Or, How the Switch 2 Suddenly Makes a Lot More Sense
When Nintendo launched the Switch 2, there was no shortage of discussion about its price. Everyone, myself included, thought the most logical progression was from the $349 Switch OLED to a $399 Switch 2. Nintendo, which spent years occupying a relatively affordable corner of the console market, suddenly released a new system for $449.
I found that $100 jump considerably harder to justify, especially considering the previous Switch generation had received relatively little support from AAA studios. At $449, Nintendo was suddenly approaching PlayStation 5 pricing and asking buyers to look at it differently. And while I knew I would have to get one for the workshop, as a consumer I wasn't convinced.
"The market simply moved around Nintendo, making increasingly expensive hardware harder for the average player to justify. Suddenly, that $450 Switch 2 makes a lot more sense."
But something interesting happened over the following year. Nintendo held the Switch 2's launch price through the tariff upheaval, maintaining that initial $449.99 price point before eventually announcing a scheduled increase to $499.99 on September 1.
Everyone else, meanwhile, got more expensive. Today, Sony's standard PlayStation 5 costs $649.99 in the United States (or $599 diskless), while the PS5 Pro sits at $899.99. Xbox hardware has similarly moved well beyond the prices we associated with this console generation only a few years ago—prices that, historically, we expected to go down over a console generation, not up.
Yet somehow, in a world of $650, $800, and $900 consoles, Nintendo has found itself occupying a position I don't think many people expected: the value option, again. And I'm not entirely convinced Nintendo did anything particularly brilliant to get there. The market simply moved around them, making increasingly expensive hardware harder for the average player to justify. Suddenly, that $450 Switch 2 makes a lot more sense.
$500 Just Doesn't Look Like It Used To
Price is always relative. At $500, I loved my PlayStation 5. Since I didn't have a PlayStation 4, I got to play Spider-Man and God of War for the first time and was completely taken by the fidelity, graphics, and immersion. Meanwhile, the similarly priced $450 Switch 2 looked expensive next to the $300 Switch that launched in 2017 and let me play Breath of the Wild for 719 hours.
"The Switch 2 doesn't have to be cheap. It just has to look reasonably priced next to everything else."
But now, at $450, with considerably more capable hardware and games like Tears of the Kingdom looking almost like beautiful new releases on it (yes, another 700 hours gone), and all the recent AAA support, the Switch 2 looks considerably different next to a $649 PlayStation 5, an $899 PS5 Pro, or even a Steam Deck OLED approaching $800. So much so that I find myself reaching for it more and more, as I don't actually get a lot of couch time for playing on the big screen.
That's particularly important because Nintendo has never really tried to win the spec wars. Nintendo hardware has generally been less powerful than contemporary PlayStation and Xbox hardware, with Nintendo instead betting on its software, playability, and first-party catalogue. For years, that strategy made Nintendo the cheaper secondary console. Consumers with money to spare would often pick up a Nintendo Switch—or a Wii before it—as a second system largely to play Nintendo's first-party games.
But the price difference between Nintendo and its competitors is becoming large enough that the equation may be changing. The Switch 2 doesn't have to be cheap; it just has to look reasonably priced next to everything else. Now, increasingly, it does, making it much easier to consider as a primary console. And considering there's already a Cyberpunk port, and Call of Duty: Modern Warfare 4 is coming to the Switch 2 on release, I'd say all we need now is a GTA VI port and the transformation will be complete.
The Concord Tax™
Sony's price increases obviously aren't literally the result of Concord. Or maybe it's part of it. But indulge me for a moment.
Sony spent years aggressively trying to capture the live-service golden goose. And to be fair, sometimes it laid a golden egg. Helldivers 2 became an enormous success and showed exactly why Sony was chasing the strategy in the first place. But other projects were canceled, studios were reorganized, development resources were committed to games that never reached customers, and Concord became the spectacular poster child for the strategy going wrong. In Concord's case, all Sony really had to show for it was a nicely designed controller and a very expensive lesson.
I'm not suggesting someone at Sony calculated the losses, opened an Excel spreadsheet, and added a "Concord Tax" to every PlayStation. But expensive mistakes don't simply disappear from the balance sheet, and investor calls can become unpleasant when investors start asking for accountability.
"Expensive mistakes don't simply disappear from the balance sheet. Strategies change, costs get cut, and somewhere along the way, the consumer ends up taking the hit."
Companies absorb losses, shareholders absorb some of them, other successful products subsidize them, strategies change, costs get cut, studios close, and somewhere along the way, the consumer ends up taking a hit too. So while I can't tell you that some percentage of the $899 PS5 Pro sitting on a shelf is the Concord Tax™, I'm also not going to pretend that years of extremely expensive strategic bets exist completely independently from the economics of the platform selling them.
Sony has built an extraordinarily expensive ecosystem around AAA game development. That works wonderfully when those bets produce enormous hits, but it gets considerably more uncomfortable when they don't.
Xbox Has a Different Problem
Microsoft's hardware situation is arguably even stranger, especially given that Microsoft's future Xbox strategy had increasingly become less about the hardware itself. Their now-discontinued campaign claimed everything was an Xbox—including a Samsung fridge—trying to push the Xbox ecosystem and Xbox Cloud Gaming to as many customers and devices as possible. And for a while, they did their best to sell you every other machine besides an Xbox.
Xbox hardware revenue has been declining dramatically. Microsoft's own financial results show Xbox hardware revenue falling 29%, then 32%, then 33% year over year across the first three quarters of its 2026 fiscal year, with Microsoft attributing the latest decline to lower console volume. Those are not small declines. Couple that with its expensive studio acquisitions of recent years, and the recent Xbox shakeup starts to make more sense: the sudden departure of Xbox's CEO Phil Spencer, followed by the recent restructure and the closure of multiple studios and layoffs.
Normally, that would make me wonder how Microsoft plans to reverse that trend. It's hard to explain to investors that you have a strategy that'll take years to develop into a profitable, meaningful part of the market when you've spent a lot of money and the cost of everything suddenly goes up. But there's another possibility.
Memory and storage costs have become a serious problem throughout the electronics industry, with other semiconductor products now facing longer lead times as advanced logic, memory, and packaging capacity remain tight. If the components required to manufacture consoles become substantially more expensive, aggressively pushing hardware volume becomes a less attractive proposition.
This creates a strange situation where declining console sales can be bad for the Xbox platform while simultaneously reducing Microsoft's exposure to increasingly expensive hardware. Microsoft is uniquely positioned to tolerate that. In fact, Microsoft reported that its cost of revenue fell partly because of lower hardware sales, while its gross-margin percentage benefited from the shift toward higher-margin businesses.
"Microsoft's diversification reduces its dependence on Xbox hardware, while Nintendo still needs to sell you a Nintendo console and games."
Xbox is no longer simply an Xbox console. It's Windows, Game Pass, PC, cloud gaming, and publishing games on competing platforms—an ecosystem increasingly designed to exist whether or not the customer buys a physical Xbox. With memory costs pushing hardware out from one side and AI infrastructure demands requiring enormous investment on the other, maybe Microsoft isn't particularly desperate to reverse console sales right now. The Xbox gaming division can take a back seat and enjoy the scraps of larger data centers, maybe even becoming a decimal error on a balance sheet riddled with potential AI-driven profit.
If I sound skeptical of this strategy, it's because I am. But whether treating consumer platforms as increasingly secondary eventually comes back to hurt Microsoft is another question entirely. Nintendo, on the other hand, doesn't have such a luxury. Even though they've recently been very successful with the new Mario movie, and everyone is talking about the upcoming Zelda movie, Nintendo still needs to sell you a Nintendo console and games. Nintendo's strategy around diversification strengthens Nintendo's IP and hardware, while Microsoft's diversification reduces its dependence on Xbox hardware.
Somehow, Nintendo Gets to Be the Good Guy
At the end of the day, Nintendo isn't escaping the price increases either. On May 8, Nintendo announced that the Switch 2 would increase from $449.99 to $499.99 in the United States, taking effect September 1.
Think about that for a second: Nintendo announced a $50 price increase almost four months before actually increasing it. Which means anyone who has been considering buying a Switch 2 has had months to simply buy one for $50 less. This is, of course, also an extremely convenient way of encouraging people to buy Switch 2 hardware before September. "Buy it now because it's going to cost $50 more later" is a pretty good sales pitch.
"By announcing the price increase months ahead of time, apologizing for the impact, and giving customers an opportunity to avoid it, Nintendo somehow gets to look like the considerate one while raising its prices."
But two things can be true at once: it's good marketing, and it's surprisingly considerate to customers. It reminds me of Akagi Nyugyo, the Japanese company behind Garigari-kun popsicles. In 2016, after keeping the price at 60 yen for 25 years, the company raised it by just 10 yen. Rather than quietly changing the price, Akagi Nyugyo gathered its chairman, president, executives, and employees together for a photo apology to customers for the increase.
This went viral because the gesture was so disproportionate to the price increase. People online joked that it was ok and they should've just raised it by 20 yen so they wouldn't have to do it again a few years later—which they ended up doing anyway, complete with the same advertisement and apology. People remembered it, but more importantly, they felt differently about the company afterward.
There's something similar happening here. Nintendo is raising the price of the Switch 2 by $50, yet by announcing it months ahead of time, apologizing for the impact, and effectively giving customers an opportunity to avoid the increase entirely, Nintendo somehow gets to look like the considerate one while raising its prices. Good Guy Nintendo. Maybe that's calculated, but if you're planning to buy a Switch 2 before September, does it really matter?
The Pro-Controller Makes the Same Argument
You can see the same strange value equation with Nintendo's Switch 2 Pro Controller. On paper, it isn't a cheap controller, but look at what Nintendo actually includes. The analog sticks are excellent all-purpose sticks which can be changed without a need for a soldering iron, the ergonomics are very comfortable, and there are two programmable back buttons.
Those are features that Sony and Microsoft reserve for their Edge and Elite controllers, sitting at $199 (though they do come with replaceable analog caps and a case). Microsoft also sells a stripped-down Elite Series 2 Core at $149.99 which doesn't include any of the extras.
"You can't just compare the Switch 2 Pro Controller with what Nintendo charged before. You have to compare it with what similar functionality costs on competing platforms today."
As I mentioned when writing about what we've learned after working on more than 1,000 Switch 2 Joy-Con, one of the things that has surprised me about this generation is how much Nintendo appears to have learned from the hardware that came before it. The Pro Controller is the best example of that.
As someone who spends a lot of time opening, modifying, and testing controllers, this is one of the things I think gets lost when people compare prices. You can't just compare the Switch 2 Pro Controller with what Nintendo charged for its previous controller, even if the latter is still being sold for less and works on the Switch 2 as well. You have to compare it with what similar functionality costs on competing platforms today. Once you do that, Nintendo's pricing starts looking surprisingly reasonable.
That doesn't mean there's nothing to improve. At the workshop, we still customize these controllers with tactile buttons, cosmetic changes, UV-printed faceplates, and other modifications. But Nintendo gave us an unusually good foundation to work from. The same could increasingly be said about the console itself.
The Value Menu
A $499.99 console is still a $500 console, no matter how hard that last penny is working. Nintendo's first-party games are expensive and usually keep their pricing throughout a console's life. Nintendo accessories are expensive. Nintendo is famously capable of making decisions that frustrate its customers, and Nintendo didn't lower the price of anything here.
The company that was criticized for launching an expensive Switch has watched the rest of the market move even further upward, while still offering the same value proposition it did before. And it looks even better now as major publishers are starting to rally behind the Switch 2.
Sony now sells hardware approaching $900. When they announced the price increase, I considered getting one at $699 before the new price took effect. It would've been a simple upgrade for me, as the workshop always needs another console. But considering how little I get to play these days, I just couldn't justify replacing my perfectly working launch PS5.
"The Switch 2 doesn't need to outperform a PS5 Pro. It needs to occupy a price-to-performance position that makes sense to enough people."
Xbox hardware sales have fallen dramatically while Microsoft's strategy increasingly extends beyond the physical Xbox. Meanwhile, Nintendo is still doing something remarkably traditional: sell a console, sell games for it, and try to convince as many people as possible to buy both. Maybe that's old-fashioned, but right now, it also looks surprisingly effective.
And here's the kicker: the Switch 2 doesn't need to outperform a PS5 Pro. It doesn't need to be the most technically impressive gaming device available, nor does it even need to be cheaper. It needs to occupy a price-to-performance position that makes sense to enough people, and right now, the rest of the gaming industry is helping Nintendo make that argument. This is especially true as Nintendo continues to offer physical cartridges while PlayStation announced its departure from physical disc production for new games scheduled for 2028.
Additionally, Nintendo just announced that the Switch 2 bundled with a game for a discount—historically something they did with the Switch 1 and Mario Kart 8 for every holiday season—is now going to be offered for the foreseeable future to mitigate the price increase.
That's why I think the conversation around the Switch 2's price deserves another look. At launch, $449.99 felt like Nintendo moving dangerously close to its competitors. At $499.99, strangely enough, Nintendo may actually be further away from them, making it much easier for me to recommend as a primary console.
There may be a larger reckoning coming for the gaming industry. Hardware is becoming more expensive, development costs continue to climb, and some of the assumptions that defined the last few console generations are beginning to look considerably less certain. But that's a conversation for another day. For now, Nintendo finds itself in the unusual position of raising the price of its console while somehow making an increasingly convincing argument that it's the affordable one.
By Gal Silver, Founder of GameTraderZero
