The question on every video game investor and analyst’s lips during the recent Nintendo earnings Q&A was whether the Mario maker will have to raise the price of the Switch 2 due to spiking memory prices amid AI-fueled shortages. RAM is through the roof and graphics cards are getting delayed, but Nintendo is keeping a cool head through the market turmoil.
“We are working to secure stable supplies of memory components by holding discussions from a long-term perspective with our business partners,” president Shuntaro Furukawa said this week. “As a result, the recent rise in memory prices did not have a significant impact on hardware profitability in the third quarter. In addition, we do not expect any significant impact in the fourth quarter.”
He continued, “However, if this rise in component prices lasts longer than expected and runs through the next fiscal year and beyond, it may put pressure on profitability. If the situation deteriorates significantly, we will carefully assess market trends and respond.” As a result, Nintendo confirmed that no decision on raising the price of the $450 Switch 2 has been made yet, but if and when that time comes, it will decide based on things like the “platform’s installed base, sales trends, and the market environment.”
Not satisfied with that ambiguity and uncertainty, Q&A members kept grilling Furukawa for more specifics. The company admitted that the recent spike in component prices “exceeds our expectations” but said that it’s been stockpiling inventory and arranging long-term deals to absorb the shocks. Even if prices continue to rise into the summer, Nintendo can put off any painful pricing changes for a bit longer. But not indefinitely.
Selling Switch 2 at a profit vs. growing the install base
If push comes to shove, will Nintendo maximize profitability or growing the hardware’s install base? “It is difficult to predict the changes in the external environment that are currently taking place, but I think it is not an appropriate approach to be excessively influenced by short-term trends,” Furukawa said. “The second and third years for Nintendo Switch 2 are very important, and if we can expand the hardware installed base, we can use that as a basis to greatly expand software sales.”
It certainly sounds like Nintendo is going to do everything in its power to avoid making the Switch 2 $500 by this time next year. At the same time, if sales momentum picks up even more after the announcement of a new 3D Mario, Legend of Zelda, or the long-awaited Gen 10 Pokémon games, well, maybe it’ll be in a position to do whatever it wants. Nintendo isn’t rushing to embrace one strategy or another just yet.
Who knows what will happen to the AI bubble in 12 months, what new tariffs will hit consumers in the U.S., or if the company’s most lucrative sales market will be plunged into an unexpected recession? Predicting any of those things is as much a fool’s errand as trying to guess what Nintendo’s next move is these days.
