Rumor: Switch 2 has 12GB RAM and 512GB internal storage

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Fight-the-Streets said:

1. Nintendo, like every company, is about money! They want that 3rd party license fees. I don't know the contracts but certainly those indie developers don't have to pay high license fees. There's simply more money to be made with AAA-licensing fees. Nintendo doesn't want to miss out on that money. The Switch 1 was simply technically not there yet to get most of the 3rd party AAA-games but for Switch 2, Nintendo doesn't want to miss out on that AAA-licensing fees. With the Switch 2 they say to 3rd party developers/publishers: That's what we have to offer, AAA-ports are possible without the need to make a triple somersault to make it possible. If you want to miss out on the money to be made on Switch 2, well, I guess you must be a communist then, you work in the wrong business!

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The simple equation is what are the costs to get AAA on board and how much money does Nintendo earn from them. In the grand scheme of things, the royalty fees from third party games as a whole don't amount to all that much. This can be seen in Nintendo's financial reports where revenue from software is ~80% first party and only ~20% third party (these are the royalty fees that third parties have to pay to Nintendo for all of their game sales). Mind you, this is for all third parties combined who release around 100 times more games than Nintendo does.

Third parties, regardless of being AAA or indie, have to pay 30% of their revenue to Nintendo, just like on the other consoles and on Steam. And since indies generate more revenue than AAA games on Switch (indie games are cheaper, but there are also way, way more of them), your assertion that there's more money to be made with AAA royalty fees is plain wrong.

Chasing after AAA third party games would only be a sound business decision, if there was evidence that multiplatform games sell Nintendo hardware. There's no such evidence, however, and this is true since the NES days. So if Nintendo intended to accomodate for AAA third parties' wishes with Switch 2, it wouldn't be about earning more money, but rather about status and image. The rumors so far do not indicate one way or the other regarding Nintendo's intention; the specs are there because the technology is available, nothing more, nothing less.