Sunday, October 8, 2023

Magic Price Collapse

I started my store in 2004 with the whispered stories of Fallen Empires from a decade before. Distributors, stores and even Wizards of the Coast took a big hit when in 1994, after a series of allocated Magic releases, suddenly everyone got everything all at once. The set was over ordered, over produced, and the storage costs alone threatened WOTC. Everyone vowed not to make that mistake again. According to MTGWiki:

After Fallen Empires, WotC would carefully decide how much of a particular product to print. It was a total swing of the pendulum. A formula was established by the Sales team at Wizards, and how much new product the distributors received was based on how they scored on the profile. How much the local retailer got was in turn determined by the distributors, each of whom had different ways of deciding how much of their allocation would go to the retailers. 

The last several years has been quite the Magic ride. It is clear Wizards of the Coast is not putting any restraints on their print runs. Imagine Fallen Empires, as a three year period of releases, culminating (so far) in Commander Masters. Commander Masters saw its value plummet days after release. I've never seen a Magic product sell alright on a release weekend and simply stop selling entirely on the following Monday. The market price dropped to below cost that quickly. 

Whereas I couldn't understand my income statement back when Pokemon was selling over keystone, I couldn't understand my income statement in September because I had become a discount seller, selling Commander Masters slightly over cost. Sales were wonderful, but where was the money? Both of these were new experiences. 

I do expect something to change soon, for no other reason than I can't afford to keep doing this; nobody can. A sell out of future Magic sets, much like how we treat Yugioh, would be more welcome than extra stock. The Yugioh strategy is to print a set, distributors take pre orders, stores get in their boxes, and within a short period, it is hopefully gone everywhere. Nobody wants to be caught holding. 

In the past, Konami would reprint every high value card into future products, much as Wizards of the Coast is doing with Magic, killing any secondary market opportunities. This is the Yugification of Magic. The secondary market, the activity of selling singles, is the "collectible" in Collectible Card Game. That's not my market, but I absolutely benefit from it when I sell sealed product. I'm punished when that market fails.

Here is a visual understanding of this problem. Below is a table showing the Magic products I have on clearance in my online store. These are all from the last three years. The chart uses TCGPlayer market prices, essentially the stock market for trading cards. This is an idiosyncratic list, but I think it's fairly representative of the market. Nobody will buy this product at just about any price. I have $8K of dead Magic inventory, and another $12K of Commander Masters, which hasn't been declared dead yet, but might as well be, as I attempt to sell it at a dismal 16% margin (well above market prices). At the beginning of the year I had a similar value of dead Magic, so this has not improved for me.

Click image to Embiggen

There is speculation Wizards of the Coast is attempting to boost revenue, possibly in hopes of selling the company. There appear to be signs of tying up loose ends. I hope buyers realize the damage done to the brand by this pump and dump strategy. When you overprint a collectible product, you don't just kill the value of that product, you undermine confidence in the market as a whole, collectible cards going back decades. Which valuable vintage card will be reprinted next? Where will the hit come with the next press release? It's why we're seeing long time sellers of singles, multi million dollar companies, exit the Magic singles market. The only one winning in this game is WOTC short term profits. The brand may never recover. I wouldn't want to buy into that mess. In fact, I plan to buy a lot less. The empire may be falling.

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