Core Viewpoint - The rising prices of data storage are threatening the demand for profitable game software from Nintendo, particularly affecting the Switch 2 ecosystem development efforts [1][3]. Group 1: NAND Flash Price Surge - Companies like Meta and Amazon are driving a global surge in AI hardware construction, leading to a significant increase in NAND flash prices, with a projected quarterly contract price increase of up to 90% [3]. - The previous quarter already saw a price increase of over 30%, indicating a trend of escalating costs [3]. Group 2: Impact on Consumer Behavior - Increased storage costs are diminishing consumer willingness to purchase new games for the Switch 2, which relies heavily on game sales to compensate for low console profits [3]. - The average game purchase per Switch 2 console is 2.18, compared to 3.88 for the original Switch at a similar sales volume, indicating a decline in software demand [3][4]. Group 3: Storage Capacity and Costs - The Switch 2 supports higher-quality games, resulting in larger file sizes; for example, the upcoming Final Fantasy 7 Rebirth is expected to occupy 102.5GB, which is 40% of the console's 256GB internal storage [4]. - The cost of storage expansion is rising, with a new 256GB microSD Express card priced at approximately 13,350 yen (about 586.6 RMB), a 30% increase from last year [4]. Group 4: Nintendo's Strategic Response - To mitigate consumer costs, Nintendo has partnered with suppliers like Samsung and SanDisk to offer a co-branded microSD Express card at about half the market price [5]. - Nintendo's stock has dropped nearly 30% since the launch of the Switch 2, indicating investor concerns over the console's pricing and market performance [5]. Group 5: Long-term Risks - There are concerns that if the Switch 2 is perceived as only suitable for first-party Nintendo games, third-party developers may abandon the platform, leading to a decline in consumer interest [5]. - The ongoing NAND price increases and storage shortages are expected to persist, further complicating the situation for Nintendo and its consumers [6].