Switch 2 game file size may affect its price, Nintendo says

How big a game is helps Nintendo determine whether or not it should charge $70 or $80 for new Switch 2 games, company president Shuntaro Furukawa says.

Switch 2 game file size may affect its price, Nintendo says
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TL;DR: Nintendo raised Switch 2 console and game prices to offset lower hardware profit margins and increased production costs, including larger game file sizes and expensive cartridges. The $450 console and $80 game pricing reflect regional market factors, exchange rates, and extended development, ensuring continued profitability despite higher costs.

Nintendo's latest Q&A with investors reveals an interesting tidbit about how the company prices its games.

Switch 2 game file size may affect its price, Nintendo says 10
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Nintendo was the first in the games industry to raise game prices to $80. With the Switch 2 launching at $450, and the first big platform exclusive Mario Kart World priced at $80, gamers have been processing sticker shock for the past few weeks. Now Nintendo management is stepping in to better explain the rationale behind the price jumps.

In a newly-published Q&A with investors, Nintendo president Shuntaro Furukawa confirmed some details about the Switch 2 generation. The Switch 2 has a lower profit margin than the Switch 1, which means Nintendo will make less profit on each console sold. The software price increase from $60 -> 70 and $70 -> $80 helps offset this profit hit. While Furukawa does say that the Switch 2 will be sold at less of a profit, it's implied that the Switch 2 will still be profitable at launch like the original Switch.

Another factor in setting the new $80 price for games is how big the software actually is. Furukawa specifically mentioned that "increased game file size" can increase costs for Nintendo. This is likely in reference to the Switch's physical game cartridges, which aren't cheap to begin with, but increase in cost depending on capacity. So a 64GB Switch 2 cartridge would be much more costly to make than, say, a 32GB Switch 1 cartridge.

The cost of cartridge production is also a big reason why Nintendo has implemented its new Game-key Cards, which are basically physical cartridges that only have a digital game key that unlocks a download of a game. Game-key Cards don't actually have the full software built into them.

Here's what Furukawa said about Nintendo Switch 2 hardware and software pricing, and what affected the new MSRP:

"Prices for Nintendo Switch 2 products are determined through an overall evaluation of factors in each region.

"When determining hardware prices, we consider not only the manufacturing cost, but also various factors such as consumers' impression of the price, the vast differences in exchange rates compared to the Nintendo Switch launch, and the market conditions in each region.

"For software, in addition to the same factors, we also take into account rises in costs, due to aspects such as increased game file size and extended development periods, when determining price.

"Going forward, we will continue to consider appropriate prices for each title when it comes to software prices. Hardware involves special factors such as tariffs, and we will take into account factors like those we have just described, while conducting careful and repeated deliberations when determining price."