Nintendo Cuts Switch 2 Production to 4 Million Units
"Game On" is The Fly's weekly recap of the stories powering up or beating down video game stocks.NEW RELEASES:Among this week's new releases is Nintendo's"Super Mario Bros. Wonder Nintendo Switch 2 Edition + Meetup in Bellabel Park," the Switch 2 upgrade for 2023's "Super Mario Bros. Wonder." The game releases March 26 exclusively for Switch 2. Also out this week is Square Enix'sadventure game "Life Is Strange: Reunion," which releases for PC, PlayStation 5, and Xbox Serieson March 26.CIRCANA FEBRUARY:Circana analyst Mat Piscatella said that Capcom's"Resident Evil Requiem" debuted as the best-selling video game of 2026 as overall spending in February grew slightly when compared to a year ago, reaching $4.6B. The new "Resident Evil" game's blockbuster debut and a 27% boost in subscription services helped video game content spending stay flat when compared to February 2025. In hardware, Nintendo Switch 2 drove 22% year-on-year spending growth. Hardware spending increased 22% when compared to a year ago, to $326M. Spending on Nintendo Switch 2 hardware offset year-on-year declines across PlayStation 5, Switch and Xbox Series consoles. PlayStation 5 again led the hardware market in both unit and dollar sales. Nintendo Switch 2 repeated its January performance ranking 2nd across both measures. With nine months in market, the life-to-date installed base of Nintendo Switch 2 is trending 45% ahead of the original Nintendo Switch.February video game content spending was flat when compared to February 2025, at $4.0B. Non-mobile subscription content spending increased by 27% compared to a year ago, offsetting the declines experienced across other content segments, Piscatella said. "Resident Evil Requiem" debuted as the best-selling video game of the year. It also ranked 1st in February across the PlayStation, Xbox and the aggregated PC storefront charts. Launch week dollar sales of "Resident Evil Requiem" were more than 60% higher than the launch week total of "Resident Evil Village," which came out in 2021, with unit sales increasing by more than 40%. Square Enix's "Dragon Quest VII Reimagined" debuted as the 7th best-selling game in February while ranking 14th year-to-date. Other top-selling games for the month in the U.S. were Take-Two's"NBA 2K26," Microsoft's "Call of Duty: Black Ops 7" and "Minecraft," Sony's "Helldivers II," EA's"EA Sports FC 26," "Battlefield 6," and "Madden NFL 26," and Nintendo's "Mario Tennis Fever."EPIC GAMES LAYOFFS:On Tuesday, Epic Games sent a letter to staff, which read, "Today we're laying off over 1000 Epic employees. I'm sorry we're here again. The downturn in Fortnite engagement that started in 2025 means we're spending significantly more than we're making, and we have to make major cuts to keep the company funded. This layoff, together with over $500M of identified cost savings in contracting, marketing, and closing some open roles puts us in a more stable place. Some of the challenges we're facing are industry-wide challenges: slower growth, weaker spending, and tougher cost economics; current consoles selling less than last generation's; and games competing for time against other increasingly-engaging forms of entertainment. And some of our challenges are unique to Epic. Despite Fortnite remaining one of the most successful games in the world, we've had challenges delivering consistent Fortnite magic with every season; we're only in the early stages of returning to mobile and optimizing Fortnite for the world's billions of smartphones; and in being the industry's vanguard we have taken a lot of bullets in a battle which is only in the early days of paying off for ourselves and all developers. Since it's a thing now, I should note that the layoffs aren't related to AI. To the extent it improves productivity, we want to have as many awesome developers developing great content and tech as we can." Investors in Epic Games include Tencent, KKR, Disney, and Sony.SWITCH 2 OUTPUT:Nintendo has cut back on the production of the Switch 2 after lower-than-expected demand for the $450 gaming console during the year-end holiday season, Takashi Mochizuki of Bloomberg. The company now intends to make 4 million units this quarter, less than the 6 million originally planned, people familiar with the matter told Bloomberg.EA DEBT PACKAGE:Electronic Arts is courting buyers for a $15B debt package to fund its acquisition by a group of investors, with the pitch centered on nearly $700M in projected annual cost savings its new owners argue should be counted as earnings, Aaron Weinman, Paula Seligson, and Michelle Cheng of BloombergTuesday. EA has told investors that the $263M spent on research and development for the worlds of "Battlefield 6" and "Skate" can be added back to earnings, as this was a one-time cost and both games are now live, people familiar with the matter told Bloomberg.MORE VIDEO GAME NEWS:Ubisofthas ended game development at its Red Storm studio,Multiplayer game 'Pokemon Champions' toApril 8PlayStation plans to drop the "PlayStation Network" and "PSN" brandidng by September 2026,Roblox, including adding restrictions to advertising standards
