Japanese gaming giant Nintendo said on Friday that it will hike the price of its Switch 2 gaming console as memory chip costs soar, warning that net profit would fall 27 per cent this year.
Sony — whose PlayStation5 has already risen in price — was more upbeat, projecting a 13pc rise in income but still with falling sales of its ageing console.
Nintendo said the Switch 2 price in Japan will rise 20pc from May 25, and from September 1 by 11pc in the United States to $499.99 and in Europe by 6pc to 499.99 euros.
For the year to next March, Nintendo expects net profit to drop 27pc to 310 billion yen ($1.98bn) on sales of 2.05tr, marking a fall of 11.4pc.
It also forecast 370bn yen in operating profit, considerably below the average analyst estimate of 480bn yen, according to Bloomberg News.
Net profit surged 52pc to 424bn yen last year on annual sales of 2.31tr yen, nearly doubling from the previous year, Nintendo said in a statement.
“Nintendo Switch 2 got off to a good start following its launch in June and global sales continued to grow after that,” the company said.
It sold 19.86m units of the new console by March, thanks to games like “Pokemon Pokopia”, “Mario Kart World” and “Donkey Kong Bananza”.
Memory chips
Price rises of memory chips fuelled by the artificial intelligence boom have hit makers of games consoles, smartphones and other devices, while disruptions linked to the Iran war have exacerbated supply problems.
Sony said on Friday that it sold 16m PlayStation5 units in the past fiscal year, down from 18.5m in the previous 12 months.
With 92m PlayStation2 units sold since its launch in 2020, analysts said the firm was well placed to benefit from the release of smash hit “Grand Theft Auto VI”, due in November.
“If there is a game that can sell PlayStations by the millions, it is this one,” gaming industry consultant Serkan Toto told AFP.
For the year to March 2027, the game division is expected to enjoy higher profits despite falling sales, Sony said.
“Sony’s more mature PS5 console cycle leaves it better placed to weather higher memory costs,” said Amir Anvarzadeh, strategist at Asymmetric Advisors.
“Having already moved past the heavy hardware penetration costs typical of earlier years, Sony’s bottom line stands to benefit significantly from the high-margin software sales and ecosystem engagement this launch should trigger,” Anvarzadeh said.
Nintendo though is in a more difficult position, Toto said, as Switch 2 customers are “especially price sensitive”.
“The first year game lineup for Switch 2 is much weaker than for its predecessor,” he said.
“But now it’s time for them to really step on the gas on the software side.”