With PS5/Xbox Series X Around The Corner, Does The Switch Need A Price Drop To Keep Selling?

Just how much will the next generation affect the Switch’s prospects?

Posted By | On 22nd, Jun. 2020 Under Article, Editorials

The Nintendo Switch is on top of the world right now. It has the biggest hit of the year, it has broken all records and is now the fastest selling console of all time, and it continues to top hardware charts every week and every month across the world. With the Switch, Nintendo hit a sweet spot that most of the market responds to, and that resonance has only grown stronger in the post-COVID world, where the Switch’s flexibility has found a lot of takers among people stuck at home.

The question is how long we can expect Nintendo’s streak here to continue. The Switch is firmly leading right now, but its current competition is two consoles that are on their way out, and have successors confirmed to be launching in a few months. When the next generation PS5 and Xbox Series X hit the market, will they impact the Switch’s momentum at all? Does Nintendo need a price drop to be able to stay competitive with the rest of the market?

The simple answer is no, but there are a lot of factors that contribute to that. The most obvious factor is that even at its current asking price, the Switch is cheaper than what we can expect the PlayStation 5 or Xbox Series X to retail at, so even at its current $300 price for the standard model, the Switch would compare favorably. More importantly still, Nintendo offers an even cheaper model in the $200 Switch Lite, which This low pricing is going to be extremely important for Nintendo, because the market for consoles is prone to high price elasticity (meaning the more expensive something is, the less it sells), and having a $199 option available when the competition is literally double that price, if not more, will probably hold a lot of sway among budget minded families, and the mass market.

nintendo switch

The Switch’s lower price becomes even more important in the present context of the global economic meltdown, which has led to over 30 million unemployed people in the United States alone. At a time when people are scrounging for cash just for basic necessities, very few will buy a $499 or higher console. A $199 or $299 entry point is far more appealing, especially when factors such as the Switch’s cheaper online subscription, or larger library than the newly-launched PS5 or Xbox Series X, come into play.

Indeed, we have seen the Switch be extremely popular even in the thick of the COVID pandemic, as well as the economic collapse; it has achieved this in spite of no price drop, disrupted supply and manufacturing chains, and closures of most physical retailers around the world. Its popularity is buoyed in part by the intrinsic appeal of the hardware (a system you can continue playing in portable mode when the kids want the TV has a lot more appeal than one that you can’t), and in part because of the software on offer for the Switch, such as Animal Crossing New Horizons, which provides the perfect escape from the grim reality we find ourselves in, or Ring Fit Adventure, which lets people stay fit and remain active at a time when even leaving the house can be dangerous.

These factors won’t suddenly disappear come Holiday season, and in fact they will matter even more so; months into an economic recession is where your immediate savings have started to deplete, so higher prices are an instant no-go, while rumored titles such as ports of Mario games will only serve to further the Switch’s appeal for the stuck-at-home demographic.

But even in the absence of COVID, Nintendo really wouldn’t have needed to drop the price of the Switch. The simple reason for this is that the Switch really isn’t competing directly with PlayStation or Xbox, and it is unlikely that its performance will be impacted to much degree at all by whatever they do. We actually already have proof of this – the Switch’s launch in 2017 had absolutely no effect on the PlayStation 4, which continued to break records, or the Xbox One, which saw its sales recover a bit thanks to the launch of the Xbox One X. That goes both ways, because performance of the Switch is not impacted by those consoles either. Most people don’t buy a Switch instead of an Xbox or PlayStation, they buy it in addition to one of those. NPD estimates that the majority of Switch owners in the US have at least a PS4 or an Xbox One as well, which only lends further credence to this idea.

Switch Lite Coral

The launch of the PS5 and Xbox Series X, then, is likely to have minimal, if any, impact on the Switch’s performance, which will be dictated by the market demand for the kind of product that it is. This means Nintendo has no need to drop the price for the Switch – as discussed, it will continue selling anyway, even in the face of renewed competition. They can’t even meet the demand for the Switch at its current asking price – bear in mind the Switch continues to sell out around the world, which very clearly indicates that its price is no barrier to the market. If Nintendo can’t even meet current demand, then how will they even be able to meet the higher demand that will ensue with a cheaper Switch?

Moreover, it’s not like Nintendo doesn’t have a cheaper entry point for people already, as that is exactly what the Switch Lite is. In effect, the Switch already received a $100 price drop last year, because the Switch Lite is $100 cheaper than the standard model.

If, however, Nintendo manages to increase its manufacturing capacity, I do hope they drop the price of the Switch (at least the flagship model, if not across the range). While all the factors I listed against a price drop obviously still apply, and Nintendo doesn’t need to drop the price, I still think they should once they know they can meet the demand. At almost three and a half years in, the Switch is actually the longest a major console has gone without a price drop – even the Wii got one before the Switch, and it’s not like it needed one either. And a cheaper price will only serve to make the console’s position against the next gen consoles stronger, while making it accessible to even more audiences for whom even the current asking price might be too high.

The Switch doesn’t need a price reduction to keep selling. But I still hope that it gets one.

Note: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, GamingBolt as an organization.

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