Nintendo's R&D spending increased significantly in the fiscal year ending in March 2026. According to the company's latest financial report, research and development expenses in fiscal year 2026 reached 177.8 billion yen, an increase of 23.7% from 143.7 billion yen in the previous fiscal year.
Nintendo clearly pointed out in its financial report that rising research and development costs were one of the main reasons for the increase in sales, general and administrative expenses (SG&A). The company said: "Due to increased advertising expenses related to the launch of Nintendo Switch 2 and rising research and development expenses, SG&A expenses increased by 28.3% year-on-year to 548.8 billion yen."
Switch2 will be officially released in 2026. It is Nintendo’s new hardware platform after many years after the original Switch. The financial report shows that the company is making various technological investments, including:
·Hardware Engineering
·First party software development
·middleware technology
·online infrastructure
·Future projects outside of current starting lineup
The financial report also emphasized Nintendo's increasing emphasis on digital infrastructure and "ecological continuity" between the original Switch and Switch 2. In fiscal year 2026, Nintendo's digital sales reached 407.6 billion yen, accounting for 54.6% of overall software sales. The growth of this proportion forces companies to continue investing in online systems, cloud functions and platform services.
Nintendo is preparing a huge software lineup for Switch2. Various projects mentioned in the financial report include:
·Star Fox – Released June 25
·"Sprawl: Smudge Squad" - released on July 23
·"Fire Emblem: Thousand Threads"
·"Pokémon Wind"
·"Pokémon Wave"
The most striking thing is that although Nintendo predicts that overall revenue will decline in fiscal 2027, the company still expects research and development expenses to further increase to 190 billion yen. This signal of continued investment shows that Nintendo did not cut expenses after the release of Switch 2, but adopted a long-term strategy centered on expanding the new platform ecosystem and fully supported the platform through the early growth stage.
Some analysts pointed out that significant increases in R&D expenses in Nintendo's history often herald the launch of new hardware. However, judging from this financial report, many of the current investments are more directly related to the early stages of the Switch2 life cycle.