Shares of Nintendo, Japanese multinational video game company, fell 7% in Tokyo on Monday after the Company hiked the prices of Switch 2 and as the market worries over a lack of high-profile games to build momentum.
Nintendo, headquartered in Kyoto, posted robust hardware sales for the financial year ended March, however, while the Company is widely known for its forecasts that are conservative, its outlook for 2026 underwhelmed the market.
The Company stretched the life of the original Switch with games from franchises such as “The Legend of Zelda” and while it has achieved great feats like ‘Pokemon Pokopia’, it is seen as lacking potential blockbusters.
Kazunori Ito, Morningstar analyst, reacted via a note, “The year-on-year decline in game shipment guidance risks signaling that Nintendo lacks confidence in its pipeline.
“However, as user engagement typically accelerates in the second year of a console cycle, we view this as too pessimistic.”
Also, Nintendo made known, its plan to raise prices of its Switch 2, with the Japanese language Switch 2 Japan model to go up from May 25 and prices in markets such as the U.S. to rise from September 1.
Nintendo, who are developer, publisher and manufacturer of both video games and video game consoles, has an audience among casual gamers who are viewed as especially sensitive price increases, which is coming as electronics makers struggle with a surge in price of memory chips.
Atul Goyal, Jefferies analyst, reacted via a note, the second year “is crucial and our non-consensus view is that it will release a Mario AAA game this year”.
Unlike Sony, Nintendo depends enormously on its gaming business even as its characters and intellectual property prove popular in movies and at theme parks.
With the Play Station 5 having stayed longer in the market, Amir Anvarzadeh of Asymmetric Advisors reacted via a note, “Sony is in a much better position to pass higher costs of memory chips to consumers”.
