During a Q&A session part of its recent earnings report, Nintendo revealed more details about its reasons behind the recent price hikes for the Nintendo Switch 2. According to a transcript provided by Nintendo, president Shuntaro Furukawa noted that the company would have refrained from raising the console’s price if its manufacturing cost increases were temporary.
Furukawa explained that the price hike “was not due to any one specific factor.” Rather, several recent market factors led to the company making the decision. He also said that this doesn’t change the company’s long-term plans in how it handles its video game business.
“Regarding Nintendo Switch 2, the basic approach to our dedicated video game platform business remains unchanged: first expand on the hardware installed base, and then drive software sales,” he said. “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.”
Among the factors Furukawa discussed that led to the price hike are the current state of the memory prices, as well as trends in the foreign exchange market and the price of oil due to geopolitical factors. He also noted that each region where Nintendo does business is affected by market conditions to varying degrees.
“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,” he explained. “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 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.”
Nintendo had announced the price hike for the Switch 2 earlier this month, with its original price tag of $449.99/$629.99 CAD/€469.99 in the US, Canada, and Europe going up to $499.99/$679.99 CAD/€499.99. Japan was also affected, with the local language version of the console getting a price hike from ¥49,980 to ¥59,980.
Furukawa had previously apologized about the price hike and promised fans of Nintendo’s consoles that the company is working on “a robust software lineup” to ensure that the Switch 2 continues to do well.
“We sincerely apologize to our customers for the considerable inconvenience and trouble this will cause,” said Furukawa about the price hike. “While we wanted to prioritize a wide adoption, it was challenging to bear the rising costs over a long period. The [new] pricing does not fully account for all cost increases.”
