Nintendo Co said it will increase the price of its Switch 2 console to US$500 (RM1,955) from US$450 (RM1,760), acknowledging pressure on profitability of its flagship device heading into its second year on the market.
The Kyoto-based company will make the global change on September 1, it said in reporting its full-year earnings on Friday. It offered a surprisingly downbeat outlook for performance in the current year, with a forecast of 370bil yen (US$2.4bil/RM9.4bil) in operating profit far below the 480bil yen (RM12bil) average of analyst estimates.
Nintendo expects to sell 16.5 million Switch units in the year through next March, another disappointing figure. The new console had sold 19.9 million units by the end of March. The device is selling at the fastest pace for any home console in history, motivated in part by consumer fears about potential price increases caused by US tariffs.
The company will rely on software for much of its income this year, as its hardware business has been challenged over the past six months by a global electronics component shortage. The war in Iran has also raised shipping and logistics costs. Nintendo said it expects an impact of 100bil yen (RM2.5bil) on its business from cost surges in memory and materials as well as from tariffs.
"Nintendo typically starts the year with conservative guidance, but even so, this feels unusually soft,” said Toyo Research Advice analyst Hideki Yasuda. "The price increase is understandable given the current macro environment, but if higher prices lead to weaker-than-expected sales, then it raises the question of whether the appeal of the Switch 2 was ever that strong to begin with.”
Game sales for the new platform have yet to take off, several months after the Switch 2’s June debut. Earlier this week, Nintendo announced a Star Fox remake for the summer, though its outlook suggests the company doesn’t expect its broader challenges to dissipate anytime soon.
Shares in the company are on their worst run in a decade and down roughly 30% this year, with investors signalling dissatisfaction about the Switch 2’s profitability. Nintendo had until today resisted raising the price of its flagship console, seeking to sustain its affordability for the widest possible audience.
After the March quarter delivered surprise hit Pokémon Pokopia, Nintendo’s momentum hinges on the strength of its lineup for the rest of the year. The looming release of Grand Theft Auto VI in the fall is likely to benefit rival Sony Group Corp, whose PlayStation 5 is widely expected to be the primary platform for the new marquee game. – Bloomberg
