accounts on their Game Pass subscription service as compared to PlayStation and Steam userbases, we predict that Microsoft's recently-announced deal with Asus to produce the Xbox Handheld will be beneficial to both companies and customers alike!

Because Asus brings their experience manufacturing ROG Ally and Ally X, with Microsoft bringing their subscription service customer base, it will enable them to sell the hardware for under the manufacturing cost. Each Xbox user subscribed to Game Pass brings them on average $15 USD per month, which adds up to $180 USD annually. Using ROG Ally's current retail pricing of $399 - 449 USD as a jumping off point, we can comfortably assume that Microsoft will lower the price of the Xbox Handheld by that one year average revenue per user from Game Pass, landing somewhere within the range of $300 - 350 USD per unit, depending on given SKU most likely differing by storage capacity.

Looking at these numbers, it's clear that Nintendo may face serious competition this time around. In the near future, Microsoft's entry into the handheld space could land much closer to the original price point of the first Nintendo Switch—while offering the added value of a strong game library via Game Pass. Whether gamers remain loyal to Nintendo’s high-quality content or are enticed by Microsoft’s lower entry price remains to be seen. In a space full of iconic titles—many from Nintendo, but with several strong properties in Microsoft’s repertoire as well—it’s a question we won’t answer just yet! What we can do, though, is openly proclaim we're as excited as anyone else that the companies have discovered the beauty of these portable gaming machines in recent years! As the Market Wisdom says: The bigger the competition in any market, the better for customers within that market! As gamers ourselves, we embrace and are fully looking forward to seeing how this segment of the gaming market develops!

Editor's addendum: I appreciate the attention to detail Martin's analysis brings and find the points made here persuasive. Nintendo's consistency in both corporate conduct and user experience IS a big factor in why people keep coming back to them. I know many of us take issue with the price increases. There are pros and cons to each company's products. Please note that I am independent of any ties to any of the major companies and intend to remain so. I have a lot of respect for Nintendo, but admit I am intrigued by what their competitors have to offer. I'm hyped to see more companies getting in on the handheld market! More competition benefits us, and that goes right to our core principles. Opinions on companies may vary, but it is clear big changes are afoot in the handheld market, and we're here for it. I'm pumped to see what options we'll have soon!

Martin Strnad is a game design, narrative and production consultant. A veteran of 16 years in game development, Martin has also served as editor and contributor to European game news sites. Disclosure: Martin is a holder of Nintendo and Microsoft stock. This article was assessed for partiality. It meets an acceptable standard for qualified opinion upon review -Ed On LinkedIn: https://www.linkedin.com/in/martin-strnad-15309338/ ¹Cartridge estimates from multiple sources https://chatgpt.com/s/dr_681c2039814c81918700918cb1b79f85

Footnote: Satoru Iwata, the former CEO of Nintendo, took a significant 50% pay cut in 2013 to avoid layoffs during a challenging financial period for the company. His decision was aimed at maintaining employee morale and retaining talent, which ultimately contributed to Nintendo's recovery and success with the launch of the Switch console in 2017. He lived from 1959 to 2015. Iwata served as the president and CEO of Nintendo from 2002 until his death in 2015, totaling approximately 13 years. Nintendo's current CEO is Shuntarō Furukawa.

Copyright GBAMFS 2025. All Rights Reserved.