Do you find the Switch 2 too expensive? Nintendo could well be cutting its margins to entice you. A risky strategy, but one that reveals the importance of your wallet... and Donald Trump's taxes.
While the Switch 2 is coming with some pretty impressive technical improvements (larger screen, built-in microphone, controllers that can be transformed into mice), its price is causing a stir. However, according to analysts, Nintendo is playing a new card: selling the console at a loss in the United States. A decision forced by Trump's customs tariffs, but also a bet on the future.
To limit the damage, the Japanese giant has accelerated production in Vietnam, where 30% of consoles are assembled. The goal: to take advantage of a temporary freeze on American taxes on Vietnamese imports (10% compared to 145% for China). But even with this maneuver, each unit sold at $450 would cost more to produce than its selling price, according to Hideki Yasuda of Toyo Securities.
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An acceptable loss against pricing pressure
According to analysts, the cost of components would reach $400. A tight calculation, where Nintendo would absorb the difference to keep the Switch 2 affordable. An exception in its history, as the company usually relies on game sales to make its consoles profitable. In comparison, Sony, dependent on Chinese factories, may have to increase the price of the PS5 in the United States.
Nintendo has also delayed pre-orders across the Atlantic while it assesses the impact of the taxes. A cautious move, given that a third of its revenue comes from the American market. If Vietnamese tariffs rose to 46%, an increase of $50 to $100 would become inevitable. In the meantime, the Japanese version, sold for less than $350, confirms that the margin is already thin.
This strategy shows how much Nintendo is banking on its community. Between theme parks and movies, the company needs a loyal player base. Even if it means cutting profits to avoid falling behind Xbox and PlayStation. It remains to be seen whether fans will respond... or wait for a post-election decline.
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