In the depths of the Covid-19 pandemic, a bored, miserable, hunkered-down world turned to Japan for inspiration. Nintendo’s Switch console, and its Animal Crossing: New Horizons game, stood ready to provide escape from crisis.
The 135-year-old company had evolved for this moment. The console was a revolutionary hybrid of hand-held and home gaming system; the game was the classic Nintendo recipe of soothing, funny and engrossing. The Kyoto-based toymaker, whose machines have now entertained generations X, Y, Z and alpha, was in its element.
On Wednesday last week, Nintendo unveiled the Switch 2 – the follow-up to the 2017 console, the all-in commercial wager of Japan’s most globally adored company and, it hopes, another digital comfort blanket for troubled times.
It is a crucial moment not just for Nintendo itself, but also the entire gaming sector, analysts say.
“Nintendo’s console is a kind of democratisation and proliferation of gaming. Because it’s not for the super-hard-core gamers, it has the broadest demographics of any machine,” says Andrew Szymanski, an executive in the gaming industry based in Tokyo who developed games for the original Switch.
But on the very same day Nintendo made its announcement, Donald Trump walked into the White House Rose Garden and unleashed the “liberation” of large tariffs on a wide range of trading partners. Trump’s levies were targeting countries, but will ultimately hit individual goods – machines, such as the Switch 2, on which global industries hinge.
Having shifted production to southeast Asia in recent years in anticipation of trade tensions between the US and China, Nintendo was directly affected by some of the steepest new tariffs. About 48 hours after the launch, it suspended pre-orders of the Switch 2 in the US, becoming one of the first companies wounded by a new era of trade uncertainty.
Yet even without that backdrop, Nintendo has given itself a high mountain to climb. The Switch 2, which will go on sale globally in June, looks an awful lot like the original Switch but with a significantly higher price tag and a bar for success set stunningly high by its predecessor.
Nintendo wants to match or best a device that has sold more than 150 million units so far and enticed both old and new fans into the arms of Super Mario, Zelda and Donkey Kong. The Switch 2 represents a large bet by Nintendo that fans want more of the same.
If Nintendo gets it right, then the Switch 2 could offer the simplest path forward for an industry that has struggled with stagnant revenues since the pandemic ended, and is grappling with whether to move away from dedicated gaming hardware or double down on hand-held machines.
Coming in the middle of the Microsoft Xbox and Sony PlayStation’s own hardware life cycles, the Switch 2 could also breathe life into old games, reset the industry’s pricing structures and capture an entirely new generation of gamers.
“This is one step towards the revitalisation of the gaming industry,” says Serkan Toto, a Japan-based games expert and founder of Kantan Games, speaking before the launch.
But Nintendo will be hoping the ill-starred launch does not derail the Switch 2’s success, especially as it was priced at a level that threatens to make fans baulk even before the spreading effects of the tariffs are knowable.
Analysts, meanwhile, will be watching it as an emblem of the disruption the new tariffs might cause the consumer sector. Having been born at the dawn of a trade war, the Switch 2 risks becoming one of its earliest victims.
Sleek, powerful, with a larger screen, upgraded magnetic controllers called Joy-Cons and a new chat function, the Switch 2 is a recognisable but premium version of its predecessor.
For some fans, the biggest differential is its price. The machine was supposed to retail at $449.99, a 50 per cent price increase over its predecessor, which reflects increased hardware costs and what analysts believed might provide a buffer for the impact of tariffs on supply chains.
Even if the price stays where it is now, analysts say that would be a risk for Nintendo. “Inflation-adjusted, it’s a $50 premium over the original, and I don’t know if it has the innovation, the kind of new design or function, to have the long-lasting power as the previous Switch,” says Jay Defibaugh at CLSA in Tokyo.
But now that Trump has finally shown his hand, there is growing concern that it may end up being even more expensive – particularly in the US itself, which analysts think makes up a third of Nintendo’s revenues.
Since the first Trump presidency, and its campaign against China’s trade deficits, Nintendo has shifted its manufacturing and assembly bases towards Vietnam and Cambodia, which analysts say have made up 50 per cent of supply in recent months. Last week, Trump announced tariffs of 46 per cent on goods from Vietnam and 49 per cent on goods from Cambodia.
Plenty of units will escape those tariffs. In January alone, Nintendo shipped hundreds of thousands of Switch 2 devices to the US from Vietnam in advance of the launch. It is unclear exactly how large an inventory build-up it has managed to put in place.
But few analysts believe the scale of the cost increases was predicted.
“I’m not sure anyone would have put together a model with a 46 per cent tariff, so this is going to be the key question as, in the US market, they may well have to move the price,” says Gareth Sutcliffe at Enders Analysis.
Nintendo is still committed to a June release but has not told the market if prices will need to be raised.
“With US pre-orders now suspended, it looks like Nintendo will raise US prices, banking on demand from core Nintendo fans for the new hardware,” says Robin Zhu at Bernstein.
“Assuming a 46 per cent tariff on $340 or so of build cost ... would imply $160 of incremental tariffs on the Switch 2 hardware,” he adds.
Higher pricing already puts it in direct competition with Sony’s baseline version of the PS5 and Microsoft’s Xbox, more powerful machines that have their own dedicated bases of support.
For Paul Fuary, a 40-year-old nurse from Brisbane, shopping for more reasonably priced retro titles, the cost of the Switch 2 gives pause for thought.
“Sure, it’s got great features but Nintendo is normally for kids or for the family. At those prices, it’s getting hard to convince them to buy that,” he says.
Visiting Tokyo for his 40th birthday, Fuary already owns an Xbox, a PS5 and a Switch. He admitted he had the disposable income to buy the newest Nintendo machine but he doubted he would do so on launch day.
“I’ll wait, and see if the price drops,” he says.
It is not only the Switch 2 console that carries a premium sticker price. The very best of its impressive roster of games are to be sold at as much as $80 – levels at which it might become harder for kids to convince their parents to shell out for the newest iteration of Mario Kart.
Those prices put it out of reach of some fans, who have taken to message boards and social media since the announcement of the Switch 2 to demand that Nintendo “drop the price”.
The industry, however, welcomes the relatively high pricing of the games, hoping that it sets a new standard. “Nintendo can clearly move its pricing on its top franchises,” says Sutcliffe. “That is clearly the new premium price point for all AAA games and they are providing premium games.”
For Szymanski, the seemingly high prices of the new premium Switch 2 games represent an opportunity, as an increase in the cost of top-tier games is long overdue in order to enable indie game developers to compete.
“Prices haven’t moved and everything else has ... so that conversation has to happen. Having Nintendo coming out of the gate with these prices will force that discussion and rip off that band-aid,” he says.
Nintendo is testing what it can get away with charging, analysts say. But there is still a broad belief that fans should still be fine during the first rush to buy: the company’s record of success shows that it understands its core audience extremely well, and has tailored a product to serve their desires.
The mainstream, however, is a different story. “The first one or two years will be dominated by superfans who would buy it even if it was $500 ... but the price did jump by 50 per cent so I’m a little worried about what happens to the Switch once the core have bought one. Then Nintendo needs to switch to reach the mainstream,” Toto says.
A blockbuster game might be the surest way to do that. The lack of a 3D Mario game, or even a teaser for one still in development, did disappoint some fans watching the launch event, but many expect that it will soon make an appearance anyway.
Consultancy Omdia predicts sales of 14.7 million Switch 2s this year, putting it ahead of its predecessor by about 10 per cent during its first calendar year on the market.
Game sales, and developers, obviously follow consoles and the Switch was printing money during its lifetime. The average Switch owner bought nine games, according to Bernstein’s Zhu, meaning that by the end of last year it had sold almost 1.4 billion games. Mario Kart 8 shipped 67.4 million and Animal Crossing 47.4 million.
A runaway Switch 2 success could signpost the future of the console industry.
Gaming revenue has been broadly flat for several years, according to Sutcliffe of Enders Analysis, with software sales compensating for declining demand for ageing Xbox and PlayStation consoles.
That, along with rising costs and the high benchmark set by the first Switch, has changed the calculus of success for the entire sector. It has also deepened the uncertainties around the expected split into premium consoles, such as the PS5 Pro, hand-held machines and cloud-based or PC gaming.
Xbox and Sony are expected to have their own hand-held machines out at some point in the future.
In helping other gaming companies decide how they should build their own next generation of machines, Nintendo is ensuring its own competition.
“The competition is clearly amassing at this point ... That is why the year-one sales for the Switch will be so important, because competition is coming and the underlying story is that fixed boxes are dying, from Sony through to the Xbox,” says Sutcliffe.
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If the new Nintendo machine fails, that reckoning might change again.
Nintendo and the Switch 2 are haunted by the biggest ever disaster in the company’s history: the failure of the Wii U. Launched in 2012 as the successor to its record-breaking namesake, the Wii U was everything that Nintendo now wants to avoid.
Badly named, badly marketed, technologically fiddly and lacking sufficient games to get people to buy, the Wii U shifted fewer than 14 million units worldwide and had a tie-in of just 104 million games. By contrast, the first iteration sold 102 million units and 922 million games.
For the Switch 2 to be considered a failure on the scale of the Wii U, analysts say it would have to sell below 50 million units – something vanishingly few people think is likely. History is very much on Nintendo’s side: the power of the Wii U as a spectre is intensified by its rarity as a failure.
But disappointment remains a possibility. “The question is going to be: what percentage of existing Switch owners – on seeing the price of a Switch 2 – opt instead for a PS5 or go to PC?” asks independent games analyst Pelham Smithers.
– Copyright The Financial Times Limited 2025
