Economics forum

Posted on May 14, 2022, 12:18 p.m. by sergiodelrio

Hi folks! This is less a thread and more me replying to a (post) on twitter, which is hard to answer there because of character limit. Feel free to discuss anyway, but I don't even know if that person has an account here, and I might not get back to this post myself.

So here we go - just to spoil it for the curious, the OP suggest reprints are bad.

Without paraphrasing the OP's full argument again they actually do have somewhat of a point when concluding 'cards should have $ value or else the whole game is in trouble (example FoW TCG) - reprints lower prices - so reprints are bad'. However, imho, the OP fails to see a bigger picture at play that somewhat dilutes the 'conclusion' portion of that argument.

Money is a big issue at play, especially in MTG, we all love it when the cards we own rise in value, at the same time it kinda stings when cards we don't own but would like to own do the same thing.

We pay $ to open packs and obviously, whenever we pull a chase rare that gives us our money back that's great! The secondary market is responsible for that effect. Since supply is at the mercy of WotC, and they mostly sell randomized packs, GAMEPLAY and RARITY filter the cards and a supply/demand (SD) function (SDF) regulates prices on the secondary market. So far so good.

Now I'm gonna take a step back. Why do those cards have a non-neglectible $ value anyway? Because of the supply-demand function of early magic! There was a time before the internet when ppl had no idea what was in the pack, what rarities are, heck we didn't even know how to properly play the game. Eventually, the game SOLD OUT.

Whenever something sells out, it means that the supply portion of the SDF goes to 0. Now that our original supplier (card packs) has run out, we're in need of a substitute in the case that demand is non-zero. So we can now either trade our cards for other cards, and already face situations where rarity and power forces us to trade not 1-for-1 but 'pay up' in cards to get what we need... or we just spend actual $ - the secondary market is born.

Why am I writing all of this? MTG sold out because it was a great game with desired game pieces, NOT BECAUSE OF EV OPENING PACKS!

Card prices first and foremost are a derivative of game design primarily, availability second.

Obviously the game and its economy have evolved from there. Market participants now include players, collectors, traders, and speculators. However, while many things may rely on card prices (for example collector attraction, willingness to start an MTG related business), card prices themselves mostly weigh in gameplay factors (and rarity).

OK, so now we know why cards have $ value. But let's get back to that SDF. Over time, more players enter the scene, because MTG is a great game - cool! But at some point, those new players face an increasing opportunity cost. Buying into a format whose supply is close to zero (sold out, many old cards needed) forces them to substitute and buy from the secondary market. However, that market has its own supply function.

$ value is relative. Period. While buying into Modern by investing, say 500$, will probably sound like a good investment for your hobby, your opinion might change if the pricetag was 2000$ for the same deck. You only make so much money, hence the relation might be off at this point.

The secondary market can't fix that problem by itself since it can only sell you what WotC produced.

So why not flood the market with everything and call it a day? Yeah that's a bad idea as well. And here is where I actually agree in portion with the OP is that 'infinite' supply will drive 3/4 of people involved in MTG out of it (players, collectors, traders, and speculators) and leave maybe the players. Their commitment will likely also be low, because of the low opportunity cost.

That being said, if Hasbro as a company wants to max their profits, they need to max out the # of ppl involved in their game, preferably spending $ on a regular basis. Printing too many cards will hurt that incentive. However, not keeping prices in check by increasing supply in precise doses will do the same, because you'll still lose customers.

Having already written too much, I want to defend reprints in a controlled manner to keep the opportunity cost of playing the game MANAGEABLE for the retail consumer, the player, because without players you don't have a game, and the whole ecosystem attached to it dies with it anyway.

Peace Out

Abaques says... #2

Well said.

I would add that I feel Wizards has been slowly transitioning from primarily focusing on the player component to more equally focusing on the collectors, traders and speculators. Just look at the large number of art variants, the secret layers, collector boosters, all the worlds beyond stuff, none of that is targeted at players.

By itself that isn't solely a bad thing, and it has the knock-on effect of lowering singles prices for players. I do feel that the level of expansion of 'collectible' products does create a risk for Wizards, and potentially Magic as a whole. Collectible markets are invariably driven by speculation. You buy a card or a pack hoping to get a card that you can sell for more than you paid for it.

Wizards strategy to appeal to collectors/traders/speculators seems to be to create a very large number of high rarity card variants and charge a premium for access to them. This is somewhat similar to the strategy the comic book industry tried in the 90's. There were 3-4 variant covers for most of the popular comics and prices skyrocketed for a while. Eventually the speculators realized that random X-Men comic with variant cover 2b wasn't actually worth all that much more compared to the normal cover (which probably had a value less than $1) and the comic book speculation market crashed, very quickly. I fear that Wizards might be walking into the same trap. If the speculator market collapses you could see card values plummet, which would lead to a sales collapse which would then ultimately result in higher singles prices for players.

To tie this back to the question of reprints, Wizard's hedge against a speculator market collapse will always be it's player base. If Wizard's doesn't address the supply of needed reprints in a meaningful way they will ultimately create barriers to entry for players which will have a cascading impact on speculators.

May 14, 2022 10:20 p.m.

SpammyV says... #3

I'm gonna be real for a second.

The mentality that Magic the Gathering must provide a financial return bothers me. Previously it was the individuals who would talk about the poor EV of an event and disparage actually playing the game in any capacity. Now it's the mindset that the worth of Magic as a game and of individual cards is first and foremost that they are assets that are always supposed to increase in value and thus that having high prices and low supply of the best, most desirable game pieces is a feature and not a bug. That makes me more afraid for the future of the game, that it will survive as a game I can love rather than a soulless, price-inflated collector asset. I'm more afraid of that than a future where The Great Henge only costs 20 bucks and the best Modern decks only cost 500 bucks.

May 15, 2022 12:17 a.m.

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