Nintendo shares fell sharply on Monday after the gaming giant warned of weaker profits and announced higher prices for its Switch 2 console in several major markets.
In early trading in Tokyo, Nintendo shares dropped as much as 9.9% to 6,908 yen following concerns over slowing momentum in the company’s gaming business.
The decline came after Nintendo forecast a 27% drop in net profit for the current financial year despite strong sales growth last year.
The company said on Friday that rising hardware costs and a weaker first-year game line-up for the Switch 2 would likely pressure earnings.
Nintendo also confirmed price increases for the console in Japan, the United States and Europe.
The Switch 2 price in Japan will rise by 20% from May 25. Meanwhile, prices in the United States will increase by 11% to $499.99 from September 1.
European customers will also pay more, with the price rising by 6% to 499.99 euros.
Analysts said the price hikes could affect demand because consumers remain sensitive to rising living costs and gaming expenses.
AI chip costs and supply issues create pressure
Nintendo’s challenges come as technology companies worldwide face rising semiconductor costs linked to the global artificial intelligence boom.
Demand for advanced memory chips used in AI systems has increased sharply over the past year. Consequently, manufacturers of gaming consoles and electronic devices are facing higher production costs.
Supply disruptions linked to the ongoing conflict involving Iran have also added pressure to global electronics supply chains.
Industry experts say shipping disruptions and higher energy costs continue to affect technology manufacturers across Asia.
Despite the weaker outlook, Nintendo reported strong financial results for the previous fiscal year.
The company’s net profit surged 52% to 424 billion yen, while annual sales reached 2.31 trillion yen. Revenue nearly doubled compared with the previous year.
Nintendo also revealed that sales of the Switch 2 reached 19.86 million units by the end of March.
Popular titles including Pokemon Pokopia, Mario Kart World and Donkey Kong Bananza helped drive strong demand for the console.
Analysts question software strategy
Gaming industry consultant Serkan Toto said Nintendo now faces pressure to strengthen its software offering for the new console generation.
“The first year game lineup for Switch 2 is much weaker than for its predecessor,” Toto told AFP ahead of the earnings announcement.
He also warned that Switch 2 buyers are “especially price sensitive” at a time when inflation continues to affect consumer spending globally.
“But now it’s time for them to really step on the gas on the software side,” he added.
Nintendo’s original Switch became one of the best-selling gaming consoles in history after its launch in 2017, driven by blockbuster franchises such as The Legend of Zelda and Animal Crossing.
Investors will now closely watch whether Nintendo can maintain strong console sales while convincing gamers to pay higher prices during a period of economic uncertainty.
