How Much Does the 2ndAry Market Support WotC?
Economics forum
Posted on Oct. 3, 2020, 4:07 p.m. by Omniscience_is_life
I've recently wondered something, that I feel as though I should know the answer to: how much does purchasing cards from the secondary market support WotC? I'm not ready to straight-up boycott Wizards, but I want to be cautious about how much money I'm feeding them at any given time. Appreciate it!
EleshNornsFs says... #3
My thoughts echo the comment above. If you buy sealed product from someone who bought from a distributor, you indirectly pay WotC. Other than that, the only way in which a purchase on the secondary market affects them is by creating demand.
October 3, 2020 5:19 p.m.
VampDemigod says... #4
Basically, if you buy something that’s in print, I’d say you’re “paying WotC”, because the vendor will buy more. However, if something is no longer in print, the vendor CAN’T buy more from WotC, so I’d say you’re not “paying WotC”.
There is an argument to be made that buying anything that is an MTG product “pays WotC, because it encourages the vendor to buy more product. However, if you subscribe to this and try to boycott, you’d better have already purchased any decks you want to play. Because buying “MTG cards” that don’t originate from WotC is illegal.
October 3, 2020 11:21 p.m.
Omniscience_is_life says... #5
Aah, good explanation VampDemigod. I play the eternal formats, so I'd be interested to see what percentage of the cards I purchase are in print. And no, I'm not interested in boycotting Wizards and then just proxying all the fetches, I'd have to play with what I had. I'm not quite ready to stop buying Magic cards, however, at least until I get conclusive evidence that I should (which may end up being never, or tomorrow. You never know).
October 4, 2020 12:16 a.m.
Correct me if I'm wrong, since I'm not super educated on the subject. I'll just define some terms that've been used the way I see them to discuss the question a bit.
"Sealed products" are booster packs, brawl decks, commander decks, or anything else that WotC prints to demand. Concerning standard booster packs, if it has rotated out of standard (takes about 2 years), then it's no longer in print so buying it won't give WotC money since the stores won't be able to purchase more from them. Concerning non-standard sets, whether they are booster packs like Modern Horizons or the Commander 2018 decks, if it's been a while since it released (not sure on the timeline) then it's a similar scenario. Basically, if you can find it at Wal-Mart, WotC will make money from it. If you can't find it at Wal-Mart, it's probably not being made anymore and has entered the secondary market where stores and people start price gouging you for it. That's why standard booster packs are always ~$4 but Innistrad is not even close to that.
"Secondary market" is where things are bought second-hand. They get bought and sold among people and stores, not between stores and WotC. The secondary market in mtg is pretty much entirely singles. If you buy singles, you won't be giving WotC your money, even if the card is in standard. Yes, an argument can be made that by buying the last Uro in the store people will buy standard booster packs for a hope to crack one, but, in general, buying singles doesn't influence people buying sealed products.
October 4, 2020 12:37 a.m.
VampDemigod says... #7
Lanzo493 I’m going to use Card Kingdom as an example of a secondary market business. If I buy an Uro, and they’re near the top of their stock, they’ll just add one to the buylist. But, Uro is an oft-played card. There’s no way that the buylist can keep up with demand. So, somewhere down their non-buylist supply chain, someone is cracking boosters.
That said, I personally agree with your post.
October 4, 2020 7:13 a.m.
VampDemigod: uro is still in high demand, even with the standard ban. It is played in all but 1 non rotating format (vintage - which very few play with real cards anyway).
October 4, 2020 9:26 a.m.
defamagraphy1 says... #11
I outlined this earlier, but
Wizards doesn't make any money from the secondary market. They only make money with what sealed products they sell. Drafting is literally their biggest money maker, thats why sets are loaded with crap cards. As well as sealed Commander products. This is why the keep releasing new ones yearly.
There are varying factors that are currently hurting the secondary market in paper Magic as well as Wizards.
Players are completely dictating the price of cards in the secondary through a variety of ways, such as netdecking. The better a card is, the more demand, the more demand, and with less quantity of prints equals increased rarity and higher price. This is seen through trading, as we don't trade straight up rare for rare. We trade at price value of the rare for possibly more less valuable rares.
Sealed product, ie a booster box costs typically $130. If a set has more sought after mythics and rares and none of those cards are being used, (as some people buy cards only to resell them at a higher value,) they get sold via secondary market at a much higher price.
Some players, rather than buying a booster box will directly buy singles to build the deck they wish to make because it makes sense for us to purchase cards and build a deck for $250 rather than buy 8 booster boxes or more at $130 or more to build the very same deck.
So here's how they lose money.
Individual private sellers such as comic books stores, can buy booster boxes sealed at a price of $90 dollars or so. This is the wholesale purchase price. They then sell the box at $130 to net profit. It would make no absolute sense for stores to sell a box at same price they purchased it at, they would never make money that way.
So, here's where the problem is.
THE SECONDARY MARKET CAN BUY PRODUCT FOR CHEAP, OPEN ALL THE BOOSTERS AND THEN LITERALLY SELL THE PLAYSETS OF MYTHICS FOR QUADRUPLE THE PRICE.
Example, a store purchases 20 boxes at $90 each and open all the boxes they paid $1800 and end up with 7 cards valued at $40 due to every one using said card (example: I preordered Omnath at 16.99 in variant art, due to the increase of players playing Omnath, the value went to 34.99 the price doubled, and as the deck has been beaten and demand has gone down its settled at 21.99) lets say they also managed 2 playsets of planeswalkers valued usually at $20 each. Another set of planeswalkers valued at 15 each. So that's $280 + $160 + $120 which equals $560 dollars just off the playsets of 3 individual cards. Each booster contains 32 packs 32 packs times 20 is 640 packs. That's 64 rares and mythics, subtract 7, 8, and 4 for the high valued Mythics already obtained. Thats 19. 640 rares and or mythics minus 19 that's 621 other rares and mythics that can also be listed and sold individually. With varying prices of some cards being 10 dollars and others being 2 lets just say the average for the rest of the lot is roughly 5 dollars. 621 x 5 is $3,105 add the other high dollar mythics and it comes out to a total $3,665 dollars. This means secondary markets are doubling their investment with no loss to them.
If you sold a product would you want other people making more money off your that you won't ever see? Probably not. I'd be upset personally.
This is a profit loss, and one that is completely uncontrolled. Since the market fluctuates so rapidly and since more players directly buy singles versus boxes they lose money
Collectors boosters, Secret Lair and the other products are a way to keep players interested in buying their sealed products. So they don't lose money. Now yes, Secret Lair is a price hike for a small handful of cards, BUT since players (especially in eternal formats) love alternate art what is going to happen to those cards in a few years when they aren't so available?
The secondary market will quintuple their price. So it's not wrong of Wizards to make a little money now when they'll be so much more in the next decade.
If you find all this insane, then you have to blame players for not taking time to innovate and diversify and you have to blame the people who only purchase Magic to flip the cards. Those are the two BIGGEST problems in the market.
Wizards only fault here is these small set releases, single set mechanics, and making some cards a lot worse than others.
Wizards can't foresee what the meta is going to do, what deck players are going to choose etc. That's why they've narrowed down deck ideas somewhat. And as far as limiting mythics they have to, because Wizards is well aware of them printing money. Theyre aware of the secondary market despite not acknowledging it. If they threw in every Mythic in one box, they'd still get sold high, and people would only profit more or the market becomes super saturated everyone has what they need and then theres no need for people to continue purchasing product. It's a lose lose scenario for WotC.
October 4, 2020 1 p.m.
Omniscience_is_life says... #12
defamagraphy1 interesting. I've learned not to assume that just because I've never heard a particular viewpoint before, doesn't mean it's wrong per se, so even though a perhaps conclusive amount of people have argued (on what isn't the other side exactly, but still) differently... I still view your point as worthy of my attention.
Now, I can't agree it's fair to say that WotC is LOSING money on every drop: can you miss what you don't have? It also isn't as though Wizards is visibly struggling to stay afloat or anything, no! Quite the opposite--with all the product aimed at collectors willing to pay seven billion dollars for a fancy basic Island, WotC is doing fine.
The only thing that your post makes me wonder about is--what are the exact metrics in play here? Is there more money going around here than I thought? Whatever it may be, this is all very interesting.
October 4, 2020 1:16 p.m.
defamagraphy1 says... #13
Omniscience Haha oh yeah man, there's a ton of money from this going around. MtG is worldwide. I have a friend in Japan that showed me what the room for the Pro Tour was like and what some of the card shops over there have. It was crazy!
No. Wizards is not losing money and the same time they are. This is why they keep making so much product. Printing one single card costs wizards .10 cents Now, each sheet has 121 cards printed on it. This roughly comes out to $12 dollars per sheet. Now factor in the cards in a box. 32 boosters x 15 that's 480 cards so roughly 4 sheets at cost of 48 dollars per box. Wholesale purchase from Wizards is a little over $90 so they're ONLY doubling their money on each box sold. If they sell for higher to retailers, retailers increase price, then players lose interest and it will literally cost Wizards money as they will lose demand on sealed product.
Now consider this. Not everyone plays Standard. Not every player will buy cards from a new set. This means that Wizards has already lost money on a box they've printed, and the more interest players put into older cards through eternal formats and modern, the more money they lose on new sets printed.
Now consider the secondary market. People who look to profit off Magic as they do will only buy so much to net money off of and then stop selling. This stops purchases on sealed product. Not everyone has an indispensable budget to use on Magic. So more players will literally buy only singles through that secondary market rather than directly from Wizards. Some players will not play the expensive high demand decks due to budget concerns, which will slow the secondary market demand, which slows the demand for buying sealed product. Most players will literally build only one or two decks, and a handful of boosters during standard due to cost and that's it. Slowing secondary market. Slowing the need to purchase sealed product.
When players in eternal formats or older formats need only one or two cards printed from a set and don't play standard this stops card demand which stops the secondary market which stops the need to buy sealed product. This is also why standard is seeing more insane cards being printed, more players have left standard due to the expensive cost to keep up with rotation and moved over to pioneer or modern, or commander, so to keep interest in purchasing new sealed product, the have to print higher power levels of cards to work in those formats to keep sealed product being purchased. Because some players in older formats will stick with the same deck for a long long time and make very little changes to it. This stops the secondary market, which stops sealed product purchases.
The secondary market directly affects Wizards, and since more players have moved to those older formats, the older out of print cards start to go in much higher demand, and driving up the prices. Without them being in print, Wizards isn't selling sealed product. All of it equals money loss. This is why the Modern Masters sets have been printed. Sealed product goes out to meet player demand through the Secondary Market.
The thing missing here is outside of draft play the majority of sales that Wizards makes is through secondary market resale. At $90 ish per box, with a printed cost of $48 per box.
For Wizards to continue being a business, they HAVE to make money, especially with Hasbro at the helm. If they don't net profit Wizards shuts down, and bye bye MTG
Value of cards is speculated through buzz going around about the card and will flucate through set demand. People want to make money off the cards, and sometimes will set prices crazily because of greed, but whole sets do not sell, so at some point secondary sellers will stop purchasing sealed product, due to lack of demand. At some point Wizards has to stop printing a set due to this low demand. Theros Beyond Death is a good example, outside of a small handful of cards, the set was not in high demand, and did poorly. Due to less sales Wizards of course stops printing, this allows the secondary markets to take advantage of the small amount of better cards circulating. If a card with an outrageous power level is being outwardly complained about enough, Wizards will start considering bans once they've reached their quota. Lets say they produce 1000 boxes, the set does bad and only 200 boxes go out into circulation. Another 100 get sat on allowing for zero need to purchase. At a cost of $48 dollars per box, they spent 48,000 to produce the batch and selling only 300 with no additional sales at $90 per box they got back 27,000 dollars in sales which means they eat a production loss of 21,000 dollars.
That is Wizards lirerally losing money.
Now, this is where printing insane cards come in, if they continue to make really really good cards, people will continue to be interested and then there's product flow. BUT, if s format truly becomes warped, players quit then there's no product flow. If the set sucks overall like THB, sales stop, no product flow. So they have to maintain balance.
I once again have to iterate that Wizards is not a company throwing away money just to make players happy. They have to make money, to keep getting paid, so they can eat and have lives like everyone else and their stock holders lose interest, no more Magic.
Hasbro bought Wizards in order for the toy company to stay afloat in changing times, it was a smart move as selling toys has died out. Look at Toy's R Us closing down. So this is why we are at where we're at.
And literally all of this stems directly from the players and deck demands.
October 4, 2020 2:46 p.m.
TheRealSpecialK says... #14
defamagraphy1 wow - thank you for putting the time, energy, and effort into that explanation. It was very articulate, and different than a lot of the other, more emotionally based arguments I've heard. You made a lot of sense, and I think you have successfully swayed how I think and feel about this. * slow clapping *
pskinn01 says... #2
Buying cards from the secondary market only supports wizards if the seller of the cards opened sealed product (or bought it from wizards). Buying from secondary market on no direct impact on wizards bottom line. But wizards still gets indirect support as the demand for their product still goes up.
Wizards of the coast is a business. They are owned by Hasbro. Hasbro has stakeholders. Those stakeholders want Hasbro to bring in all the profit they can get.
If everyone stopped buying product from Wizards, then the magic community as a whole would suffer. As cards would stop being printed. Secondary market prices would increase for in demand cards as all cards would basically be reserve list. Card shops could close, as their would be fewer new people due to higher costs to get product. And the game would be slowly die.
Now I'm not saying that its fair that they are basically selling singles directly. But as long as people buy them, it doesn't matter if you bought them directly from the secret lair drop, or through eBay. The end result is that they sold the product to someone due to the demand on the cards.
October 3, 2020 4:58 p.m.