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The Verge
6 days ago
- Business
- The Verge
Nintendo wants to keep ‘traditional approach' to development as costs skyrocket
A bigger, more powerful Switch means bigger, more intensive games that take more time and money to make. But as development costs skyrocket across the industry, Nintendo seems to have a plan to keep things in control as it transitions into the Switch 2 era. In response to a question during a recent shareholders meeting about the increased costs of making games for its new console, Nintendo president Nintendo president Shuntaro Furukawa admitted that 'recent game software development has become larger in scale and longer in duration, resulting in higher development costs. The game business has always been a high-risk business, and we recognize that rising development costs are increasing that risk.' However, he said that Nintendo's development teams are 'currently devising various ways to maintain our traditional approach to creating games amidst the increasing scale and length of development. We believe it is important to make the necessary investments for more efficient development.' 'The game business has always been a high-risk business.' The early lineup of first-party Switch 2 games has already shown Nintendo being more ambitious with its franchises on the enhanced hardware. Mario Kart World introduced an open-world structure to the long-running racing series, while the upcoming Donkey Kong Bananza adds an impressive destructive element to a more traditional 3D platforming experience. This has come with increased costs for consumers; World sells for $79.99, $10 more than most Nintendo games, while the Switch 2 itself is $449.99, a $100 jump over the Switch OLED. (In response to a question about these prices making it harder to reach younger audiences, Furukawa said that 'we are closely monitoring to what degree the price of the system might become a barrier.') Of course, Nintendo is not alone, and the increased scale of game development has been disastrous for many of its competitors. Just last week Microsoft's gaming division was hit hard by layoffs and game cancellations, while high-profile games like Black Panther and Concord were both shut down alongside their development studios. Nintendo has been one of the rare exceptions in the floundering game industry, but keeping that up will become increasingly challenging as games get bigger. Then again, Furukawa offered one concrete way of combatting this: more smaller games. 'We also believe it is possible to develop game software with shorter development periods that still offer consumers a sense of novelty,' Furukawa said. 'We see this as one potential solution to the concern aboutrising development costs and software prices, and we will explore it from various angles within thecompany.'
Japan Times
08-05-2025
- Business
- Japan Times
Nintendo gives conservative sales outlook for Switch 2 amid tariff concerns
Nintendo projected weaker-than-expected initial sales of its upcoming Switch 2 game console, a reflection of how uncertainty over U.S. tariffs is weighing even on a company fielding record-setting demand. The Kyoto-based company expects shipments of the long-awaited Switch 2 to reach 15 million units in the year to March, shy of the 16.8 million average estimated by analysts. Nintendo forecast its annual operating profit to reach ¥320 billion ($2.2 billion) during the period, also significantly short of analyst expectations. That is despite overwhelming preorders for the $450 gadget and market expectations that the Switch 2 would be the fastest-selling console in history. In Japan, the console will sell for ¥49,980 ($350), though an edition that supports only the Japanese language. Nintendo is gearing up for a once-in-a-decade handover, moving on from the eight-year-old Switch and rekindling growth following years of tepid earnings and waning demand for the original console. In the March quarter, Nintendo's operating profit fell to ¥35 billion, concluding a fiscal year in which the company sold 10.8 million Switch consoles and 155.4 million copies of software. The earnings follow surging preorders of the Switch 2 that prompted Nintendo President Shuntaro Furukawa to warn that many consumers won't be able to get the new console on the release date in Japan, while orders quickly sold out at many U.S. retailers. In any other year, the considerable social media buzz around the Switch 2, along with the console's preorder momentum, would suggest rosy sales ahead. But U.S. President Donald Trump's tariff policies and fears that they may force Nintendo to raise prices are denting inventor sentiment. The company, which produces the bulk of its Switch consoles in China, has lifted the price tag on some Switch 2 accessories, and warned customers in the U.S. that prices may rise on other products depending on the tariffs imposed. The Switch 2 is already Nintendo's most expensive console. The company behind the Super Mario and Zelda franchises is shifting some production to other countries such as Vietnam. But the unpredictability of U.S. tariffs remains, with concerns growing that U.S. tariffs on foreign-made movies and software products might also apply to game titles. The additional cost for consumers may sap demand for Nintendo consoles and spur them to seek more powerful offerings from rivals Sony and Microsoft or seek games by U.S. publishers that are playable on PCs.
