Nintendo reportedly using Switch OLED model to test markets, improve profit margins

The company wants to see how the new console is received.

Image via Nintendo

The new Nintendo Switch OLED model is going to add some nice, albeit small, changes to the popular hybrid console when it launches on Oct. 8. And in a new report from Bloomberg, it appears this was done as a way to improve the company’s profit margins and test a new part of an existing market. 

Nintendo tends to release updated hardware at similar price points to the older models, while reducing the original’s cost slightly to show it is no longer the optimal version. This has happened with multiple versions of the Game Boy, DS, and 3DS family of handheld systems, along with the Switch Lite being a cheaper entry point for the newest console. 

The Switch OLED model adds an enhanced screen, 64 GB internal storage, updated audio, a new adjustable stand, and a LAN port in the back of the dock. Nintendo is also upping the price for the newest model by $50, launching it at $350 compared to the original Switch’s $300 and the Switch Lite’s $200. 

Bloomberg reported that the Switch OLED only costs an estimated $10 more to produce than the original model. This increase comes from the 7-inch OLED Samsung display costing an additional $3 to $5, the increased 64 GB storage being an additional $3.50, and the combination of the upgraded kickstand and LAN port in the dock adding another few dollars per unit. 

With this estimated cost and the $50 price increase for the new model, Nintendo will improve its profit margins without significantly upgrading the system’s performance. The company will also still have the original Switch and Switch Lite on the market. 

Since its launch in 2017, the Nintendo Switch has sold more than 84 million total units, 28.8 million between March 31, 2020 and 2021. Having a newer model might not entice every existing Switch owner to marginally upgrade their system, but it puts more consoles on the market, potentially giving new buyers easier access to pick a non-Lite variant up for the first time.