Japanese gaming company Nintendo announced on Friday that it will increase the price of its Switch 2 console due to rising memory chip costs, while also warning that its net profit is expected to decline by 27 per cent this year.
Sony, which had already raised the price of its PlayStation5, presented a more positive outlook by forecasting a 13pc increase in income, although sales of its older console are still expected to decline.
Nintendo revealed that the price of Switch 2 in Japan will go up by 20pc from May 25. In the United States, the price will rise by 11pc from September 1 to $499.99, while in Europe it will increase by 6pc to 499.99 euros.
For the financial year ending next March, Nintendo projected a 27pc fall in net profit to 310 billion yen ($1.98bn), with sales expected to drop 11.4pc to 2.05 trillion yen.
The company also estimated operating profit at 370bn yen, significantly lower than Bloomberg News analysts’ average forecast of 480bn yen.
Nintendo reported that net profit jumped 52pc last year to 424bn yen, while annual sales climbed to 2.31 trillion yen, almost double the figure from the previous year.
In a company statement, Nintendo said the Switch 2 had a strong start after its June launch, with global sales continuing to rise. By March, it had sold 19.86 million units of the console, supported by titles such as “Pokemon Pokopia”, “Mario Kart World”, and “Donkey Kong Bananza”.
The increase in memory chip prices, driven by growing demand linked to artificial intelligence, has affected manufacturers of gaming consoles, smartphones, and other electronic devices. Supply chain issues have also worsened because of disruptions connected to the Iran war.
Sony stated on Friday that it sold 16 million PlayStation5 units during the last fiscal year, compared to 18.5 million units in the previous year.
With 92 million PlayStation2 units sold since its 2020 launch, analysts believe Sony is in a strong position to benefit from the release of the highly anticipated “Grand Theft Auto VI”, expected in November.
Gaming consultant Serkan Toto told AFP that if any title has the power to boost PlayStation sales by millions, it is “Grand Theft Auto VI”.
Sony said its gaming division is projected to post stronger profits by March 2027 despite lower hardware sales.
Amir Anvarzadeh, strategist at Asymmetric Advisors, noted that Sony’s more advanced PS5 lifecycle puts it in a better position to handle rising memory costs. He added that with the company having moved beyond the heavy hardware-related costs of earlier years, Sony is likely to gain more from high-margin software sales and greater ecosystem activity triggered by upcoming launches.
According to Toto, Nintendo is facing a tougher challenge because Switch 2 buyers are particularly sensitive to price increases. He also said the first-year game lineup for Switch 2 is weaker than that of the original console, and that Nintendo now needs to significantly strengthen its software offerings.