Nintendo Switch 2 could be being sold at a loss claim analysts

Despite its high cost, Nintendo could be making as little as £3 on each Switch 2 console sold, suggesting they literally couldn’t make the new hardware any cheaper.

Nobody has been in the games business longer than Nintendo and while they’ve had their ups and downs, to put it mildly, they’ve never really been in any financial trouble, since they have vast reserves of cash (which prevents them from being taken over by other companies) and never sell their consoles at a loss – or at least almost never.

Most new consoles from Sony and Microsoft are sold at a loss at launch, only becoming profitable with later hardware revisions that simplify the manufacturing process. Despite what many fans think, Nintendo has done this too, with the 3DS and Wii U both being sold at a loss for a while.

There’s no official information to judge what the situation is with the Nintendo Switch 2 but two different analysts suggest it’s cutting things very fine, with one estimate claiming it’s barely breaking even.

The Nintendo Switch 2 is being sold for £395.99. That’s significantly more than the £279.99 the original Switch was at launch, and the subsequent OLED Model at £309.99.

However, most fans agree that it’s not unreasonable, with many fearing it would be more, given inflation and the fact that the Switch 2 is bigger and more powerful than its predecessor.

Instead, it’s the price of the games that’s been the main point of contention, with Mario Kart World costing up to £75 for the physical version, although the digital edition is cheaper and fellow first party title Donkey Kong Bananza is cheaper still.

According to Toyo Securities analyst Hideki Yasuda, speaking to Bloomberg, the Nintendo Switch 2 costs around $400 in terms of raw materials. It’s being sold in the US for $449.99, so that means that once you factor in manufacturing it may not be making a profit – so you can imagine how Nintendo felt when Trump started talking about tariffs.

Multiple other sources also suggest that the console is making little or no profit, with YouTuber Nintendo Prime suggesting that Nintendo may be making as little as $4 (£3) on each sale in the US.

Double Jump Games, who is getting 9 Switch 2 Units to sell, noticed in the order that Nintendo is basically making nothing in the US per unit. They make $4 per unit sold, Nintendo’s costs basically match what it costs to be here. So next to no profit margin.

Meanwhile, MST Financial analyst David Gibson, speaking to the Financial Times, claims that the unit price for Switch 2 consoles being manufactured in Vietnam, which have lower tariffs than those made in the US, is $338.

However, that’s before things like shipping and transportation (and tariffs) are taken into account, so again it seems that if the Switch 2 is being sold at a profit it’s a very small one.

Console manufacturers make money in two main ways, by selling their own exclusive games – which is a much more important avenue for Nintendo than for Sony or Microsoft – and for charging licencing fees to other publishers for releasing their games on the console.

Conversely, this is more important for Sony and Microsoft, since Nintendo consoles have traditionally had poor third party support. The Switch 2 seems to be much better supported so far, but that can quickly evaporate if the console is not an instant success or if customers simply don’t buy the third party titles.

Whatever the profit figure is – and it will vary from country to country – it suggests that Nintendo is walking a narrow line and while the higher game prices are primarily because of the higher cost of making modern video games, they may also be the only way to make a profit in the short term.

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