Nintendo's newest earnings report paints a split picture for the Switch 2: hardware sales fell 37% compared to the same period last year, while software revenue climbed 18.8%, driven by strong performers like Tomodachi Life: Living the Dream and Rhythm Heaven Groove.

PC Gamer noted that most of the decline landed this summer, largely before the console's recent price hike took effect, making it hard to pin the slump on sticker shock alone. Nintendo itself is bracing for more of the same, forecasting a 16.9% sales drop for the Switch 2's second year on the market.

Context matters here. The Switch 2 remains comfortably ahead of where the original Switch stood at the same point in its life, and GamesRadar+ reports it is also outpacing the PS5's comparable trajectory. Second-year slowdowns are normal for console launches once early-adopter demand is absorbed; the question is whether the gap narrows enough that the Switch 2 loses its lead over its predecessor by year two, as Nintendo's own guidance suggests it might.

For now, the software engine is doing the heavy lifting. If first-party releases keep converting at this rate, Nintendo can weather a slower hardware curve — but the pressure is on the 2027 lineup to keep consoles moving off shelves.