Shocking revelation that Nintendo makes no profit on each Switch 2

Rumors that Nintendo is selling the Switch 2 game console at no profit have caused a stir in the gaming industry.

According to Tech4Gamers , the Nintendo Switch 2 gaming console with a price of 450 USD (about 11 million VND) is the center of attention after a detailed introduction in early April. However, a recent rumor has surprised the gaming community, when Nintendo is said to make almost no profit, maybe even 0 VND, on each console sold in the first stage.

Nintendo makes no profit selling Switch 2

The shocking information comes from a content creator named Nintendo Prime on the social network X (formerly Twitter). Initially, this person claimed that Nintendo only "earned $4" on each Switch 2. This number is surprising because it is too low compared to the price of $450.

Nintendo sells Switch 2 with almost zero profit

PHOTO: CNN SCREENSHOT

However, Nintendo Prime itself later clarified in the comments that the $4 figure was actually the retailer's profit, while Nintendo itself was selling the console at almost its manufacturing cost (COGS) and "making nothing" from selling the hardware.

This information seems to be further reinforced by a share from Double Jump Games, a retailer in the US. When reviewing orders for 9 Switch 2 consoles, they found that the profit margin that Nintendo earned on each unit in the US market was "almost zero".

It’s not uncommon for a console maker to sell hardware at zero profit, or at a very low profit, or even at a loss at launch. This is a fairly common business model, with companies accepting to ‘sacrifice’ initial hardware profits in order to quickly build a large user community. After that, the main source of revenue will come from selling exclusive games (first-party) and collecting royalties from other developers (third-party), which have much higher profit margins. Sony’s PlayStation 5 has followed this path, and has only recently started to make a profit from selling the console as the cost of manufacturing components has gradually decreased over time.

So while the rumor that Nintendo won’t sell the Switch 2 at a profit might be shocking at first, it fits into the normal console business strategy. Nintendo will still reap huge profits from selling its blockbuster games. Over time, as the Switch 2’s manufacturing costs come down, selling the console will become more profitable.

Source: https://thanhnien.vn/tiet-lo-gay-soc-khi-nintendo-khong-co-lai-tren-moi-may-switch-2-185250502104122355.htm