In a recent announcement regarding the Nintendo Switch 2, the company revealed that the console will be priced at $450, while first-party games are set to range from $70 to $80. During a series of interviews conducted at the unveiling event, Nintendo executives offered insights into their pricing strategy amid external pressures, including tariffs imposed by the Trump administration.
Doug Bowser, President of Nintendo of America, addressed the tariffs in an interview with CNBC, stating, “we’re still all trying to really understand [the tariffs] better and understand what possible impacts may rise from that.” He emphasized that the company did not factor in tariffs while determining the Switch 2’s pricing, which was based on what they believed was appropriate for consumer value.
In the same discussion, Bowser indicated that Nintendo aims to avoid repeating the Wii U experience, where hardware was sold at a loss to attract software customers. He remarked that the focus is on maintaining hardware margins, which may be slimmer compared to software, while ensuring that consumers recognize the value in their investment in a Nintendo device through diverse software offerings.
The potential impact of tariffs on imported consoles produced in Vietnam or China could complicate the company’s efforts to sustain hardware margins in the U.S. However, Bowser noted that Nintendo has built up inventories globally and confirmed that some Switch 2 units are already in the U.S., which could mitigate the financial implications of any tariffs.
Addressing Increased Costs
In justifying the $450 price tag, the executives cited enhanced hardware specifications and new features like GameChat and mouse mode. Nintendo Vice President of Player & Product Experience, Bill Trinen, explained that incorporating more technology into a system invariably increases costs.
Additionally, Trinen attributed part of the price increase to broader economic trends, stating, “We’re unfortunately living in an era where I think inflation is affecting everything.” This perspective is bolstered by economic data illustrating that the $299 price for the original Switch in 2017 is equivalent to about $391 today, according to the Bureau of Labor Statistics Consumer Price Index calculator. For many consumers whose wages have not increased in tandem, the 50 percent hike to $450 may prove challenging during uncertain economic times.
Trinen acknowledged the reality of rising costs, expressing a desire for prices to stabilize. He stated, “Obviously the cost of everything goes up over time… we try to find the right appropriate price for a product based on that.”
Game Pricing in Flux
The discussion around inflation also extended to Trinen’s explanation for the $70 to $80 price range for first-party Switch 2 games. He highlighted the relative stability in video game pricing over the decades, recalling a 1993 advertisement featuring Donkey Kong Country priced at $59, asserting that the industry has seen little movement since then.
However, referencing a game from the latter part of the cartridge era may not fully capture the market dynamics. Nevertheless, it is true that the equivalent of $80 in today’s currency aligns with historical, inflation-adjusted prices for console games during the disc era.
In a separate conversation with CNBC, Bowser clarified that Nintendo does not seek to establish a new standard for pricing with titles like Mario Kart World priced at $80. He reiterated that this decision is about determining the right price for the product based on its quality and experience, rather than conforming to industry norms.
Instead of adhering to a fixed pricing model, Bowser emphasized a tailored approach, assessing each game individually to determine its value based on factors such as gameplay experience, length, and depth. Trinen echoed this sentiment, emphasizing the importance of the player experience when setting prices.
Furthermore, Nate Bihldorff, Senior Vice President of Product Development and Publishing at Nintendo, remarked that pricing is a complex process, combining both subjective and objective components. “There isn’t an Excel sheet up here where you’re checking boxes… a fairly different set of prices for different pieces of software” reflects the nuanced methodology behind determining game pricing.
