In addition to the obvious upgrades to the Nintendo Switch (OLED model), a new report suggests that the $ 50 price increase is due in part to Nintendo’s decision to “test new waters for console manufacturers.”
As reported by Bloomberg, Nintendo’s commitment to the Switch (OLED model) and the increased price of the COVID-19 pandemic follow where Nintendo, Sony and Microsoft have had difficulty meeting the demand of those looking for “entertainment and escape” while isolated at home. .
Speaking of the switch, it has secured the top spot on the NPD Group’s list of best-selling hardware after unit sales in the United States for over 30 consecutive months. PS5 and Xbox Series X also do very well, but Sony and Microsoft simply can not make them fast enough.
Nintendo hopes this momentum will remain strong with the Switch (OLED model) ̵
Of course, there are upgrades to be found in the Switch (OLED model), including the titular OLED screen, more internal storage and other additional components such as a new console stand and a LAN port in the dock, but this is hardly “Switch” Pro “many hoped for on.
Despite that, Nintendo wants to increase profit margins with this new Switch model. The OLED screen is said to cost an additional $ 3 to $ 5 per device, according to DSCC co-founder Yoshio Tamura. Increasing internal storage from 32 GB to 64 GB seems to add another $ 3.50, according to Omdias Akira Minamikawa. All the other new components are “going to add a few dollars more.”
All of these provide up to a $ 10 price increase per unit for Nintendo, which means it will earn around $ 40 per Switch (OLED model) sold.
Nintendo had already sold the hardware at a profit since its launch in 2017, and this would only increase returns via those who want to buy or upgrade to this new model. This mindset goes against the grain of the traditional console cost model that usually sees systems that sell at a loss and get back the original investment through software sales and increased production efficiency over time.
According to Ace Research Institute analyst Hideki Yasuda, if this move from Nintendo is successful and it is able to keep the impressive sales line going, it could “set a precedent for charging more across the industry.”
An official in the PlayStation division shared that Sony is one of the companies keeping an eye on the sales performance of the Switch (OLED model), as PlayStation 3, 4 and 5 took the traditional route of selling initially at a loss.
Investors are not entirely convinced yet, as Nintendo’s shares have fallen about 5% since the announcement, and only time to tell which side is right.
“Nintendo failed to provide enough added value to justify a $ 50 bump in the new hardware,” said Morningstar, head of stock research at Kazunori Ito. “The new hardware is barely half-baked and will not help maintain the platform’s speed at all. Switch had its peak last year, and will only slow down from here. ”
Others see it in a more positive light, such as Serkan Toto, an independent consultant for video game companies. They said the Switch (OLED model) screen is good enough to “squeeze $ 50 more out of consumers” considering how well the standard Switch has sold.
“I see no reason why this model would flop,” Toto said. “Nintendo increased the price of the new model, as it does not need to cut the prices of today’s models thanks to strong demand.”
Nintendo Switch (OLED model) pictures
With console sales usually seeing a decline as they get older and the impact of the COVID-19 pandemic wears off, some believe that demand for products like Switch may finally see a decline. However, Nintendo is never one to play by the rules.
“Nintendo made a really bold decision because it’s obvious that people will spend more on services and less on goods in the future,” said Sony Financial Holding’s senior economist Takayuki Miyajima. “From a macroeconomic point of view, the move could not be made if they have little concern about how well the console would do.”
We do not need long to find out the answer, as the Nintendo Switch (OLED model) will be released on October 8, 2021. For more, check out our handy preview comparing this new model to the original.
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Adam Bankhurst is a news writer for IGN. You can follow him on Twitter @AdamBankhurst and on Jerk.