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Understanding How WoTC Controls the Secondary Market



 
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AppleofEris



Joined: 20 Dec 2006
Posts: 553

PostPosted: Thu Aug 19, 2010 5:38 am    Post subject: Understanding How WoTC Controls the Secondary Market Reply with quote

Hi kids, it's your ole pal muppet here to explain to you how Wizards of the Coast, and their owning company Hasbro, do very much control the secondary market.

Now see, to understand why you're paying obscene prices for obscene cards, you're gonna need to know some basic economics. This is gonna be a review for most of you, but I'm sure more than a handful of you little demons don't really consider why things cost a certain amount.

The monetary value of something is generally found by observing the supply of an item versus the demand consumers hold for it. Of course, we could argue all day how money has no value but then all we're left with is a barter-trade system and unfortunately, unless you have drugs, gtfo!

So, now we know that the initial value of a card on the secondary market is gonna be equal to how many of the card has been printed (supply) and how useful it is in constructed play (demand). This is how Wizards and Hasbro initially control the market and why so many people are angry that they came out with Mythic Rares.

You see, back in the day, we had commons, uncommons, and rares. Then later, they started making holofoil versions of each card which are even more rare, but that's okay, you don't need holofoil cards to play. You had the same chance of opening up a useful rare as you did opening up a total crap $1 rare (see: eye of the storm).

Now, we're seeing something that Yu-Gi-Oh has been doing for a while, with it's 3 different teirs of rares making it absolutely pointless to buy a booster-pack of that absolutely pointless game that doesn't even use mana. DOESN'T EVEN USE MANA PEOPLE! *Ahem* Wizards made Mythic Rares so it could make the best cards in a set even more rare...and thus, more valuable.

Now, I know what you're asking...how does Wizards make more money off that? Well, consider for a moment how cards get to the secondary market in the first place. There is generally 3 ways (although if Wizards were selling them themselves, it wouldn't surprise me): people selling cards they got from booster packs to companies, companies opening booster packs themselves, people selling cards they won/stole (including getting sets off MODO). More often than not, with a card like Jace, The Mind Sculpter, you're gonna notice not a lot of people wanting to get rid of her. This means, that Companies like Starcity Games or Troll and Toad are gonna be popping open a box and hoping they strike gold. People opening up more booster packs to find those rare cards that are worth a fortune is great business for Hasbro, especially because booster sales are gonna stay at mostly a constant.

So now you have an idea of how Hasbro is making more money off Mythics and how we're paying more for our decks as a result. I've noticed in the community that there's a lot of assholes who rabidly attack someone who complains about the price of a Jace or Vengevine. They scream at their monitor things like "No one is forcing you to play Magic" or "I'm gonna kill your babies". These people will hopefully (and most likely) never breed, so just wait for them to die, but to answer them I say this: when you see a game that you've enjoyed and invested in for so long go down the shitter, you're not only allowed, but you are obligated to bitch, whine, moan, and complain.

With that being said, I don't think Magic is going down the crapper yet. With all these hideously over-priced pieces of cardboard floating around, winning with budget decks is my new hobby. And who knows, maybe when you pop open those boosters you won at FNM, you'll open up a holo chase rare and you can sell it for big bucks...or for even more boosters....muahahahaha

So my fellow Magic players, hang in there guys, it's not like this game could get any worse than it did back in The Dark.
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gypsy



Joined: 15 Jun 2007
Posts: 1671

PostPosted: Thu Aug 19, 2010 6:10 am    Post subject: Reply with quote

people buying more boosters doesnt affect single prices
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AppleofEris



Joined: 20 Dec 2006
Posts: 553

PostPosted: Thu Aug 19, 2010 6:20 am    Post subject: Reply with quote

Sure it does and sure it doesn't.

If people bought a crap load of boosters and the market got flooded with Jaces, you'd see a price drop (probably).

Other than that, you are correct, but what I meant by that is this is how Hasbro mostly profits from extremely rare and valuable singles, more people are gonna be popping open boosters in search of them.
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Amigosu



Joined: 24 Mar 2010
Posts: 7

PostPosted: Thu Aug 19, 2010 6:33 am    Post subject: Reply with quote

gypsy wrote:
people buying more boosters doesnt affect single prices

This is true. In economy school we study the lotery theory and people just buy boosters if he think it's cheaper than buy singles, so the only way to change the single cost is changing the price of the booster or changing the rarity of the single.
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Kabelis



Joined: 27 Jun 2010
Posts: 105

PostPosted: Thu Aug 19, 2010 6:44 am    Post subject: Reply with quote

gypsy wrote:
people buying more boosters doesnt affect single prices


Duuuuh..

But the company which is in charge of game development prints overpowered cards in the form of mythic rares, which means that any player who wants to stay competitive has to get those cards.
Which means that someone IS gonna have to buy a shitton of booster packs to get those cards.

I mean, if set has 15 mythic rares, opening any specific one requires someone to buy approximately ONE HUNDRED TWENTY packs.
That's pretty ridiculous
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AppleofEris



Joined: 20 Dec 2006
Posts: 553

PostPosted: Thu Aug 19, 2010 6:44 am    Post subject: Reply with quote

Amigosu wrote:
gypsy wrote:
people buying more boosters doesnt affect single prices

This is true. In economy school we study the lotery theory and people just buy boosters if he think it's cheaper than buy singles, so the only way to change the single cost is changing the price of the booster or changing the rarity of the single.


You're factoring in only the consumer part. You need to think about the companies that sell singles. They will open more boosters if the singles are worth more, thus, Hasbro makes more money.
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AppleofEris



Joined: 20 Dec 2006
Posts: 553

PostPosted: Thu Aug 19, 2010 6:46 am    Post subject: Reply with quote

And if the company had to open that many more boosters to get that card, then they're gonna pass the savings on to you.
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Amigosu



Joined: 24 Mar 2010
Posts: 7

PostPosted: Thu Aug 19, 2010 8:51 am    Post subject: Reply with quote

Kabelis wrote:
gypsy wrote:
people buying more boosters doesnt affect single prices


Duuuuh..

But the company which is in charge of game development prints overpowered cards in the form of mythic rares, which means that any player who wants to stay competitive has to get those cards.
Which means that someone IS gonna have to buy a shitton of booster packs to get those cards.

I mean, if set has 15 mythic rares, opening any specific one requires someone to buy approximately ONE HUNDRED TWENTY packs.
That's pretty ridiculous

That's why people opening more booster don't change the price of the single. If u pay 400 dolars to have a Jace (like buying a lot of bosters of WWK) will you sell it for 10 dolars?
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Kytep



Joined: 21 May 2006
Posts: 187

PostPosted: Thu Aug 19, 2010 9:52 am    Post subject: Reply with quote

gypsy wrote:
people buying more boosters doesnt affect single prices


Sure it does. It affects the "supply" side of the equation. More opened boosters -> More Jaces/BSA's/Venges in the market (i.e., supply of these goes up -> Prices of those singles go down

Imagine if a card cost $100, that you had a 1 in 50 chance of getting one in a pack, and each pack cost $1. Obviously, it would make more sense to buy (approximately) 50 packs for $50 to get the card, rather than paying $100 for just the single. Because you didn't pay the $100 asking price, and because there is now an additional Card X in the market, the price of the card will be pressured to come down, especially if tens of thousands of other people do the same thing you did.

Think of it this way: If every card - including Jace, et al, were commons, and you ended up with 10 copies of every card in a set just by buying a booster box for $80, what do think the single prices of those cards would be? I can guarantee you not $100 each, nor would so many packs/boxes get opened (read: be purchased from Wizards) chasing these mythic rares...

Kytep
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caesarthehun



Joined: 27 Jun 2006
Posts: 186

PostPosted: Thu Aug 19, 2010 10:14 am    Post subject: Reply with quote

Its like trying to teach a class of 12 year olds that have every right to disagree with you and probably will insult in the process.
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Amigosu



Joined: 24 Mar 2010
Posts: 7

PostPosted: Thu Aug 19, 2010 10:21 am    Post subject: Reply with quote

Kytep wrote:
gypsy wrote:
people buying more boosters doesnt affect single prices


Sure it does. It affects the "supply" side of the equation. More opened boosters -> More Jaces/BSA's/Venges in the market (i.e., supply of these goes up -> Prices of those singles go down

Imagine if a card cost $100, that you had a 1 in 50 chance of getting one in a pack, and each pack cost $1. Obviously, it would make more sense to buy (approximately) 50 packs for $50 to get the card, rather than paying $100 for just the single. Because you didn't pay the $100 asking price, and because there is now an additional Card X in the market, the price of the card will be pressured to come down, especially if tens of thousands of other people do the same thing you did.

Think of it this way: If every card - including Jace, et al, were commons, and you ended up with 10 copies of every card in a set just by buying a booster box for $80, what do think the single prices of those cards would be? I can guarantee you not $100 each, nor would so many packs/boxes get opened (read: be purchased from Wizards) chasing these mythic rares...

Kytep

Sorry for my bad english.
Ok, ur example explained why if we change the rarity of a card he will be cheaper.
But the first part is simple not right. In economy, no one is stupid. If Jace is priced 10 dolars, no one will buy booster of WWK, that why the price will jump from 10 dolars to 100 dolars, and maybe now people will be happy to buy booster of WWK, and them. And if Jace costing 100 dolars, and them everyone think let's buy WWK boosters, then the price will go down, but, after the price go down no one will want to buy another WWK booster. That's why Jace price will be 100 dolars, no one cent more and no one cent less, and no one can do anything to change it (you can indeed buy a lot of booster of WWK and sell Jace for 90 dolars, but then you will have loss).
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niknight



Joined: 14 Oct 2004
Posts: 261

PostPosted: Thu Aug 19, 2010 11:21 am    Post subject: Reply with quote

What the original poster fails to take into account is that card prices are relative to the power level of the sets. Let's use some examples:


The following list are the rares in each set since the printing of mythics that have a value of >$5 (according to MOTL):

M11: Fauna Shaman, Obstinate Baloth

Rise: None

WWK: None

Zendikar: Fetches, Bloodghast

M10: None

Reborn: Maelstrom Pulse

Conflux: Knight of the Reliquary, Noble Hierarch

Shards: None

So that leaves us with 11 rare cards in 8 sets that have a value of $5 or more.

I'll just list the number of rare cards in older sets that hit $10:

Eventide: 2
Shadowmoor: 2
Morningtide: 3
Lorwyn: 7
10th: 1
Future Sight: 3
Planar Chaos: 1
Time Spiral: 2

That's 21 cards in the 8 sets before mythic rares that achieved at least twice the value of the rares now. One thing that I will concede is that these 8 sets had 15% more cards. This does not make a difference however, as the number of expensive cards is 100% larger.

So, while good mythics have become increasingly more expensive, the overall cost of Magic hasn't changed that much. In exchange for the price increase caused by mythics, the price of staple tournament rares has fallen off a cliff. If mythics were never printed, the Worldwake Man Lands would be sitting in the $8-10 range instead of the $2-4 range they are in right now. This point is further evidenced by the research done by Ben Bleiweiss, who demonstrated that the overall cost for a complete set per card (to account for the difference in set sizes) has actually DECREASED since mythics were first printed.
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Kytep



Joined: 21 May 2006
Posts: 187

PostPosted: Thu Aug 19, 2010 12:36 pm    Post subject: Reply with quote

Amigosu wrote:
Sorry for my bad english.


No worries; your English is better than any other language I have tried to speak or write. Smile

Amigosu wrote:

Ok, ur example explained why if we change the rarity of a card he will be cheaper.
But the first part is simple not right. In economy, no one is stupid. If Jace is priced 10 dolars, no one will buy booster of WWK, that why the price will jump from 10 dolars to 100 dolars, and maybe now people will be happy to buy booster of WWK, and them. And if Jace costing 100 dolars, and them everyone think let's buy WWK boosters, then the price will go down, but, after the price go down no one will want to buy another WWK booster. That's why Jace price will be 100 dolars, no one cent more and no one cent less, and no one can do anything to change it (you can indeed buy a lot of booster of WWK and sell Jace for 90 dolars, but then you will have loss).


That's only true if $100 is the market-clearing price. As supply fluctuates, prices will tend towards an equilibrium. If Jace starts off at $100 and people are buying boosters, Jace's price will start to fall - not immediately to $10 as in your example, but $99, then $98, and so on, perhaps to, say, $80, when people realize it's worth buying Jace as single again. Then perhaps the price will go to $81, then $82, then people buy a few more booster, then back to $81 or something and pretty much stay there.

So, I agree that the market will move towards an equilibrium price, but it is also true that if people DO buy more boosters, the prices of individual cards will be affected, since the supply will increase. Only when they stop buying boosters and supply remains constant (and if demand also remains constant - a big IF), will the price remain steady.

Kytep
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Taodd
Level 1 Judge


Joined: 24 Feb 2006
Posts: 31

PostPosted: Thu Aug 19, 2010 3:23 pm    Post subject: Reply with quote

While the overall price of a set may have not increased much, the overall costs of decks has. The costs of the junk rares in a set is now a little less than it was, but that doesn't make competitive decks cheaper. The minor decrease in price of competitive rares is not enough to offset the price of the expensive mythic rares.

However, such expensive mythics are not necessary for magic. M10 had Baneslayer and nothing else for expensive mythics. In Shards of Alara block the only really expensive mythic (once the dust settled) was Elspeth, and even she only got up to like $40 at most. Few of the other mythics in the entire block saw that much competetive play. For a while Rafiq was part of a single deck that did well for a few months, and that alone saw his price jump a good bit. Beyond that there is simply Ajani Vengeant, which they made the prerelease promo.

Note the particulars about all 3 of the mentioned mythics. They're all either a planeswalker or legendary, which makes needing them as a 4 of less likely. Also they all cost 4 mana, which is a big part of why they saw play while others didn't. Giant powerful 8 drop creatures don't often dominate in today's standard. Also, all 3 of those rares were in the same set.

Instead now we have Lotus Cobra and Eldrazi Monument as the money mythics in Zendikar (pretty sure the rest are under $10). Worldwake has Jace, Abyssal Persecutor, and Avenger of Zendikar. Rise of the Eldrazi has All is Dust, Gideon, Sarkhan the Mad, and Vengevine.

The number of expensive mythics seeing competitive play has gone up. I'm certain that I'd rather pay $20 a card for 3 playsets of regular rares than $85 a card for a single playset of Jaces. My current T2 deck is worth about $350-360, and while it wins FnMs decently often it isn't a tier 1 deck and is by far the most expensive T2 deck I've ever owned. The 3 most expensive cards in the deck make up about half the monetary value of the deck. They're 2 Jaces and a Lotus Cobra. Can you imagine Jace's price if he had been the prerelease promo?
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gypsy



Joined: 15 Jun 2007
Posts: 1671

PostPosted: Thu Aug 19, 2010 6:47 pm    Post subject: Reply with quote

people just need to get better friends who own cards
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