Gotta Catch 'Em All!

by Space Cadets Gaming Gaming

Today I'm going to talk about one of the 800 pound gorillas in our little shop.  That's Pokemon.  One of the big three (Magic, Pokemon and Yu Gi Oh) collectible card games that dominate the landscape.  Since it's release in the states in 1999, it's consistently had strong sales and a commanding presence on game store shelves.  Young fans, expert gamers and collectors alike snatch up product like Ash Ketchum with an Ultra Ball.  But something has stirred the market and made it problematic for retailers (such as us) and even big box stores Target and Wal-Mart to get product.  What happened? The following are some speculative opinions.

Pandemic
The recent Covid Pandemic found people stuck at home.  Normally, players would be coming in to our regular weekly league or big time tournament events to scratch that Pokemon itch.  But with the Pokemon company suspending official play events, these players were left with opening product and deck design as their outlets.  The desire to hunt the biggest and baddest cards drove players to grab whatever product they could find and just enjoy the thrill of opening packs and boxes.

Youtube, Twitch, Instagram....
Closely tied to point number 1, online personalities (Logan Paul most specifically) took to their media outlet of choice and did pack/box opening videos.  They're showing all the beautiful new cards that they hope to flip for a profit.  Folks who may have had zero interest in Pokemon previously suddenly become enamored with the prospect of easy money.  To the store they go eager to buy up anything; clear the shelves depriving anyone of acquiring that latest box and sell for double, triple or even beyond normal retail prices.  Those that missed grabbing from the shelf gladly pay that price because again, their favorite online celeb did it so they can too!

Printing Shortage
When the pandemic first hit (March/April 2020), many of the card game companies had their releases  planned if not already printed for the upcoming year.  They typically work 1.5 to 2 years in advance of the actual release.  So when the market started to explode, Pokemon was ill prepared for the demand.  In the past, it was relatively easy and expected for us to call up a distributor and request a case of product and have zero issue receiving it.  Currently, we are grasping for anything we can get our mitts on.  Pokemon has gone back to the vault and reprinted boxes from 2017 which retailers have been able to get as of 2021 and guess what....they're selling just as fast! Sadly though, the new hotness (Darkness Ablaze and Vivid Voltage) items are just nowhere to be found except on third party market sites such as eBay and Mercari for, as previously mentioned, sometimes triple the normal retail price.

Collector's Secondary Market
In case you're not familiar, the secondary market encompasses stores such as us; selling single cards or collections of items that have been opened from packs and boxes or simply considered collectible and desirable.  The three factors listed above have all driven the secondary market to explode in growth!  Good news for us!  Our singles sales have skyrocketed we frequently have to make room in our case for new cards.  Conversely though, these same collectors are part of the ones making it difficult to get product.  They're purchasing anything they can get and usually multiples of it seeking those secret rare cards that will net them some big money.  In addition to simply hunting and collecting these rare cards, folks have gone to grading sites in droves.  Sites such as PSA, Beckett and CGC to name a few, receive cards submitted by individuals and stores to grade condition.  A rating between 1 and 10 is assigned to the card and is based on how mint the card is.  The card is then encapsulated in a hard plastic case and labeled with the grade.  This certifies your collectible as one of the best available and thus raises the value immensely.  Example, the secret rare Charizard VMax from Champions Path typically goes for between $300 and $330 ungraded.  One that has come back graded 9 or 10 will increase the value close to $800 or more! The value is of course relative to whatever customers are willing to pay.

All of the above factors have put the game and community on a dangerous precipice in two ways.  One such way is that up until a couple of weeks ago, scalpers and collectors were flocking to big box stores in the early morning hours to catch stock people as product was going out.  In some cases, they were quite literally grabbing whole boxes of product before they left the cart.  This creates a potentially dangerous scenario for the employees and other customers possibly looking to get product.  Black Friday anyone? Luckily, Target and Wal-Mart specifically started putting in measures to counteract this.  Target started more closely monitoring purchases and limiting customers to 2 items.  There's a myriad of ways around that system, but it's a start. Wal-Mart just flat out stopped carrying Pokemon cards (in the Houston area anyway).
Secondly, this comes down to simple supply and demand.  The scalpers are holding the market hostage with the bulk of the product and charging ludicrous prices.  Of which people are paying because they desperately want it.  They control the supply and drive demand.  This drives up value for our product too, which right now is a great thing!  Note, when we have sealed product, we do not charge above MSRP unless our costs dictate doing so.
The problem will arise when either 1.) the fans and collectors start watching their pennies and decide they don't need to spend $400 on that booster box or 2.) Pokemon Intl ramps up re-printing previously released product thereby putting much more product into the market.  With it more readily available, scalpers are left with a hoard of product they couldn't move and are forced to liquidate.  They lose money or break even and the market will to a degree flood.  Look into some history of sports cards and even Magic in the late mid to late 90's.  It nearly collapsed because they overcompensated.  When that happens, market values on some of these cards will regulate.  Still in high demand, but prices we're seeing today will dip significantly.

One of the prompts for my writing of this piece is the current release of the McDonald's 25th anniversary promo cards in Happy Meals.  The deal they were to be released, in the Houston area alone, I saw two posts of someone who had gotten their hands on a full case of the cards and selling for $10 pack.  This made my blood boil.  That's when I knew this was close to hitting the breaking point.  Our thirst for chasing profit, on a children's game mind you, have driven the market to take product from a HAPPY MEAL!  I'll grant that McDonald's probably has a zillion of these things printed and kids will not be deprived of them, but it has gotten out of hand.  We as a store are not going to take ANY of these McDonald's promos for at least a year.  WHEN, not IF, the market regulates, these things are going to be worth pennies and I for one will not be stuck with them.

Whew!  That was a lot to put down.  And there's probably more I could go into.  But I've rambled enough.  I'd love to sit down and talk the economics of this with anyone interested.  Having lived through the 90's card and comic craze and now watching it spin up again and be a part of it as a business fascinates me.  

Thanks for reading
-Captain BMac

Comments
Jason Griffin

Liked your article Brian. This has been aggravating me so much. My daughter and I play casually and I usually grab her a ETB and a few packs from each set and we build what we can. I will not succumb to scalpers so we are just doing without right now. Makes me sad and a little mad. It will be a Poke-less birthday this year.

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