Why the Switch 2 is so important for Nintendo

Nintendo just released the Switch 2, its first new game console in eight years. The original Switch was wildly popular, selling 15 million units in its first year, more than any prior Nintendo console. The company says its was the second most successful console in its history.

The Switch also beat out the competition, topping consoles from Microsoft and Sony in first-year sales. Overall, it was only surpassed by the PlayStation 2, the best-selling console of all time.

"The Switch replaced both the historic Nintendo console and the historic Nintendo handheld," says Michael Pachter, managing director at Wedbush Securities. "They've merged those two audiences, and the handheld audience got a massive trade up, and the console audience got a zero trade down."

While Nintendo systems have often introduced bold new features, like Wii's motion controls or the DS' touch screen, the Switch 2 may be the company's biggest bet yet: that consumers want more of the same. When the original Switch was released in 2017, it met the quality gamers expected from a home console on the go. The second iteration builds off the success of the innovative device, with a bigger screen, improved performance and a higher price tag at $450.

Still, the Switch 2 sold out within minutes of pre-orders opening up. And fans lined up for hours ahead of the midnight release at Nintendo stores. The company says it expects to sell 15 million units of the new console in its first year.

"They're probably not going to be in a position to meet initial demand," said Clay Griffin, an analyst at MoffettNathanson. "I do think that they'll be able to have success even at this higher price point…there's enough demand that they should be fine."

When asked what makes the Switch 2 a worthwhile upgrade, Nintendo of America President Doug Bowser told CNBC it's about creating the next generation of gaming platforms that enhances the overall gameplay for consumers.

"With Switch 2, we've taken the things you know and love about Nintendo Switch, but then added very powerful gameplay features and social features," he said.

Watch the video as CNBC's Steve Kovach interviews the Nintendo of America President Doug Bowser and explores what's next for the gaming giant.