Switch 2: Same Pipe, New Plumbing
Nintendo is entering a new hardware cycle with the upcoming launch of the Switch 2, a pivotal moment after a sluggish fiscal year. FY25 marked a clear slowdown, with hardware sales declining sharply as consumers held off in anticipation of the next gen console.
With competition intensifying and macro pressures mounting, Nintendo’s execution over the next 12 months will be critical both in terms of unit economics and investor confidence.
The company shipped 11 million Switch units in FY25, missing its 13.5 million target. That makes it Nintendo’s second worst year for hardware sales in three decades when factoring in both home consoles and handhelds. Revenue declined 30% to $7.8 billion, while net profit fell 43% to ¥279 billion ($1.9 billion).
Software sales also dropped 22% to 155 million units, well below the prior forecast of 165 million. Despite the slump, the original Switch remains a dominant contributor, still accounting for 93% of company revenue.
Now, all eyes are on the Switch 2, slated to launch this June. Early signs point to strong momentum pre orders in Japan alone exceeded 2.2 million within three weeks, rapidly depleting initial supply. Nintendo is guiding for 15 million units sold globally by March 2026, a cautious estimate that may leave room for upside. If it meets that number, the Switch 2 will match the debut-year performance of its predecessor, positioning the company to challenge the all-time console sales record currently held by the PlayStation 2.
Strategically, Nintendo is aiming for stability rather than reinvention. The Switch 2 keeps the hybrid format but offers incremental upgrades: more power, backward compatibility, and refined hardware. The approach mirrors Apple’s product strategy evolve the platform without alienating the base.
After the Wii U’s commercial failure and missing the mobile gaming boom, Nintendo is playing it safe, but smart. It’s a familiar experience with enough improvements to drive upgrades and new adoption.
However, risks remain. Roughly 44% of Nintendo’s revenue comes from the Americas, but its manufacturing is still concentrated in China and Vietnam leaving it exposed to potential U.S. tariffs. CEO Shuntaro Furukawa has warned that pricing adjustments could be on the table, which could push the $450 base price higher. Managing that balance protecting margins without disrupting demand will be essential. Still, with pent-up demand and a loyal fan base, Nintendo appears well positioned for a strong new cycle if it can navigate the early execution risks
Nintendo is entering a new hardware cycle with the upcoming launch of the Switch 2, a pivotal moment after a sluggish fiscal year. FY25 marked a clear slowdown, with hardware sales declining sharply as consumers held off in anticipation of the next gen console.
With competition intensifying and macro pressures mounting, Nintendo’s execution over the next 12 months will be critical both in terms of unit economics and investor confidence.
The company shipped 11 million Switch units in FY25, missing its 13.5 million target. That makes it Nintendo’s second worst year for hardware sales in three decades when factoring in both home consoles and handhelds. Revenue declined 30% to $7.8 billion, while net profit fell 43% to ¥279 billion ($1.9 billion).
Software sales also dropped 22% to 155 million units, well below the prior forecast of 165 million. Despite the slump, the original Switch remains a dominant contributor, still accounting for 93% of company revenue.
Now, all eyes are on the Switch 2, slated to launch this June. Early signs point to strong momentum pre orders in Japan alone exceeded 2.2 million within three weeks, rapidly depleting initial supply. Nintendo is guiding for 15 million units sold globally by March 2026, a cautious estimate that may leave room for upside. If it meets that number, the Switch 2 will match the debut-year performance of its predecessor, positioning the company to challenge the all-time console sales record currently held by the PlayStation 2.
Strategically, Nintendo is aiming for stability rather than reinvention. The Switch 2 keeps the hybrid format but offers incremental upgrades: more power, backward compatibility, and refined hardware. The approach mirrors Apple’s product strategy evolve the platform without alienating the base.
After the Wii U’s commercial failure and missing the mobile gaming boom, Nintendo is playing it safe, but smart. It’s a familiar experience with enough improvements to drive upgrades and new adoption.
However, risks remain. Roughly 44% of Nintendo’s revenue comes from the Americas, but its manufacturing is still concentrated in China and Vietnam leaving it exposed to potential U.S. tariffs. CEO Shuntaro Furukawa has warned that pricing adjustments could be on the table, which could push the $450 base price higher. Managing that balance protecting margins without disrupting demand will be essential. Still, with pent-up demand and a loyal fan base, Nintendo appears well positioned for a strong new cycle if it can navigate the early execution risks
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🟣MasterClass moonypto.com/masterclass
🟢Signal moonypto.com/signal
🔵News t.me/moonypto
⚪ t.me/moonyptofarsi
🟢Signal moonypto.com/signal
🔵News t.me/moonypto
⚪ t.me/moonyptofarsi
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.