Yea,noo. Steam did not.

Nobody is a source themselves. That's credentialism. Whether you cite a priest for claiming that spirits cause illness or cite a scientist for claiming that all life on earth is dependent on the sun, you wind up being wrong. Unless something has been established as common factual knowledge, it needs to be demonstrated. Whatever source someone uses needs to actually explain and demonstrate how they are right. A book stating that aluminum will burn when mixed with carbon isn't a good source if it doesn't include an explanation or demonstration of how and why. Multiple credentialed sources all saying the same thing is better but not bulletproof. Especially if it's on a controversial topic. 

But anyway, the money you spend on a game definitely gets thinned out when bought at retail. Back during the 360 days, a developer might get $15 to $20 from a $60 game sale. This was an established fact, as you can find all sorts of graphs and charts from multiple sources saying the same thing around 2010. And I believe many of these charts state which retailers they asked. I do remember Gamestop and small-time shops claiming that they only make $5 on the sale of a brand-new game. But I can't find the quote and Gamestop may be full of it. It does suck that we don't have a reliable source for any of this stuff these days. I guess I could call up multiple independent shops and ask but that would only establish that indie shops get hosed. 

1. Probably true, but the biggest reason for that is the tariff situation in the USA. Besides, hardware has never been a big contributor to profits, so this isn't going to be especially significant in the big picture.

2. Production costs of cards are covered by higher game prices, so it's not the physical medium that poses a problem. Their physical MSRP in Europe is higher than digital - unlike in America where both cost the same - because European retailers have a habit of undercutting the MSRP. This has made physical games routinely cheaper than their digital counterparts. But when, say, Mediamarkt now undercuts Nintendo's MSRP by €10, then physical and digital cost the same; and that's what Mediamarkt already does.

The biggest threat to Nintendo's profit margins is their decision to make a Mario Kart World bundle where the game is notably discounted, so this fiscal year alone they'll leave money for around 10 million copies on the table, which ranges anywhere between $200-400 million in lost profit depending on how you want to estimate it. But in the long run the higher game prices this generation will keep Switch 2's profitability pretty close to Switch 1's. Third parties surrendering the physical games market to Nintendo for the most part will probably increase the sales of first party software which is the biggest contributor to Nintendo's overall profitability.

Steam is anti-consumer garbage. They allow Denuvo and other 3rd party DRM. They don't let you sell or trade your games even though game-key-cards show that sellable and tradable digital licenses are easily done. Valve was the first company to allow complete and utter slop to overtake their storefront. Everything Gabe Newell says is good about Steam is shown to be a lie when you go to Steam and buy games. It offers a better service than piracy? Nope Denuvo exists. Frequent sales and discounts? Irrelevant when you can't sell your own games, because a free marketplace will always offer better deals than a closed ecosystem. Biggest library of games? Slop is irrelevant, and many older games don't work or don't run authentically on modern PC OS. 

Imagine Series X and PS5 being $250 each right now. Imagine Switch lite being $99 and Switch being $149. 

It definitely did in the PC space. Big Box PC games were very common before Steam but when Steam started to hit its stride, Phyiscal media started to disappear to basically none existence, out side of collector editions.

Mario Kart World bundles are temporary, aren't they?

I can't say much with confidence. Profit margins might fall significantly behind Switch 1's, and profitability slightly behind. But then again we have no idea how the price trajectory is gonna go this generation or how Nintendo's more price sensitive players will react to the new pricing in the long run. Higher game prices would only cover the high cartridge cost if software sales numbers somehow aren't affected at all (Cheaper software will always reach a broader audience vs a more expensive version of the same software. But Nintendo's natural popularity growth may offset this).

And you know what's even worse? The corporations have gotten so emboldened that even without tariffs I doubt the hardware would have more than a modest price cut at best. Nintendo has had years to cut the price of Switch and has refused to. Even Sony and Microsoft could've cut prices of the hardware in 2023 or 2024. 

True that. Then Games for Windows - Live was the final nail in the coffin for physical PC games.

I think it has more to with companies being greedy.

The hardware gets cheaper to produce over time, yet no price cuts. They couldn't even keep the price stable.

On the bright side, my investments are growing.