The Nintendo Switch 2 is arguably the most important product launch in video game history. Not only does DFC expect it to be the fastest-selling console system ever, but it has the potential to lift a video game industry that has been grappling with product delays, rising costs and economic uncertainty.
Initial DFC forecasts for 2025 anticipated a nice uptick for the video game industry, driven by two major releases: the Switch 2 and Grand Theft Auto VI. However, with GTA VI now delayed until May 2026 and industry tariffs driving up prices, the outlook has shifted. The delay of GTA VI is particularly impactful, as it was expected to boost hardware sales for the PlayStation 5 and Xbox Series X/S during the critical holiday season.
As a result, DFC now projects a decline in console video game software sales in both North America and Europe. North America is expected to see a 2% decline in 2025, with Europe expected to see revenue remain flat from 2024 levels.
In sharp contrast, Japan is expected to see a 25% increase in console software revenue in 2025. Nintendo has enjoyed a resurgence in Japan and the Switch 2 is aggressively priced for the Japanese market. When Japan sales are taken into account DFC forecasts overall video game console sales will grow 3% in 2025.
The Nintendo Switch 2 is now the key driver of industry growth for 2025. DFC has increased its forecast for Switch 2 unit sales from 15 million to 16 million. If manufacturing could meet demand, the Switch 2 could sell as many as 20 million units, but DFC considers this unlikely as Nintendo is expected to take a conservative approach to inventory.
Reflecting its historically conservative approach to new product forecasting, Nintendo is estimating sales of 15 million Switch 2 units through the end of its fiscal year in March 2026. When the original Switch launched in March 2017, Nintendo initially projected 10 million units for the fiscal year but ultimately sold 15 million units in that period. Based on that track record, the fact that Nintendo is forecasting a 15 million unit number gives us confidence that they will be able to ramp up supply and navigate tariff challenges.
Despite these short-term supply issues, the video game industry remains robust from a consumer demand perspective. When GTA VI launches a year from now, it should help drive the industry to further heights. From 2026 through 2029 we expect to see the video game industry set new hardware and software sales records.
Meanwhile, the Switch 2, along with the growth of mobile PC game devices, is redefining the landscape of the video game industry. Nintendo can no longer be considered as playing in its own separate space. With the Switch 2, Nintendo is positioning itself as a central player in the broader console and PC gaming ecosystem. DFC forecasts that by the end of 2029 the Switch 2 will have sold over 100 million units making it the leading console system by a wide margin. The next few years could see Nintendo for the first time becoming the primary partner for third-party game publishers. his dynamic evolution will shape the future of gaming.
