Can Nintendo break the curse of "the next generation of consoles will be overturned"?

Switch 2 has just been released and has become one of the hottest hosts discussed. Many people even call it "another phenomenon product". Can it really continue the glory of the first Switch, or is it just a short-term popularity? Let’s talk about it today.

This first new console in eight years was officially launched this Thursday. Many players lined up in the early morning to wait for a rush in front of retail stores such as GameStop and Best Buy. Its popularity is comparable to the iPhone release. The reason is that Switch 2 has indeed hit the players' expectations at key points - the technical performance has been significantly improved, but it still retains the portable + home two-in-one design of the first generation Switch, which is full of familiarity.

The first generation Switch launched in 2017 has exceeded 152 million units in global sales with its unique mixed gameplay and a super first-party game lineup, making it one of the best-selling game consoles in history. But players have always had complex emotions about Nintendo's new console. After all, in the past 20 years, Nintendo's performance in the console market can be said to be a "roller coaster" - GameCube failed in 2001, Wii exploded in 2006, Wii U once again Waterloo in 2012, and Switch reversed again in 2017. This "even-generation incident" rule has made many people feel upset about Switch 2.

But from the moment, the Switch 2 has a strong start, not only is it popular, but it also has a key advantage - backward compatibility. This means that a large number of games that players have purchased on the Switch can continue to be used on the new console, saving a lot of repeated purchase costs and reducing anxiety about replacement.

I recently experienced the Switch 2 at Nintendo's media trial, and I also bought my own console on the day of its release, and I have been playing with it for more than 12 hours. Overall, the feel and workmanship have been significantly improved. The 7.9-inch large screen has bright colors and the picture quality is much clearer than the previous generation. The animation of the debut masterpiece "Malio Racing World Tour" is very smooth and is likely to become a killer application of Switch 2. You should know that the previous work "Malio Racing 8 Deluxe Edition" sold 68 million sets, which is the sales champion of the Switch platform.

I also tried out the Legend of Zelda: Tears of the Kingdom optimized for Switch 2. The frame rate is higher, the loading is faster, the resolution is also greatly improved, and the gaming experience is significantly improved. The overall system responds faster, the UI operation is smoother, and even some old Switch games are smoother when running on new consoles.

Of course, the most controversial point is the price. The starting price of the Switch 2 is US$449.99, which is a full US$150 more expensive than the first generation, which is about RMB 3,200. This is really a pressure for players with limited budgets. But considering that the host life cycle is usually 7 to 8 years, and the average annual price is only a few hundred yuan, this calculation is actually not outrageous.

From the perspective of market strategy, Nintendo still did not follow Sony and Microsoft to compete for the ultimate hardware parameters, nor did it do the cloud gaming system, but insisted on going its own way - to make an entertainment product that "everyone can easily get started". It does not volume configuration, it only volumes "happy".

Nintendo recently stated in a letter to shareholders: "We are an entertainment company that creates smiles and is committed to providing intuitive and interesting gaming experiences that everyone can enjoy." This is indeed in stark contrast to the "tech arms race" like PlayStation and Xbox.

Official forecasts that in the fiscal year ended March 2026, the sales target of the Switch 2 is 15 million units, the same as the sales of the first year of the first generation of Switch. But some analysts believe that this goal is too conservative. Jefferies analyst Atul Goyal raised sales expectations to 17 million units and continued to give a "buy" rating. He pointed out that Nintendo's IP is its biggest moat.

It's true, Mario, Zelda, Metroid, Animation Crossing... These IPs can almost only play new works on the Nintendo platform. As Nintendo's layout in film and television and theme parks becomes more and more mature, the entire brand ecosystem is forming a closed loop. "Super Mario Brothers Movie" has exceeded US$1 billion worldwide box office. The live-action version of "The Legend of Zelda" will be released in 2027, and Super Nintendo Paradise is also opening around the world, with the latest one opening last month.

When Barrons recommended buying Nintendo stocks two years ago, he took a fancy to the potential of Switch 2. Today, Nintendo's US ADR stock price has doubled, and this year it has risen by about 40%. Goyal even raised its target price to 20220 yen (about US$140), more than 60% higher than the current stock price.

But here is the discussion about the stock market. What do you think? Will you pay?