There Have to be Limits

This is easily the most frustrating article I’ve written so far. The incarnation you’re reading now was preceded by a finished 2000 word piece that I threw out and then a 1500 word piece I gave up before finishing. It’s just been a very challenging topic to articulate my thoughts on cohesively, so I want to thank/apologize to the users on #wall-street and the #flesh-and-blood Team Covenant Discord channels who have dealt with me hashing this stuff out via spirited argument over the past week. I think that I’ve arrived at something that coheres, even if it’s perhaps a bit contentious.

Anyway, that’s a hell of a preamble before I even get to the topic at hand. Like pretty much everyone else, I’m eyeing up what looks to be another supply shortage when Monarch finally drops at the very end of April. I wrote on my under-printed first edition concerns previously in my “The Problem with ‘First Edition is for Collectors; Unlimited is for Players’” article, but I feel like the state of affairs has degraded even further since then, and what’s happening now is that we’re moving towards “first edition is for whales; unlimited is for everyone else”. I see a lot of people yelling “free market” and looking at $125-150 Monarch pre-orders three and a half months out as a sign that the game is in a good place because demand is high. Independent of my ongoing concerns about those pre-orders actually being fulfilled, I would contend that this is ultimately a shortsighted view, and the enormous return on investment collectors and investors are realizing in a short timeframe is not sustainable if the game is going to be healthy and grow.

The State of Things

Right now it seems very much like Monarch will be sold out before it releases. When talking to singles sellers and retailers, they are almost universally worried about allocation. One seller told me that he’d be happy if he gets 10% of the cases he ordered. If ten percent is the good scenario, what does the bad one look like? What we’re seeing here is a situation where singles will be generally unaffordable for the average player on set release (I have yet to talk anyone who sells singles who isn’t planning to open up their L pricing at $500-1000). Per Alpha Investments, Rudy noted that he anticipated the set selling out in the first month (I think that a month later that projection is looking overly conservative) and that UNL would follow weeks later. Given Rudy’s direct line to LSS, this seems like it’s probably based on his discussions with them, which would indicate MON first edition and unlimited are being printed side-by-side. We do not have concrete confirmation that this is true, but given the relative radio silence from LSS as of late, this is likely the best info we’ll get any time soon, so I’m proceeding under the assumption that it’s accurate for the purposes of this article. It certainly seems to be the underlying assumption driving pre-order prices. (That said, I have talked to stores who expect first edition to roll out over several weeks –this is largely a logistics issue, but if it bears out, it would be a more pronounced version of the CRU rollout where product disappeared after a week, and then trickled out in drips and drabs for several more weeks before wave 1 was finally done).

A Magical Detour

Of course we’re going to talk about Magic! Specifically, we’re going to talk about one of the reasons that people are upset with Magic. From the financial end of things, the complaint is generally that the singles in current Magic sets do not hold their value, never mind accruing more over time. This is specifically a singles problem; Magic sealed product does still perform well most of the time. Singles are a different story because of the unpredictability of how often WOTC will reprint valuable cards and, in my opinion at least, how many premium versions of these cards are being pumped out these days. FAB has approached the singles issue by having a policy of cold foils only being available in first edition, giving collector’s and investors a clear sense of what cards will remain valuable over time.

The implication of this model is that unlimited cards are not assumed to hold value. You buy them because you need them to play. It’s important to recognize that this doesn’t mean that they’re worthless. For example, a rainbow foil Mask or Momentum will likely always be worth a solid amount of money as long as the game is healthy. What it does mean is that they are not a reliable investment vehicle, and you should buy them with the understanding that their prices could, and likely will, drop with additional reprints.

What’s the Problem?

Right now a box of unlimited WTR/ARC is selling for $125 and climbing. This is entirely due to supply constraints. In November, you could buy a box of WTR-U for $60 from Gamenerdz. To me, that implies that, were supply not an issue, those boxes would reliably be obtainable at $60-65 from several online retailers –certainly MAP ($76.60) boxes would be easy to come by. So, in the current environment, the supply crunch has doubled the price most people pay for what is supposed to be the “affordable option”, and it will probably get worse as we go on, as the earliest we’ll see a stable supply is post-Monarch (we know all current printing is focused on Monarch), but we have no guarantee that ample supply of ARC-U/WTR-U will be available prior to Kingdoms.

Now, when that supply does eventually comes, there is going to absolutely be a crash in the unlimited singles market. Remember, if the expected value of a readily available set significantly exceeds the cost of the box, boxes will be opened and singles prices will drop until they reach an equilibrium point with box prices. This means that players starting now who have come in at $125 boxes of WTR/ARC and the associated high singles prices are going to have the value of core of their collection gutted. If you buy a playset of unlimited Command and Conquers at $195, when that set goes down to $90, you’re going to be understandably upset. This is the number one reason I am currently not trying to pitch the game to friends. There is no MSRP product on the market, and the cheapest product is 30% over MSRP and will almost certainly tank in value in a year to two years (depending on when supply issues finally get sorted out).

So that’s a problem, but it’s actually farther reaching than that; I don’t think there is going to be any affordable product that will maintain or grow in value coming out before Kingdoms. Monarch first edition is likely done from the standpoint of finding MSRP priced boxes online with a scant few exceptions (Reaper sounds like they’ll be doing 1 case per customer at MSRP or lower), and I suppose ChannelFireball could decide to sell an MSRP bundle, though I’m skeptical of that. The biggest perk with them is that they are more likely than a random shop to actually have all of the product they’re selling once it comes time for fulfillment (a $150 MON box from a retailer who will actually deliver it is better than a $100 box that turns into a refund come the end of April). 

This is where I take issue with the people crying “free market” because I don’t think this is healthy for the game at all. If first edition and unlimited are going to be available for the same MSRP at virtually the same time, and one of them will hold massive value and profit potential while the other one will likely be worth less after you open it, how excited is anyone starting the game between now and then going to be for the second class version of the product? And, please don’t tell me it’s not a second class version. If you believe that, shoot me an email and we can trade your first edition product for my unlimited.

I realize that “second class version” seems derogatory, but the reality is that first edition is a superior product because it is worth more. That, in and of itself, is not a bad thing. That’s how collectables work. If they printed first edition forever it wouldn’t hold value, but let’s not pretend that it isn’t vastly more desirable than unlimited (that’s the whole point from a collectability end). That said, there is a world of difference between “this set came out a year ago, and the unlimited product is there for you to catch up” and “this set is coming out in several months and you can’t buy it at MSRP; better luck with the following set in nine months.” If Monarch is indeed going to be simultaneously printing first and unlimited editions, the question for me is: why? Why isn’t that unlimited just more first edition? You don’t need to introduce additional artificial scarcity when boxes are selling for over MSRP four months ahead of set release.

In a recently released episode of their podcast Team Covenant offers up an interesting answer on that question. Here Zach argues that the simultaneous release ensure that cards will actually be able to get into players’ hands because unlimited isn’t going to get hoovered up by investors and speculators. I would contest this point because I don’t think it meshes with what we know about current unlimited sets, which themselves cannot meet demand. As noted at the start of this section, unlimited is absolutely being speculated on and flipped, and the prices are still rising. While I do certainly acknowledge that UNL MON will not get to the price point that first edition MON will, if the prices are sufficiently high for a protracted period of time (say $125-150 a box), then the argument that unlimited makes the game affordable are null and void, and we’re right back at the WTR-U/ARC-U problem where we’re setting players up to take big losses when supply eventually catches up.

The Fix

There is no true fix; at least, not for Monarch. I don’t think there is any way for LSS to produce enough combined first and unlimited edition to reliably keep it on shelves from launch to Kingdoms. I would absolutely be delighted to write an article six months from now about how I was wrong and the pulled it off, but I’m not banking on it. What we can discuss is what needs to be done for the future of FAB, and which methods would help the game remain healthy. Obviously the core solution is “print more” and that’s certainly a thing they need to do, and I assume they’re looking into that, but, to me, the bigger question is “what are the long term plans for first edition vs unlimited”?

Right now the model for Monarch appears to be: if you want MSRP, preorder as much as you can 6 months early. After that, you’re paying increasingly high markups, and the odds of getting any product on day of release are pretty much nil unless you’ve got an LGS that doesn’t take online orders and won’t let any enterprising locals buy their entire stock to flip. Outside of lucking into an early order half a year in advance (and I would anticipate those being even harder to come by for Kingdoms unless something changes) or paying a serious premium, you get unlimited, which may or may not also be over MSRP. And if unlimited is selling over MSRP, I think any arguments that it’s making the game accessible fail to hold water. Sure, they make it less expensive, but for the average player, less expensive is likely no better than Magic (possible worse, to be honest, if you need a $200 RF L as a starting point). Oh, and your unlimited cards probably aren’t going to hold value any better than Magic singles, congratulations.

Unlimited needs to follow one of two models (ignoring a print to demand for pre-orders approach, which doesn’t seem at all like a thing LSS want to do). Either unlimited is not released until it can be supplied at a quantity that precludes the market price being significantly over MSRP, or it needs to just be released at the same time as first edition, with first edition getting a higher MSRP. This second version is sort of what Magic is doing right now with its premium collector’s edition boosters releasing alongside draft and set boosters. Note, I’m not a fan of this version because I don’t like tiered simultaneous releases of products for CCG, but at least you know what you’re getting into.

People aren’t going to like this next bit, but first edition is far too limited and needs to printed much more aggressively in the future. “But what about my profits!” they cry. “If the cards are too easy to get, they won’t be worth anything? What do you say to that?!” Well, I’ve got an answer, but they’re not going to like it.

Don’t Be So Damn Greedy

I’m sorry but the notion that keeping first edition on shelves for a few months would annihilate its value is delusional unless you think they game has no legs, and, if that’s the case, why are you putting your money into it? When people roll out this argument, I feel like they either haven’t really thought about it enough, or what they’re really saying is “what about my 500% returns?” This is the issue: current FAB returns are too good to be the norm. It’s fine to have the game explode in popularity and see product enjoy an associated spike in price, but those should be notable events, not a regular occurrence. The reason you don’t want that to be the norm is because, if it is, you are going to be cut out of the profits unless you’re well-connected or lucky.

This is a pretty simple concept, if first edition is free money, then why would stores give you the free money instead of just keeping it for themselves? They could just mark boxes up significantly. Forget $125 pre-orders, if that $95 box will be $500 in a few months, why not just sell them at $300? When you look at sealed Magic investing (which is, again, a profitable way to invest), the sets come out at or below MSRP (yes, there’s no official MSRP anymore, but come on, we all know there is an effective one), and they usually accrue modest gains year-to-year with occasional spikes once a product has been out of print for a while. There are outliers —Dragon’s Maze is still only $95 after over 7 years, and Dominaria is already $170 after two years—, but the gains aren’t immediate. And that’s the important part because most stores can’t wait five years to realize a return on inventory. The investors who can afford to wait, and are willing to assume that risk, get to profit. If FAB first edition is going to keep selling out week one, then there is no risk for stores. They might as well just keep raising prices and take the gains themselves. I suspect that the people crying “free market” won’t actually be as excited about that concept if they can’t get their beaks wet. And, while all of this is going on, the average player is stuck with nothing but unlimited cards which mostly won’t maintain or accrue value. Oh hey, what does that remind you of? Is it current Magic singles? Yep, awesome, now FAB singles are Magic singles for anyone who can’t fork over a few thousand dollars for initial investment in a new set.

Don’t be so damn greedy. If first edition FAB went up 10% a year, that would be a great return. It would also be reasonable enough that people actively playing the game could get a chance at the fancy cards. Periodically, older sets would likely spike as they got farther from their OOP date, and cold foil singles would continue to build value, especially if the game continues to grow. Remember, if the game is growing, the print runs that would be sufficient to keep first edition on shelves for three or four months this year will look small in comparison a couple years from now, and the associated demand for those singles will help them appreciate.

I’m Looking at You, LSS
At the end of the day, all of this is contingent on what LSS intendeds to do with first edition going forward. What are their goals here? Are they trying to keep it on the market for a few months and coming up short due to logistics issues? Are they happy with new sets selling out months before they release? While LSS has done well in terms of designing a game that is quite strong thus far and has a polished aesthetic, their biggest weakness has been their communication. Their first party content is extremely sparse –why is the last substantive article on the home page from August? Why is the “there’s no unlimited CRU” article only three sentences long? I know that they have a partnership with Rudy, but he probably shouldn’t be the primary source of information for what’s going on with the game. Some level of communication would go a long way towards helping calm the current panic around UNL. I, and I assume others, would give them a lot more latitude if it seemed like there was a clear vision for how set releases were handled, even if it wasn’t realized in time for Monarch.

Ultimately, I would very much like to try to sell my board and card game playing friends on FAB, but I can’t do it in good conscience until there is a chance for them to buy a product at a reasonable price that is going to hold value, and right now, I have no clue when and if that’s going to happen. And that’s depressing, because I’m excited for the game, but with no clear indication that things are going to improve vis-à-vis supply in 2021 that’s going to be a very long wait before I can share it.

*Header Image: Bloodrush Bellow by Wisnu Tan

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