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Besides the obvious upgrades for the Nintendo Switch (OLED model), a new report suggests its $ 50 price hike is in part due to Nintendo’s decision to “test new waters for console makers.”
As reported by Bloomberg, Nintendo’s bet on the Switch (OLED model) and its increased price follows the COVID-19 pandemic where Nintendo, Sony and Microsoft have struggled to keep up with demand from those looking for ” entertainment and escape “while being isolated at home.
Speaking of Switch, it has secured the # 1 spot on the NPD Group’s list of top selling hardware per unit of sale in the United States for more than 30 consecutive months. The PS5 and Xbox Series X are also doing very well, but Sony and Microsoft just can’t make them fast enough.
Nintendo is hoping that momentum will stay strong with the Switch (OLED model) – which retails for $ 349.99 as opposed to the Switch’s standard price of $ 299.99 – and this move follows the launch of the PlayStation 4 Pro and the Xbox One X mid-life refresh that gives a console a breath of fresh air that isn’t quite a new generation. However, the new Switch has one main difference with these consoles – it does not provide any performance improvement.
There are of course upgrades in the Switch (OLED model) including the titular OLED display, more internal storage, and other added components like a new console mount and a LAN port in the dock, but it’s not quite the “Pro Switch” many were hoping for.
Despite this, Nintendo is looking to increase its profit margins with this new Switch model. The OLED display would cost an additional $ 3 to $ 5 per unit, according to DSCC co-founder Yoshio Tamura. The increase in internal storage from 32GB to 64GB appears to add an additional $ 3.50, according to Omdia’s Akira Minamikawa. All other new components are “thought to add a few extra dollars”.
All of this represents an increase of around $ 10 in the price per unit for Nintendo, which means that it will bring in around $ 40 per Switch (OLED model) sold.
Nintendo had already been selling its hardware at a profit since its launch in 2017, and that would only increase its return via those who want to buy or switch to this new model. This line of thinking goes against the traditional console cost model which typically sees systems selling at a loss and recouping the initial investment through the sale of software and increasing manufacturing efficiency over time.
According to Ace Research Institute analyst Hideki Yasuda, if Nintendo’s move is successful and it manages to maintain an impressive sales streak, it “could set a precedent for charging more in the industry.”
A head of the PlayStation division said that Sony was one of the companies closely monitoring the sales performance of the Switch (OLED model), as the PlayStation 3, 4 and 5 followed the traditional path of initial selling at a loss.
Investors are not quite convinced yet, as Nintendo shares have fallen around 5% since the announcement, and there is only time to say which side is right.
“Nintendo failed to deliver enough added value to justify a $ 50 hike in new hardware,” said Kazunori Ito, Morningstar’s head of equity research. “The new material is barely half-baked and wouldn’t help at all to keep the platform’s momentum going. The Switch had its heyday last year and will only slow down from here.
Others see it in a more positive light, like Serkan Toto, independent consultant for video game companies. They said the Switch’s display (OLED model) was good enough to “support consumers an additional $ 50,” given how well the standard Switch sells.
“I don’t see any reason why this model would fail,” Toto said. “Nintendo has increased the price of the new model because it does not need to reduce the prices of the current models due to high demand.”
With console sales typically on the decline as they age and the effects of the COVID-19 pandemic are fading, some believe demand for products like the Switch may finally see a decline. However, Nintendo is never one to play by the rules.
“Nintendo has made a really bold move because it is obvious that people will spend more on services and less on goods in the future,” said Takayuki Miyajima, senior economist at Sony Financial Holdings. “From a macro perspective, the move might not be made if they even have a slight worry about how the console would perform.”
We won’t have long to find the answer, as the Nintendo Switch (OLED model) will be released on October 8, 2021. To find out more, check out our hands-on preview that compares this new model to the original.
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Adam Bankhurst is a news editor for IGN. You can follow him on Twitter @AdamBankhurst and on Tic.
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