Nintendo president Shuntaro Furukawa has made it clear that the US tariffs did not factor into the Switch 2’s higher price point.
In an earnings call Q&A published yesterday, Furukawa said the ¥49,980/$499.99/£395.99 price was determined by manufacturing costs, consumer impressions, market conditions, and exchange rates.
“For software, in addition to the same factors, we also take into account rises in costs, due to aspects such as increased game file size and extended development periods, when determining price,” he said.
“Going forward, we will continue to consider appropriate prices for each title when it comes to software prices.”
“Hardware involves special factors such as tariffs, and we will take into account factors like those we just described, while conducting careful and repeated deliberations when determining price.”
Speaking of tariffs, Furukawa explained why they did not affect the base price of the Switch 2.
“Our basic policy is that for any country or region, if tariffs are imposed, we recognise them as part of the cost and incorporate them into the price,” he explained.
“However, this year marks our first new dedicated video game system launch in eight years, so given our unique situation, our priority is to maintain the momentum of our platforms, which is extremely important for our dedicated video game platform business.
“Consequently, if the assumptions on tariffs change, we will consider what kind of price adjustments would be appropriate, taking into account various factors such as the market conditions.”
The higher price of the Nintendo Switch 2 also factored into the firm’s sales forecast for the console. As highlighted in its financial results for the full year, it expects hardware sales of 15 million and software sales of 45 million.
Furukawa said the 15 million figure was set in an attempt to meet the “same level of sales” as the Switch did in its first ten months of sale (that being between March 2017 and December 2017), which was 10 million units.
“The Switch 2 is priced relatively high compared to the Switch, so we recognise that there are corresponding challenges to early adoption,” he noted.
“That being said, the Switch 2 can play compatible Switch software, so there is continuity between the platforms.
“We are taking steps like building software with the hardware to accelerate adoption in the first fiscal year, aiming to get off to the same start we did with the Switch.”
Last month, Nintendo of America president Doug Bowser said “longevity” was also a factor for the Switch 2’s higher price point.
“We want to make sure that this is a device that is approachable, that consumers will see as part of their overall entertainment experience and will understand that it has longevity to it,” Bowser said.
“And all of those factors really go into the consideration of the price.”
Furukawa emphasised that its “hardware production capacity” did not affect its forecast, and neither did “the tariff situation in the US or a possibility of a recession.”
“In order to achieve sales of 15 million units, we will need to manufacture the hardware in quantities greater than that,” he reiterated.
“Our first goal is to get off to the same start we did with the Switch, and we are working to strengthen our production capacity so we can respond flexibly to demand.”
When asked whether limits to production capacity affected the forecast, Furukawa confirmed there was no limit and that Nintendo continues “to strengthen [its] production capability.”
“Our plan is to continually produce and ship significant numbers of Switch 2 units going forward,” he explained.
“To achieve a certain level of sales, we believe it is necessary to maintain momentum throughout the year, not just at the start, so we set this figure as the number of our initial plan.”
As for its software forecast, Furukawa highlighted the “robust lineup” of titles from software publishers this time around compared to the Switch launch, and Switch 2 editions of Switch games.
“This fiscal year, we will aim for the target we have set as the sales volume forecast, strengthen our production capacity to respond to recent increased demand, and focus on promoting sales in an effort to exceed our forecast,” he added.
“The momentum we have immediately after the Switch 2 launch is important, of course, but the challenge we face is how to sustain that momentum and carry it into the holiday season.”
