The future of Nintendo hinges on making the upcoming Switch 2 console a success, as it will soon be the primary platform for delivering its many popular game franchises and characters. — Reuters
Japanese entertainment giants Nintendo Co and Sony Group Corp are likely to raise prices on their game consoles in response to US tariffs, according to the latest research from Bloomberg Intelligence.
American consumers would pay as as much as 30% more for a Switch 2 or PlayStation 5 under the base-case scenario, which would imply pricing close to US$590 (RM2,617) for the soon-to-be-released Nintendo flagship machine or Sony’s PS5 Astro Bot bundle. Both devices are assembled in China, which is now subject to a 125% duty for shipments to the US, although Nintendo also has an expanding production footprint in Vietnam, which has a 90-day reprieve from elevated tariffs.
Console makers are the most vulnerable players in the video game industry, said BI analyst Nathan Naidu, due to their hardware businesses and need to ship physical goods. The US accounts for 29% of revenue for Tokyo-based Sony and 37% of sales for Kyoto-based Nintendo, he said. The market is indispensable for both companies: US consumers drive global trends, and word-of-mouth recommendations boost entertainment product demand.
A 30% price hike in Nintendo’s Switch 2 is contingent on an 80% to 90% tariff imposed on its US imports, according to Bloomberg Intelligence’s base case scenario, Naidu said. "Still, Nintendo might hold back from raising prices as it can use the 90-day reprieve on tariffs to further bolster its US stockpile.”
Nintendo partner Hosiden Corp has committed almost all of its Vietnam production from the start of this year to the US market, showing the stockpiling effort is already underway. PC makers, similarly, spent the first quarter of the year hastening shipments to the US in anticipation of potential tariffs. Even with a three-month pause from Donald Trump’s administration on the most severe tariffs – except for those on China – there’s still a flat 10% levy that the US is now charging on any incoming goods from overseas.
Nintendo shares fell 5.4% and Sony’s shares dropped 9.4% in Tokyo on Friday, adding to a volatile week that just a day earlier had both companies registering double-digit moves up. The uneven stock price moves reflect uncertainty about the tariffs floated by Trump, including questions about the exemptions countries like Japan might win. A representative from Nintendo declined to comment. A Sony spokesperson did not respond to a request for comment.
For Nintendo, the 90-day window clears up the picture around the June 5 launch of the Switch 2 and provides time to ship what could be millions more units to the US from Vietnam. Even so, the company has yet to open pre-orders in the US, which it delayed indefinitely to assess Washington’s tariff announcements.
Should Sony or Nintendo have to hike US prices significantly, there’ll be pressure to reflect the change across global markets, Naidu said.
Nintendo’s future hinges on making the upcoming Switch 2 console a success, as it will soon be the primary platform for delivering its many popular game franchises and characters. Sony may find it tougher to sustain sales of a more expensive PS5, which is now more than four years old. Xbox maker Microsoft Corp may have the easiest time of the three, Naidu said, as it’s less reliant on production partners that are subject to higher US levies. – Bloomberg
