Nintendo Switch 2 Sees Strong Demand but Lower Profit Margins

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Nintendo released its new gaming console, the Nintendo Switch 2, in Japan on June 5, marking its first new hardware in over eight years. The company expects to sell 15 million units globally in the first year, but demand has already far outpaced supply.

Some estimates suggest it could take until next spring for stock to catch up. Experts believe the Switch 2 has strong potential to surpass the original Switch, which sold 150 million units.

The new console features a larger 7.9-inch display with smoother graphics and supports 4K output when connected to a TV. It also introduces new features such as voice chat, along with an overall boost in performance.

Slow Start, Strong Demand

In Japan, the standard model is priced at ¥49,980 JPY (about $350 USD), while the multilingual version costs ¥69,980 (about $490). At a May earnings briefing, Nintendo President Shuntaro Furukawa acknowledged that the higher price compared to the original Switch might slow initial sales.

Even so, more than 2.2 million people in Japan applied for the first official lottery sale, with many unable to secure a unit. Major electronics retailers also experienced intense competition in their own lotteries.

Despite the increased cost due to upgraded hardware and rising component prices, many consumers still considered the Switch 2 reasonably priced. Nintendo noted that its profit margin is lower than that of the original, suggesting the company deliberately kept prices down to promote early adoption.

*Reporters trying out Nintendo Switch 2 on April 3. (©Sankei by Naoki Aikawa)*

Financial Outlook

For the fiscal year ending March 2026, Nintendo projects a 63.1% increase in revenue to ¥1.9 trillion ($13.2 billion), though net profit is expected to rise only 7.6% to ¥300 billion ($2.1 billion). The company plans to improve profitability through high-margin software sales once the console becomes more widely adopted.

On launch day, stores across Japan began handing out consoles to lottery winners. At the Joshin Nipponbashi store in Osaka, only pre-orders were available for pickup, but about 20 people still lined up before the 10 AM opening to collect their units.

Some customers took paid leave to pick up their devices. Others were seen collecting them on behalf of grandchildren. Meanwhile, resale listings quickly flooded online marketplaces, with some multilingual models priced at around ¥200,000 — nearly four times the retail price.

To combat scalping, Nintendo has implemented stricter lottery requirements and partnered with resale platforms. However, completely preventing reselling remains a challenge.

Hideki Yasuda, senior analyst at Toyo Securities, who closely follows the gaming industry, said, "Although it would increase costs, using air freight could raise this fiscal year's sales to 20 million units. In the end, the Switch 2 could end up being even more successful than the original Switch."

Author: Hiroto Kuwajima, The Sankei Shimbun

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