Slownenberg said:
$400 seems a bit high. I mean it could be, but I'd put better chance at it being $350. I doubt Nintendo is gonna bump its launch price up by $100 from one gen to the next, especially if it is indeed a very similar system like most expect (a Switch 2) which wouldn't require loads of R&D to create. And not really on the price cut stuff. They just have to sell one more game to make up the difference on a price cut. Someone who wasn't gonna buy the system at $300 but buys it at $250 just has to buy one $60 first party game and Nintendo makes up the difference. That's of course only for bringing in extra buyers, but presumably those extra buyers would buy several first party games, and that alone offsets the loss of $50 from some of the people who would've bought at the original price anyway, and then you offset more of that loss from the new buyers (at $300 vs $250 you offset 5 'were gonna buy the system anyway' buyers with each single extra buyer), so most of the revenue lost is made up right there. Also if system is $50 less maybe those people get one more game than they would have, not to mention possible new people paying for NSO, or just in general new fans who then maybe are more likely to buy the next system a few years down the road. The Math definitely works out for price cut. And like I said if Switch is still $300/$350 when Switch 2 comes out at $350 (or even if they go with a real high price and launch at $400) that just gets confusing and complicated and silly for consumers. Only way I see that working out in any way that makes sense is if they just stop producing original and OLED models when Switch 2 releases and only sell the cheap Lite, but then again you're just cutting off potential sales of Switch to late buyers. Any way you look at it, price cuts makes a lot of sense for the Switch this late in the game due to several factors. |
Pretty sure the R&D bill for Switch 2 will be higher, it actually will have a new chip basically built for it, whereas the original Switch just used the Tegra X1 which was an already existing chip. Also inflation, you have to factor that in. The current Switch could've honestly launched at $350 and done well, it was pretty well sold out for most of its first year.
Budget shoppers tend to buy fewer titles I would guess so I don't think the "well people will just buy an extra game!" thing actually works out in reality. You're selling hardware at a lower profit margin ($50 lost per unit) AND you're selling it to people who don't buy as many games (late gen adopters).
I'm pretty sure Nintendo and Sony have run the math on this, it's why they don't chase this market any more.
Like just as a basic breakdown if the Switch's profit margin is $80 and you cut that by $50 (to only $30), Nintendo could jump from 15 million units to even 30 million units and they'd still make less profit on hardware, people really don't get how much of a loss losing $50 of profit per unit is. It makes some sense earlier in a product cycle when you're trying to build userbase but later probably not. You make more money selling 15 million units @$80 profit/unit than you do selling 30 million @ $30 profit (this is an extreme example anyway since a price cut is going to give you no where close to 30 million).
Sony not only did not drop the price of the PS5, they increased it in almost every region, lol. Nintendo hasn't dropped their price, they introduced a more expensive model. So this trend really is not in favor of the "lets just sit around and wait for price cuts" crowd. I don't think Sony and Nintendo want to encourage the "I'm not buying your system until you cut the price multiple times" folks, it's becoming "look this is the price of entry, either you pay it or move along there's 2 people behind you willing to pay full price".
Last edited by Soundwave - on 09 May 2023
