Nintendo needs the Switch 2 to hit the top of the flagpole

With eight years of sales under its wrist strap, the Nintendo Switch has solidified itself as one of the most successful pieces of gaming hardware ever.

Unfortunately for Nintendo, gaming is more of a “what have you done for me lately” industry. Now, all eyes are on the Switch 2, set to release sometime this year. Its debut marks a major inflection point for the Mario maker, which is hoping there’s enough pent-up demand for the device to drive sales in an already crowded gaming year.

The release can’t come soon enough for Nintendo, which has struggled lately, with Switch sales falling faster than it predicted. (Understandably — sales are bound to be disappointing when everyone knows a sequel to an old but successful product is on the way.)

Despite disappointing sales numbers lately, investors are bullish on the gaming juggernaut as they anticipate the Switch 2. Nintendo shares have surged since the beginning of the year, popping after CES leaks in early January and then again after the company’s official Switch 2 announcement. The stock is up 38% since the leaks.

There’s still a lot we don’t know about the Switch 2, and official answers probably won’t come until early April at Nintendo’s planned presentation about the new console. In search of some intelligence in the meantime, Sherwood News reached out to a handful of gaming industry analysts to set expectations.

Pricing forecast

This nice analysis from Polygon shows that, adjusted for inflation, Nintendo has priced its new consoles in the $350 to $500 range for the past 40 years. Analysts we spoke to expect that trend to continue with the Switch 2.

Joost van Dreunen, CEO of analytics firm Aldora and a gaming strategy professor at NYU, is predicting a $399 price tag for the Switch 2. That, according to van Dreunen, would keep Nintendo in the sweet spot: below premium PC handhelds like the Steam Deck, above the original Switch’s launch price ($300), and in line for a positive margin on hardware.

Even at the top of Nintendo’s traditional console price ceiling, Ampere Analysis’ games research director, Piers Harding-Rolls, doesn’t see a significant crunch on sales — at least initially.

“Even if it’s priced at $499 or whatever, I don’t think that will impact demand too much,” Harding-Rolls said. “There’s a lot of pent-up demand, and I think the difference between $50 here or there is not going to impact that demand.”

Sales expectations

The Switch 2 has big shoes to fill. Since 2017, Nintendo has sold 151 million original Switch consoles (and god knows how many replacement joy-cons). That’s just shy of the company’s own bestselling piece of hardware, the DS, and only 9 million short of the all-time console unit sales leader, Sony’s PlayStation 2.

But the original Switch got a major sales bump from the pandemic gaming surge, and most analysts don’t expect the successor to keep the pace long-term.

Harding-Rolls and Ampere are bullish on the new console, expecting 13.2 million Switch 2 consoles to be sold to customers in the calendar year — a faster rate than the original.

“We’re expecting the sales to be slightly ahead in terms of the cadence,” Harding-Rolls said. “The argument for that is the fact that they’ve got this big install base of Switch users, which you didn’t have in the previous cycle.”

“The forward-looking strategy appears focused on platform sustainability rather than raw unit economics,” van Dreunen said. Nintendo has confirmed that most Switch games will be playable on the Switch 2. That, van Dreunen says, suggests Nintendo is prioritizing existing customer retention and recurring digital sales.

Manu Rosier, Newzoo’s director of market analysis, also expects a strong start but lower lifetime sales for the handheld.

“The original Switch had years of minimal competition in the hybrid console space, whereas the Switch 2 entered a more crowded market,” Rosier said.

Handheld competition

The more crowded market Rosier mentioned refers to handheld options like the Steam Deck, ROG Ally, and, to a lesser extent, Sony’s online-only cloud streaming handheld, PlayStation Portal.

While these devices could one day threaten Nintendo’s market share, most analysts don’t see them as significant competition.

“These devices appeal to PC gamers who prioritize access to vast libraries like Steam and Game Pass. They are less attractive to casual gamers, families, and Nintendo’s dedicated fanbase,” Rosier said.

According to van Dreunen, market data shows that premium PC handheld owners typically own multiple gaming platforms and represent “market validation” rather than competition for Nintendo. It’s the same principle that helped the original Switch easily eclipse the sale numbers of PlayStation and Microsoft’s Xbox consoles: 71% of Switch owners have another gaming system.

Tariff impact

Like with many other industries, the Trump administration’s proposed and current tariffs on goods from China, Canada, and Mexico are a big unknown in gaming.

About 40% of Nintendo’s consoles are sold in the US, so any disruption could deal a significant blow to the company’s bottom line.

“Trade policy uncertainty represents the paramount risk for Nintendo’s Switch 2 launch,” van Dreunen said.

On the company’s earnings call earlier this month, Nintendo President Shuntaro Furukawa addressed the looming question of tariffs.

“Switches are produced not only in China, but also in Vietnam and Cambodia. We have established a system in anticipation of various geopolitical risks,” Furukawa said. “A certain impact is expected, but the impact on our performance this fiscal year will be minor.”

Harding-Rolls reiterated that he expects pricing to be less of an issue for early adopters, but that tariff-related sticker shock could become a bigger problem further down the line. Harding-Rolls noted that consoles were ultimately granted exemptions from tariffs on goods from China during Trump’s first administration — though it’s anyone’s guess if that’ll happen again.

Nintendo’s cheat code

What sets Nintendo apart from its console rivals is its first-party game library. While reluctant gamers could potentially hold out on a console update for a year or two, buying a Switch 2 will eventually be the only way to play the latest Mario or Zelda game.

And Nintendo doesn’t discount those games very often. Van Dreunen notes that “Mario Kart 8” sold 57 million copies, with minimal discounting, over its life cycle.

Sitting out of the console graphic wars — and positioning its hardware launches years ahead of rivals — has made that kind of success possible for Nintendo. The Switch 2 will test that theory for the next generation of gaming consoles.