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Japanese gaming leader Nintendo announced on Friday that it will increase the price of its upcoming Switch 2 gaming console due to rising memory chip costs, warning of an 27% decline in net profit for the current fiscal year. Sony, whose PlayStation 5 has already seen a price increase, remained optimistic, projecting a 13% increase in revenue despite declining sales of its older console.
Nintendo revealed that starting May 25, the Switch 2 will cost 20% more in Japan, and from September 1, the price will go up by 11% in the U.S. to $499.99. In Europe, prices will increase by 6%, reaching €499.99. The company anticipates its net profit for the year ending next March to fall 27% to 310 billion yen (approximately $1.98 billion), with sales dropping 11.4% to 2.05 trillion yen. It also forecast an operating profit of 370 billion yen, significantly below the average analyst estimate of 480 billion yen, according to Bloomberg News.
Nintendo reported a 52% jump in net profit last year, reaching 424 billion yen on sales of 2.31 trillion yen—nearly double the previous year’s figures. The company noted that the Switch 2 enjoyed a solid start following its June launch, with global sales continuing to grow. By March, it had sold 19.86 million units, boosted by popular titles like “Pokemon Pokopia,” “Mario Kart World,” and “Donkey Kong Bananza.”
The increase in memory chip prices, driven by the artificial intelligence boom, has impacted manufacturers of gaming consoles, smartphones, and other tech devices. Supply chain disruptions caused by geopolitical tensions, including the Iran war, have further exacerbated these issues. Sony reported that it sold 16 million PS5 units last fiscal year, down from 18.5 million the previous year.
Analysts believe Sony is positioned well to benefit from the upcoming launch of the highly anticipated “Grand Theft Auto VI” game in November, which is expected to drive console sales. With 92 million PlayStation 2 units sold since the PS5’s 2020 launch, industry experts suggest Sony is likely to see continued growth. Serkan Toto, a gaming industry consultant, said, “If there’s a game that can move millions of PlayStations, it’s this one.”
Despite falling hardware sales, Sony’s gaming division is expected to see higher profits in the year ending March 2027, thanks to strong software sales and ecosystem engagement. Amir Anvarzadeh, a strategist at Asymmetric Advisors, explained, “Sony’s mature PS5 cycle puts it in a good position to withstand rising memory costs. Their focus on high-margin software and ongoing platform engagement should benefit their bottom line.”
Nintendo faces a more challenging scenario, however, as consumers purchasing the Switch 2 are particularly price-sensitive. Toto noted that the initial game lineup for the new console is weaker than its predecessor’s, but stressed that Nintendo needs to accelerate its software development to boost sales moving forward.
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