I've read somewhere that the manufacturing cost of the 16GB NS cart is estimated to be around $7. So that extra $3 could come from the shipping/packaging/distribution/licencing etc. I think people forgetting that this is not a standard SD card or BL disc, therefore, by default, it will cost more. On the other hand if the game fully fits on the cart it doesn't require extra space on the system itself as access times are vastly superior to any disc based media. Considering the portability factor, I don't think that Nintendo had much choice to begin with. The only other viable option would be to add extra space to the Switch (256GB for example) and go with digital distribution only, but with current technology that would increase the price of the system by around $100 and surly, ditching physical media, would leave many consumers, to put it mildly, unhappy.
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