Will Switch 2 Break Nintendo's Curse of Sequel Flops?

The highly anticipated Switch 2 has finally arrived, bringing with it an air of excitement reminiscent of past major console launches. Following the relatively subdued releases of the PS5 and Xbox Series X/S due to the pandemic, this high-profile launch is a welcome boost to the gaming industry, especially during uncertain economic times. One aspect the Switch 2 launch shares with the PS5 launch is the likelihood of supply constraints. Despite Nintendo securing a substantial stock for retailers, the demand for the new console is exceptionally high and is expected to outstrip supply for several months. This situation echoes the PS5 launch, where consumers were left frustrated due to perceived supply issues, despite the PS5 having a higher launch supply than any previous console. The PS5 situation also created opportunities for scalpers, exacerbating supply problems. Nintendo has attempted to mitigate this by requiring a history of Nintendo account usage for pre-orders, but the effectiveness of these measures remains to be seen. The ideal solution to prevent scalpers is to better match supply with demand, but forecasting demand for a console is challenging, and increasing supply is not as straightforward as adjusting factory production. Companies like Nintendo must manage hardware supply in significant increments, which can involve retooling production lines or entire factories, a costly and risky endeavor if demand forecasts are overly optimistic. No company wants to be left with unsold hardware or unnecessary production capacity, so they often prefer to deal with supply constraints rather than risk over-supply. Nintendo has set a target of 15 million Switch 2 units for the fiscal year, a solid number historically but likely conservative given the actual demand. The Switch 2 is unique as a direct sequel console from Nintendo, maintaining the form and function of its predecessor, which has not been Nintendo's typical approach. The original Switch has sold over 150 million units, making it one of the most successful gaming devices in history, and its popularity, combined with its age, creates a strong demand for an upgrade. The Switch 2, being a better, faster version of a beloved console, and its handheld nature making it easy to upgrade and pass down, further fuels this demand. Considering these factors, the 15 million target seems conservative, potentially leading to significant supply constraints as the software library grows and major titles are announced. Nintendo's cautious approach to supply, given the company's history of successful consoles being followed by less successful ones, is understandable. The Switch 2, by sticking to a winning formula, looks poised to break this curse. However, success is never guaranteed, especially with economic risks like tariffs and recession indicators affecting the launch. The strong initial response and the prospect of a large installed base by the end of the year make the Switch 2 a significant addition to the gaming landscape, attractive to developers and publishers. It will be interesting to see if the Switch 2 replicates the success of its predecessor in supporting smaller and independent titles in its early years. The Switch's eShop eventually became crowded with low-quality titles, but the Switch 2, with its relatively uncrowded market, may offer new opportunities for developers, possibly with Nintendo exerting more quality control this time around. For now, the Switch 2, after a long gestation period, is in the hands of consumers, with largely positive feedback. While it's too early to declare Nintendo's curse broken, the signs are positive, and a successful Switch 2 launch is beneficial not just for Nintendo but for the gaming industry as a whole.