Nintendo president Shuntaro Furukawa explains Switch 2 price increases in recent Financial Results Briefing

switch2.jpg

As a part of their Financial Results Briefing for the previous year, Nintendo president Shuntaro Furukawa took to the floor to answer key questions around the Switch 2 and the company's approach for the coming year. The most pressing among these related to the upcoming price increases to the system, as well the reasoning behind the differing values from region to region.

Shuntaro Furukawa said:
This change in hardware pricing was not due to any one specific factor. Rather, the decision was made in light of various changes in the recent market conditions which we believe will have a medium- to long-term impact on the global outlook of our dedicated video game platform business.

Regarding Nintendo Switch 2, the basic approach to our dedicated video game platform business remains unchanged: first expand the hardware installed base, and then drive 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.

Unfortunately, the recent surge in memory and other component prices, and the changes in the market environment, including 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. As a result, 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.

The reason that the extent of the price revision differs from region to region is because each region is impacted to a different degree by the various changes in the market environment.

Furukawa also concedes that this increase will raise the barrier of entry for the platform, though stresses that Nintendo's focus is on delivering fun that is "worth more than the price", promising a variety of new experiences unique to the Switch 2.

Shuntaro Furukawa said:
I will not discuss the specifics of how this price revision could impact Nintendo Switch 2 sales, but we recognize that this raises the barrier for entry to a certain extent for people deciding whether to make a purchase.

That being said, the most important thing in our dedicated video game platform business is to offer engaging fun that is worth more than the price. Going forward, Nintendo and other software publishers plan to release a variety of titles, and we aim to expand the installed base by conveying that these titles offer new experiences unique to Nintendo Switch 2.

While uncertainties remain regarding future trends in component prices, we recognize 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.

Those interested in reading more of the Q&A summary can find the full release below, translated into English directly by Nintendo.

:arrow: Source
 
They're getting their tarrif money back  and your tax dollars,  AND your NSO fee.
tax doillar goes to government where the console is sold
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Out of all the 1st-party companies, Nintendo is so far ahead that it's not funny. It's a very big reason why folks buy Nintendo consoles. Most folk that buy the other consoles typically buy them for 3rd-party. To make Nintendo's games available on other platforms wouldn't necessarily mean a rise in sales. It would probably be closer to a shift in sales, and that would result in paying royalties, ultimately resulting in lower revenue.
I meant PC, but yea... Also, royalty cannot be the only reason. You can either have your market closed and have 10M potential consumers (those who bought your console), or open your market to PC and have 150M potential consumers (only talking about Steam monthly active users). 10M vs 150M, the price of the console will never match that kind of potential customer-base.
10M consoles sold doesn't equal to 10M people who will buy each of their first-party games. Even with the royaltees (30% on Steam, which is the same that Nintendo charge on their e-shop (I know Nintendo doesn't pay royaltee for their own game)), if they can sell their games to 1% of Steam base, that's still they would sell outside their e-shop.
A lot of nostalgic people would be ready to pay for their game but not for the console. Even if they release them as temporary exclusive.
But at this point, it feels like they won't even do that "out of respect to their loyal customers, who bought their consoles for their games, and who would feel like they bought it for nothing", you know, the perfect excuse to not release their games anywhere else? 😹
 
Last edited by Noctosphere,
I meant PC, but yea... Also, royalty cannot be the only reason. You can either have your market closed and have 10M potential consumers (those who bought your console), or open your market to PC and have 150M potential consumers (only talking about Steam monthly active users). 10M vs 150M, the price of the console will never match that kind of potential customer-base.
10M consoles sold doesn't equal to 10M people who will buy each of their first-party games. Even with the royaltees (30% on Steam, which is the same that Nintendo charge on their e-shop (I know Nintendo doesn't pay royaltee for their own game)), if they can sell their games to 1% of Steam base, that's still they would sell outside their e-shop.
A lot of nostalgic people would be ready to pay for their game but not for the console. Even if they release them as temporary exclusive.
But at this point, it feels like they won't even do that "out of respect to their loyal customers, who bought their consoles for their games, and who would feel like they bought it for nothing", you know, the perfect excuse to not release their games anywhere else? 😹
They had a market with 150M+ potential customers with their own console, and their newest one is sitting at over 20M, not 10M. Every console maker has to go dealing with the struggles of releasing new platforms. That's the nature of the beast. Jumping to provide for PC doesn't help that, and even now after many years, it seems Sony is withdrawing from PC. Why would Nintendo go jumping into it when they aren't in as much of a dire situation as Sony?

And I think we've heard enough from PC gamers when it comes to Nintendo, and "nostaglic" is not the word that would describe them, especially when it comes to Nintendo's pricing. Steam may have a lot of monthly active users, but I doubt most are Nintendo fans, whereas folks that buy Nintendo's system are far more likely to be favorable towards Nintendo.
 

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