Nintendo R&D spending hits record high amid looming Switch 2 launch

Nintendo’s R&D spending hit a new record high in Fiscal Year 2024 as the company prepares to launch new Switch console hardware.

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Evidence strongly suggests that the new Switch 2 system has entered–or may be entering–mass production. Two of Nintendo’s component suppliers (Hosiden and Weltrend) are ramping up spending on production lines. Nintendo, in turn, has also been boosting its R&D spending throughout the years, and in FY24, it reached a new all-time high.

According to Nintendo’s financial records, the Japanese games company spend a record 137.7 billion yen (or around $911 million) on research and development throughout the April 2023 – March 2024 period. This represents 8% of its net sales for the fiscal year.

It’s important to remember that this represents Nintendo’s total R&D spending, including a combination of hardware, software, new experimental technologies like VR and AR, Switch Online content, network costs, and more. One interesting thing to note is that Nintendo has been spending part of its R&D budget on deep learning since 2019. NVIDIA’s DLSS upscaling technology can use deep learning to deliver better-looking visuals without significantly compromising in-game performance.

It’s believed that the Switch 2 console will leverage DLSS to enable 4K gaming via a new custom NVIDIA Tegra chip, and it is likely that a portion of Nintendo’s R&D spending over the past few years has been on this tech on both the hardware and software side.

Below is an example of what Nintendo spend its R&D money on, as excerpted from Nintendo’s 2024 annual report:

Research and development expenses for the fiscal year were ¥137.7 billion (USD 911 million), with the outcomes of major research and development activities described below. Segment information is omitted since we operate as a single business segment.

With respect to hardware, we continuously investigate and undertake research on underlying technologies spanning data storage technology such as semiconductor memory, display technology such as liquid crystal displays, and electronic components.

We also carry out research and development activities to examine the applicability of various technologies to the field of home entertainment including interfaces such as touch panels and sensors, networks such as those for wireless communication, security, cloud computing, virtual reality (VR), augmented reality (AR) and mixed reality (MR), deep learning and big data analysis.

Our efforts are not limited to in-house studies and research and we are also exploring various possibilities on a daily basis to discover technologies that will help create new ways to play by proactively turning our attention outside Nintendo.

Moreover, we continue to enhance the durability, safety, quality and performance of our products to ensure that consumers can comfortably enjoy them over an extended period, in addition to designing and developing various accessories and pursuing cost-cutting initiatives.

Regarding our parts procurement and manufacturing processes, in addition to promoting the mass production of parts that employ new test methods and technologies, we also research and accumulate knowledge pertaining to relevant laws and regulations with the cooperation and support of our manufacturing partners.