Since our first glimpse of the Switch 2 last month, we've been left guessing on many crucial hardware details, including the all-important launch price. Now, Nintendo has hinted that the unsteady state of the international money market may play an outsize role in that pricing decision.
Addressing a question about Switch 2 hardware pricing during an investor Q&A session Wednesday, Nintendo president Shintaro Furukawa said (via machine translation):
In addition to the current inflation, we are aware that the exchange rate environment has changed significantly since the launch of the Nintendo Switch in 2017. We also need to consider the affordable price that customers expect from Nintendo products. When considering the price of a product, we believe that it is necessary to consider these factors from multiple angles.
At this time, we cannot disclose the specific price of the Nintendo Switch 2, but we are considering it while taking various points into consideration. At this time, we do not plan to change the price of the Nintendo Switch hardware.
Most of that is the usual polite executive-speak shorthand for "we're not ready to answer that yet." But the bit about exchange rates and inflation got us wondering just how vulnerable a Japanese company like Nintendo might be to the yen's historic weakness, and what this might mean for the Switch 2.
More yen for your buck
When the Switch launched in early 2017, a single dollar could get you about 114 Japanese yen, a rate broadly in line with the norm over the previous two decades. Today, that same dollar can get you over 152 yen, matching rates the world hasn't seen since before 1990.
This means that, at launch, the 29,980 yen asking price for the Switch in Japan was worth about $262, in roughly the same ballpark as the $299 US launch price. Today, Nintendo still asks 29,980 yen for a Japanese Switch and $299 for an American Switch. But that yen-denominated Japanese price is now worth just $196 under today's exchange rates.
This means that, in real terms, customers currently pay a lot less for Nintendo hardware in Japan. Conversely, it also means Nintendo makes a lot more money selling hardware in the US than in Japan.
What does this mean for the Switch 2? Well, let's say Nintendo wanted to launch its new system at about the same price as the original Switch but adjusted for the last eight years of inflation. The $299 US launch price of the Switch in 2017 is worth about $387 in today's dollars, making a $399 Switch 2 price seem entirely reasonable in this scenario.
In Japan, however, the 29,980 yen Switch launch price is only worth about 33,787 yen in today's money. That translates to only about $221 at today's exchange rates, or about 55 percent of the price Nintendo could get selling a $399 console in the US. At those prices, Nintendo would have a lot less incentive to sell Switch hardware in the Japanese market since it could make significantly more money selling that same unit of hardware in the US.
Rock meets hard place
Nintendo could raise the Japanese price of the Switch 2 to be more in line with that supposed $399 US price, of course. But at today's exchange rates, that would mean an asking price of about 60,000 yen, nearly doubling even the inflation-adjusted price of the original Switch in Japan. At that price, the Switch 2 would actually be more expensive in Japan than the PlayStation 5, even after Sony raised the console's Japanese MSRP in 2022.
Maybe strong demand for a new console would keep the Japanese Switch 2 afloat for a while even at that heavily inflated price. But that might be a risky move for a market that still makes up nearly a quarter of Nintendo's overall hardware sales.
Nintendo could also theoretically take advantage of the exchange rate to lower the US launch price of the Switch 2—after all, even a $299 Switch 2 would bring in quite a bit more yen than selling the current Switch at today's Japanese prices. But that might mean leaving money on the table for Nintendo, which can probably count on brisk US Switch 2 sales without offering a cut-rate price (after all, the original Switch has still never seen an official price drop, despite costing more than the aging PS4 in 2017).
One intriguing option for Nintendo would be to return to the 3DS- and Wii U-era policy of region-locked hardware, which can only play software sold in the same region. With this protection in place, Nintendo could sell Japanese Switch 2 units at a relatively low yen-denominated price, without having to worry about resellers snapping up those units to flip them for a profit in the US market.
These are the kinds of monetary decisions Nintendo is considering, even as it "consider[s] the affordable price that customers expect from Nintendo product." We should learn more about where the company comes down on this matter in a Switch 2-focused Nintendo Direct planned for April 2.
