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Sephiran on 02 August 2025
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Norion said:

An amazing quarter as expected and in fact even somewhat better than the Switch 2 than expected. This launch is truly extraordinary and could very well be a record it holds forever. MKW didn't quite pull off the ridiculous feat of having a bigger attach rate than 100% like BOTW did but 97% is still insane but also expected since there was little reason to buy a Switch 2 in June if you weren't into MK. Most Nintendo fans are into MK though so it was a perfect choice for a launch title.

One negative thing of note is how much worse the profit margin is with the Switch 2 but that should improve as software sales on the Switch 2 increase and "Other" has had a start that's nearly as strong as Europe so if there's any area where the Switch 2 could exceed the Switch 1 it could be that. Also the annual playing users declined YoY again so time will tell how much growth the Switch 2 can cause for that. Time will also tell how it'll sell going forward once demand is fully fulfilled but it seems pretty safe to say that sales will at worse remain great so they're for sure gonna destroy the hardware forecast.

Also for the Switch 1 there was a huge hardware decline YoY as expected but it'll still be selling a lot of software for a while yet. With the Switch 2 now out and prices increases starting to happen the decline should be bigger next time but it still has one more quarter above a million left in the tank with Q3 before sales start to fall off even harder.

I think the double whammy when it comes to Switch 2 profit margins are; The Japanese subsidized yen price to make it more affordable there, and the tariffs in the US which probably destroys Switch 2 profit margins on every unit sold in the US. They basically probably only get decent margins on hardware sales in Europe and a few other markets. But Japan/US make up a big chunk of Switch 2 unit sales, and they have terrible margins on those markets from a hardware perspective.