Nintendo Switch Is Facing An Uphill Battle

After ending 2016 on a low note, Nintendo Co., Ltd (ADR) NTDOY is off to a disappointing 2017 as well. The company revealed a $299 price point for its new Switch console, while the market was anticipating a price point lower than the price of Nintendo’s current Wii U console, which also retails in the United States for $299.

Nintendo investors were hoping that a cheaper alternative to the Wii U would help Nintendo win back gamers who have abandoned expensive consoles in recent years in favor of smartphone gaming. After the $299 Switch price tag was announced, Nintendo shares plunged 6.2 percent in Friday’s session to their lowest levels of 2017. Nintendo stock finished out an eventful 2016 with a 14.3 percent December decline as well.

The Statista chart below indicates the challenging market that Nintendo is facing with the launch of the Switch. Total U.S. console sales have fallen from more than 85 million in 2008 to under 30 million in 2016.

Back in 2008, Nintendo held more than 60 percent of the total console market share split between its Wii and DS systems. In 2016, Nintendo’s share of the console market had dropped to roughly 25 percent.

Sony Corp (ADR) SNE has taken over as the gaming console market leader, accounting for roughly half of all 2016 console sales.