Q. Why is the Switch 2 launch so significant?

The Switch 2 launch is vitally important to Nintendo’s future business performance. The company has attempted to diversify in recent years with some success in mobile gaming and IP licensing, but still derives over 90% of its revenue from its console hardware, software and services. With a single hybrid console product line since the merging of its handheld and TV console businesses with the launch of the original Switch, everything rests on the performance of the new console. However, there is also significant upside potential for Nintendo’s business with a more progressive shift to digital sales of games, which will improve margin compared to physical media sales and also enable the company to increase its share of business from the Nintendo eShop, helping scale revenues.

For the console market more generally, Switch 2 is key to maintaining a consistently scaled opportunity over the next few years. Based on a June 5th launch date and the price point of $450 for the US version of the console, Ampere expects the Switch 2 to sell at a marginally higher pace than at the launch of its predecessor, reaching a little over 13m installed base by the end of 2025. With an estimated 115m active Switch devices still in the market and 129m annual playing users on Switch, there is a huge audience of existing players ready to engage with the new console. 

Ampere expects the pent-up demand for a ‘better Switch’ to drive demand over the next 18 months and help the platform reach 31m sales by the end of 2026. While there is justifiable concern over the impact of US tariffs on demand, we do not expect the price point to impact early adoption. The Switch 2 games lineup contains a lot of remakes and remasters of existing console games, and a few pure exclusives for the platform, which is likely to disappoint some Nintendo fans. Mario Kart World is the standout launch title - Mario Kart 8 Deluxe has sold 67m copies on Switch alone - which will trigger a large number of existing Switch gamers to upgrade. 

Nintendo is responsible for a significant portion of the console gaming market, commanding a 42% share of the global active console installed base in 2024. Ampere expects the Switch 2 to boost Nintendo’s share of all active games consoles to 49% in 2027 – its highest since the Wii era in the early 2010s. As of the end of 2024, Ampere Games data indicates that the Nintendo Switch family (including the Lite and OLED versions) is the second best-selling console family of all time, with just shy of 150m units sold. The Switch family also boasts by far the largest active installed base, almost doubling that of the PlayStation 5 (PS5) family (which includes the PS5, PS5 Slim, PS5 Digital and PS5 Pro). The reach of Nintendo devices is currently unmatched in the console space, so many will be keen to see if the Switch 2 can maintain or even expand upon this level of success.

Q. What does Switch 2 mean for Sony and Microsoft?

Nintendo operates in its own market to an extent by offering unique content and console hardware, but will be competing for time and money against the other console companies, the broader gaming industry and entertainment more generally. Switch 2's capabilities and its games lineup brings it closer in competition with PlayStation and Xbox. 

Ampere’s consumer research of 16-64-year-olds helps illustrate the overlaps in ownership between different console platforms, with 33% of Switch users in the US also gaming on PlayStation 5 and 11% on Xbox Series X. Additionally, 21% of Nintendo Switch players in the US identified PlayStation 5 as their most used console. This shows that a good share of console gamers use Switch as a supplementary gaming device and, if these gamers buy into the Switch 2, will be spreading their spend across console platforms. Traditionally, Nintendo and PlayStation are considered less direct competitors, but there is no doubt that Switch 2 will be drawing in considerable spend from PlayStation and Xbox gamers. Ampere also expects these consoles to compete more directly due to increased third-party support at launch and the number of remasters and Switch 2 Editions of existing console games coming to the platform.

There is a lot of commentary about the newly revived handheld gaming market and how the Switch 2 might fit into that different device landscape. Since the original Switch launched, a new wave of PC gaming handhelds have entered the market with Valve’s Steam Deck leading sales in this category. Ampere does not see these devices as a threat to Switch 2 adoption – they are niche in terms of adoption and are priced significantly higher than Nintendo’s new console. To put this into context, we expect Switch 2 sales in its launch year to be more than lifetime sales of the entire PC gaming handheld category. 

Q. What are the opportunities for games companies on Switch 2?

The Switch 2 represents a $7bn-8bn games content opportunity over the next two years. Ampere is forecasting 31m Switch 2 devices to be in the market by the end of 2026 and expects the number of addressable Switch (across original Switch and Switch 2) devices to peak in 2028. Early adopters will be particularly keen to spend on new content and services, and backwards compatibility will allow games companies to cross-gen publish content to a reinvigorated, active userbase. The total audience is expected to reach almost 130m across the flagship Switch and the Switch 2 by the end of 2026, and will last for 2-3 years.

However, despite the Switch family’s success in terms of sales of devices and games, in-game monetisation remains a largely untapped opportunity on Nintendo platforms. In 2024, Nintendo commanded a mere 4% share of consumer spending on in-game and downloadable content (DLC) across the console platforms. Even a moderate increase in this form of monetisation could represent an additional $1bn-$2bn in in-game spending over the next few years. Nintendo platforms are typically dominated by first-party content: a lack of in-game monetisation aligns strongly with its established brand image and thus consumer expectations. However, with increased third-party support from launch, Ampere expects in-game monetisation to grow throughout the Switch 2 cycle.  In a market constantly seeking a transformative growth engine but typically coming up short, combining smaller pockets of opportunity, such as this one, can amount to more sizeable commercial wins.