Retro game prices are up a lot in the last year. The average retro game* is up 42% since February 2020 and up 9% just last month.
Games for some consoles are up even more. GBA is up 52%. N64 up 61%. PS1 up 45%.
Even newer games are increasing in price. Gamecube is up 81% in a little more than a year. PS2 is up 38% and Nintendo DS is up 30%. Even the Wii, with tons of shovelware games and many million+ sellers, is up 22% on average.
So what's going on with the game market that's causing these huge price increases?
It all started with COVID lockdowns but it has morphed into something else.
In March 2020, the entire USA went into lockdown due to COVID. People were stuck inside and couldn't enjoy activities that involved other people. No concerts, sporting events, restaurants, movies, etc. These were all things that people spent money on but now they couldn't and people had a lot more free time. Many people turned to video games instead. It's indoors and can be played alone or online with others - the perfect COVID activity. More than half of American's turned to video games during lockdowns and sales were up 12%.
Some of these new gamers (or gamers with more disposable income), bought retro games and enjoyed a bit of nostalgia (those good old days when there was't COVID and constant mask wearing). Unlike new games, supply for retro games does not increase if there is more demand. Nintendo isn't making more Super Mario 3 or Earthbound cartridges. With increased demand and fixed supply, Econ 101 tells us that prices will increase and they did.
Retro game prices increased 22% between February and August 2020.
But then things slowed down. More parts of the US allowed more activities, opened schools, allowed in-restaurant dininig, etc. Some states even lifted all COVID mandates and were back to normal. More people had more choices where to spend their money and some people stopped spending it on games.
From August to December 2020, prices increased only 2.5%.
Then in January prices started spiking again. Up 2% in January. Up 2.5% in February. Up 3.8% in March and up 8.9% in April.
With the COVID vaccine rolling out to more people and more states allowing citizens to resume pre-lockdown activities again, you would expect prices to continue holding steady or maybe even decline if demand dropped enough.
What has caused this accelerating increase in prices?
All assets are seeing price increases. Homes prices are up 11%. Stocks are up 30% (even after 25% declines in first months of COVID). Office space sold for record prices. NFTs, Pokemon, Sports Cards, etc. Almost every asset class has seen record sales and/or large price increases.
Investors are looking for places to invest because interest rates are at record lows and all Americans received stimulus checks that many plan to invest. More demand for investments is driving up prices.
And video games are being caught up in the madness.
People are not spending $660,000 to open and play Super Mario Bros. They are buying it as an investment. Some people are buying games because they think they will be worth more money in the future.
Price increases can lead to more price increases. For example. A collector who owns a bunch of games might hold off selling for a while because the prices will be higher next month. This lowers supply and increases prices.
Or a game store might increase their prices now because they don't want to sell out today and see prices increase 10% next month. This accelerates the price increases based on expectations.
This second round of price increases is driven by mainly by cheap money, investors, and speculation.
What happens next?
Prices could climb even higher as the cycle continues. Or higher prices could become the new normal but prices stabalize. Or prices could plummet as the bubble bursts on the investors. Or countless other scenarios.
Whatever happens to the prices, at the end of the day you will still own some fun games. Enjoy playing them, enjoy collecting them, and don't worry about the short-term fluctuations in price.
Please leave your feedback and thoughts on the gaming market in the comments below.
* Retro game: This includes every commercially released, standard game for NTSC NES, SNES, N64, Gameboy, Gameboy Color, GBA, Genesis, Master System, Saturn, Dreamcast, Sega CD and Sega 32X. It does not include variants of the same game.
1 comments :
I can appreciate this well-written piece for several reasons. First, it addresses a topic that hasn't been very widely explored or analyzed yet, but that many surely think and wonder about. Secondly, it provides appropriately simple--and very necessary--statistics/data to connect the gaming market to the larger markets (i.e., both consumer and investor markets) and to illustrate context. And lastly, I appreciate how concise it is and how linear the narrative reads, especially considering how (arguably) complex the topic truly is.
And I can agree with, I think, just about all that was said. Thank you for this post.
Reading this does bring up some questions I've been pondering myself lately. Like, if the pandemic initially triggered demand to increase and sales to subsequently rise, but investors help fuel further price increases, how much of the market is still consumer-driven? Have some collectors stopped buying games they normally would? I also wonder what percentage of collectors--who normally wouldn't be selling much of anything at all--have been tempted to sell off items due to significant value increases. Of course any number of things could end up happening but, given the current conditions and the facts we do know, it would seem logical to me that two opposing concepts would end up both being true in the near(ish) future: First, when the number of investors looking to liquidate their gaming assets hits a certain threshold, it would follow that the current demand/supply ratio becomes imbalanced, supply would increase relevant to demand and prices would fall. By contrast and yet simultaneously, the same "cheap money" that triggered the initial increase in demand/sales/values would inevitably be the reason why prices (not necessarily value) could continue their upward trend and become higher than ever (via the excessive inflation of the USD). I have no data or references to cite, but those are my thoughts anyway.
I love the end point made in this article, too: Just enjoy the games we do have! :)
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