Nintendo's Switch 2 console sales fell 41% in its fiscal second quarter, as the Japanese gaming giant raised prices in several markets amid soaring memory costs.
Nintendo sold 2.67 million units of the Switch 2 in the three months ended Sept. 30, down 41% from the same period last year and below the 3.82 million units sold in the previous quarter. The company reported revenue of 448.2 billion Japanese yen ($2.8 billion), missing the 481.37 billion yen average estimate from LSEG, and net profit of 73.5 billion yen, below the 82.16 billion yen expected.
During the quarter, Nintendo rolled out price increases for the Switch 2 in the U.S., Canada and Japan, after hiking the cost in Japan earlier in the year. Memory, a core component of Nintendo's consoles, continues to face a supply shortage and huge demand, which are driving an unprecedented price surge for the chips.
Despite the sales decline, Nintendo maintained its Switch 2 sales forecast of 16.5 million units for the current fiscal year, which ends in March 2027.
Nintendo released "The Legend of Zelda: Ocarina of Time," a remake of one of its most iconic games, on Thursday. Serkan Toto, CEO of Kantan Games, said the Ocarina of Time remake is Nintendo's only real blockbuster this fiscal year and called it "not enough to make investors happy, especially after the device is now as expensive as it is."
"It's getting harder and harder to sell video game hardware these days, and only hits help," Toto said. "Nintendo must step on the gas and deliver more big games next fiscal year to make sure the Switch 2 momentum continues."
Nintendo has some strong titles this year including "Tomodachi Life: Living the Dream" and the surprise viral hit "Pokémon Pokopia," but no major marquee titles. New Pokémon games are slated for release in 2027.
Analysis
Why This Matters
- Nintendo's Switch 2 sales drop signals broader challenges in the video game hardware market, where rising component costs and price sensitivity are squeezing demand.
- Price hikes in major markets (US, Canada, Japan) may test consumer willingness to pay a premium for gaming consoles, potentially affecting the entire industry's pricing strategies.
- The reliance on a single major title (Zelda remake) to revive sales highlights the pressure on hardware makers to secure exclusive, hit content to maintain momentum.
Background
Nintendo launched the Switch 2 as the successor to the hugely popular Switch, which has sold over 140 million units since 2017. The company has faced increasing competition from Sony's PlayStation 5 and Microsoft's Xbox Series X/S, as well as the rise of mobile and cloud gaming. Global memory chip prices have surged since late 2024 due to AI-driven demand and supply constraints, affecting multiple electronics manufacturers.
Key Perspectives
Nintendo: Maintained its Switch 2 sales forecast of 16.5 million units for the fiscal year, suggesting it expects the second half to recover on the back of new game releases.
Serkan Toto, CEO of Kantan Games: Says the Ocarina of Time remake is insufficient to boost sales alone, and that Nintendo needs more major titles next fiscal year to sustain momentum. He noted it is "getting harder and harder to sell video game hardware these days."
What to Watch
- Sales figures for the Switch 2 in the second half of the fiscal year, particularly following the Zelda: Ocarina of Time remake launch.
- Whether Nintendo announces additional price adjustments or new major game titles to boost demand.
- Memory chip supply and price trends, as they directly affect Nintendo's production costs and ability to price competitively.
