Nintendo’s R&D spending soars to record levels ahead of Switch 2 release

At the end of the 2024 fiscal year, Nintendo’s research and development expenses reached a record level, the company’s financial reports show, as it is now preparing to release a new generation of gaming consoles.

The new Nintendo console, which is still tentatively called the Switch 2, has entered or will enter mass production in the foreseeable future. Two Nintendo component suppliers, Hosiden and Weltrend, are increasing production line costs. The Japanese gaming giant itself has been increasing its research and development spending for several years now, and in fiscal year 2024 it reached a new all-time high. Between April 2023 and March 2024, Nintendo spent 137.7 billion yen (about $911 million) on these purposes, or 8% of net sales for the fiscal year.

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The company’s research and development activities include the creation of hardware and software, new experimental technologies (including those related to augmented and virtual reality), Switch Online content, network costs and much more. Part of the budget is also spent on deep learning of artificial intelligence – it is used, in particular, by Nvidia DLSS technology, which allows increasing the quality of graphics without a significant decrease in performance in games. The Switch 2, powered by a new version of Nvidia’s Tegra chip, is expected to support 4K gaming using DLSS, and some of Nintendo’s spending over the past few years may have gone toward developing that technology, including its hardware and software.