Key Takeaways
1. Physical stores in Japan remain popular for buying gaming consoles, including the Switch 2, despite high pre-order interest.
2. Nintendo is offering the Switch 2 at a lower wholesale price, increasing retailer margins from 2% to 5%, encouraging them to promote the console more.
3. Japanese consumers prefer physical copies of games over digital ones, which supports retail sales and promotions for Switch 2 games.
4. Nintendo aims to outpace competitors like PS5 and Xbox by leveraging the Switch 2’s pricing strategy and appealing to current handheld owners.
5. The handheld gaming market is thriving in Japan, as many gamers prefer portable devices for gaming on the go.
Physical stores in Japan continue to be a favored method for consumers to buy the latest gaming consoles and titles. Despite the impressive pre-order figures for the Switch 2, Nintendo is not taking any risks. According to a new report by Bloomberg, the company is supplying Japanese retailers with the handheld at a surprisingly affordable wholesale price. Nintendo’s aim is to make the Switch 2 the leading console in the market.
Retailer Insights on Switch 2
Various retailers discussed Nintendo’s strategy regarding the Switch 2 with Bloomberg’s Takashi Mochizuki. Typically, stores earn about a 2% gross margin for each console they sell. This makes it tough for retailers to gain profit from these systems, so they usually depend on selling bundles, games, and accessories. However, with the Switch 2, the margin is increased to 5%. This change gives shops greater motivation to stock the new handheld and to put more focus on marketing it.
Market Trends and Consumer Preferences
Retailers in the U.S. and other areas will also be focusing on the console both before and after the Switch 2’s official launch date. However, data from 2022-25 indicates that Japanese consumers are not as open to digital gaming. Physical copies still hold strong appeal, which means that customers depend on stores to buy their games. Retail chains like Bic Camera are heavily promoting Switch 2 games for the launch.
Competition and Future Sales
By offering a lower wholesale price for the Switch 2, Nintendo is also targeting its competitors. Sales of the PS5 are still behind those of the PS4, while the Xbox is becoming increasingly irrelevant. In 2024, the Switch reached the milestone of being the best-selling console in Japan’s history. If Nintendo can persuade current handheld owners to upgrade, it will continue to lead in hardware sales.
The Mobile Gaming Opportunity
With the help of retailers, Nintendo can tap into the profitable mobile gaming sector. Since gamers often spend a lot of time traveling and away from home, handheld devices like the Switch and 3DS have flourished in Japan.
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