As Nintendo confirms Switch 2 backwards compatibility, analyst claims investors are more confident that the next console is "a continuation" rather than "a risky experiment"

Nintendo has now officially confirmed that the Switch 2 will be backwards compatible with current Switch games, and it sounds like investors are seeing this as a good sign of things to come.

This backwards compatibility announcement comes just a day after Nintendo's latest financial results, which weren't exactly positive for the company, with sales of Switch consoles (including the OLED and Lite models) down 31% year-on-year for the six-month period up to September 30. Although Nintendo justified this with a lack of "special factors" driving sales, as well as the fact that the Switch is now in its eighth year of life, analyst Dr. Serkan Toto, the CEO of Kantan Games –  a consultancy focused on Japan's games industry – said that "Nintendo stock was down around -4% in regular trading" following the results. At the time, he suggested that investors "see no fuel in the tank" until the Switch 2 reveal, but it appears that that situation has changed slightly now.

"Nintendo stock just closed up +5.80% (3:30pm Japan time on Wed) because of the confirmed backwards compatibility of the next console with the current Switch," Toto writes today. "Investors think this is a sign Nintendo's next device will not be a risky experiment but rather a continuation."

At this point, we're yet to actually see the console – while everyone has been calling it the Switch 2 for simplicity's sake, Nintendo has continually referred to it as "the successor to Nintendo Switch," without giving it an actual title. The term "successor" could have already indicated that the next console might be a continuation of sorts, but the backwards compatibility confirmation is the most concrete evidence of that suggestion we've seen yet. 

Of course, backwards compatibility won't necessarily guarantee its success. Just look at the Wii U (rest in peace to that era), which was also able to play games from the wildly popular Wii, but didn't come close to mirroring its predecessor's sales. Either way, the Switch successor is still on track to be revealed before April 2025, so we might not be waiting too much longer to see what it's all about.

It's been 10 years since Mario Kart 8 launched, and it still managed to outsell every single first-party new Nintendo Switch game in 2024.