Editorial: The Retro Games Bubble

[et_pb_section bb_built="1"][et_pb_row][et_pb_column type="4_4"][et_pb_text admin_label="P1 & 2" _builder_version="3.0.62" background_layout="light" text_orientation="left" border_style="solid"] In 2016, long-time retro games collectors saw a sudden change in their market;  A dramatic shift that shocked just about everyone.  Everyone, that is, except for the collectors themselves.  The booming game collecting bubble burst.  It was bound to happen, but the question was why did it happen?  What brought the popular new hobby to its near-demise in 2016?

First, it is important to understand what a market bubble actually is, and what it means when it bursts.  A bubble occurs when demand, speculation and heavy investment in a particular market balloons very quickly.  This sudden skyrocket in price then results in a snowball effect causing the price to inflate even quicker as time goes on.  Eventually, the prices are so outrageous for any market that two things happen: First investment slows, then speculation causes mass-liquidation.  List liquidation results in the market being flooded with merchandise ultimately devaluing all products in that market.  It’s hard to really nail down when a burst will happen because bubbles typically occur in markets that are more necessity than leisure (like the notoriously-devastating housing crash that occurred between 2006-08).  However, collectors’ markets always hit their nadir, bubble, crash, then stabilize.  The problem with any collecting trend is there is always a risk that something could trigger massive interest in the hobby.  As mentioned in the previous editorial on the NES’s involvement in the mainstreaming of game collecting, a handful of valuable titles made headlines piquing the interests of just about everyone with means and knowledge of gaming.

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The Retro Games Bust is an ongoing phenomenon and the full fiscal consequences are yet to be seen.  However, I can attest to an approximately 10% drop in the value of my total NES collection pricing from March 2016-March 2017 when I reevaluated the pricing of games in my collection.  This is pretty dramatic.  Now, for me, as someone who collects for the love of retro gaming and not just for the monetary returns, the drop in price hurts, but does not make me lose interest in collecting.  However, this 10% drop is a sign of a coming crash in the value of retro games as a whole.  I find that there are a few reasons for this.

First is the ease of access brought about by the Internet.  Sites like eBay and Amazon, while having been around a while, are somewhat to blame for the bubble.  I cannot really say they are culpable in any malicious way, but the truth is, it’s hard to be mystified by elusive titles like Flintstones: Surprise at Dinosaur Peak when you can see it online for sale just about any day of the week, albeit at an exorbitant price.  However, the part of the hobby that made it so interesting was the trip to the used games store, or better: the flea market.  This gamble made things interesting.  With that gone, much of the fun of the hobby has been stripped away.

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The second trigger is the availability of these sought after games in digital format.  For a long time, games like Earthbound, Chrono Trigger and the Mega Man series saw a lot of demand and this drove the price up significantly.  However, with the advent of easy-to-find, legal, digital distribution of classic games on various platforms, and with re-releases on popular handhelds and in retail collections, these games that otherwise unplayable without the cartridge and requisite console were now available on multiple platforms for a fair price.  This alone wasn’t enough to kill the value for the nostalgia collectors, but those that were buying up these older games solely for the ability to play the games at all sold off their stock quickly in fears that the prices would plummet.

Then, there are the resellers!  For many a game collector who regularly hits up the flea markets or vendor booths in their area, resellers are the real villains.  These individuals are not like retailers who have overhead and a legitimate, contributing business to run.  No, many, if not most, of them are opportunists who will move through a Flea Market, local garage sales and unwitting outlets like Goodwill, and will buy every game they can them flip them at a vendor booth or online for far more than they are worth.  This has two effects: First it reduces confidence in gamers that they will be able to find a worthwhile deal at flea markets, especially as these sites have more recently been taken over by resident resellers and other permanent vendors.  The effect resellers have had on the market is near-immeasurable.  They have artificially driven up prices which further contributed to the bubble and their aggressive tactics (I have had a reseller at a flea market literally shove me out of the way at a table run by an older couple selling old games, try to outbid me on the price of common games, then curse the couple out because, being courteous and honoring their initial sale to me, rejected his offer of a few dollars more than I was already in the process of paying).  The stories of resellers snatching things out of buyers’ hands, blocking access to tables so people cannot see what’s for sale and even paying market staff to notify them of the tables in use are numerous.  The problem is not so much with their businesses, but rather their tactics, and this has really harmed the more exciting part of the hobby: pushing the pavement and digging through boxes to find great deals.

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Lastly, there is the loss of interest in those investing in retro games for the money.  As mentioned previously, the opportunistic investors jumping on the retro games bandwagon seeking short-term gains did well at the start but as most short-term investors tend to do, they panicked and jumped ship quickly, selling games at prices well below their actual value in hopes of liquidating their stock.  Add to that a general loss of interest in the trend outside of niche collectors, with many cases of collectors selling their entire collection on eBay as one room-filling lot, and you have a recipe for disaster.

That said, the market has shown a great deal of resilience as late 2016 saw the beginning of the first sustained downturn in the NES valuation index since the start of the site’s monitoring of the aggregate data.  Compare that to other platforms like the PS1 showing a massive dive of nearly 40% in overall value in the same period (data sourced from pricecharting.net; a games price aggregation resource).  This more-or-less comes down, I think, to the hobbyists.  NES is where it started for most, and now it is where many older gamers’ hearts are.  So they are less likely to be phased by a sudden shock to the market like a dramatic downturn.

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I would say today is a great time to start collecting, honestly.  The prices are going down and there is a greater desire to sell than ever before.  Games are easier to find and most sellers are generally honest.  I’ve never received a game that I paid a lot for that wasn’t as advertised.  Just remember to verify the seller, know your product and do research into it to look for variant releases.  Another thing I advise is to pick a console to be your main focus.  There’s no shame in straying from time to time to pick up a game for a different platform, but trying to buy for everything will spread you pretty thin.  Also, I would actually advise against investing too much in disc-based systems.  CD-ROM and DVD-based games are not going to last forever.  Efforts can be made to protect your games, but discs will eventually deteriorate.  Cartridges, on the other hand, are incredibly resilient.  It is possible for a cartridge to sit in a box for decades gather dust, dirt and god knows what else, come out, be cleaned and play like new.  Which brings me to a final point: Learn how to take care of your games.

Learning basic console maintenance, how to clean games safely, and having the appropriate tools to do so is very important.  Try to avoid dealing with moving parts as much as possible, too.  If you jump into the NES, I suggest biting the bullet and buying a top-loader instead of the toaster model.  They are far less prone to failure and are much sturdier.  It all comes down to how you want to approach collecting.  If you are going for rare games there’s definitely more risk, but it’s usually worth it in the end.  However, simply reliving your youth isn’t typically too expensive.  Getting your hands on games you played as a kid is surprisingly affordable most of the time!  Always bring your phone or tablet with you when you hit up a games store and check for the price online.  If there is a negligible difference in price online, I say buy it from the store.  Most retro game stores are local small businesses and it doesn’t hurt to help them out a bit and building a relationship with the store owners and other collectors in your area can open the door to some great deals!  However, sometimes you simply will not have much of a choice but to make your purchase online since, by nature of their business, they more-or-less have to charge more for their games.

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I hope to do more of these articles as I go on as there is a surprising lack of serious insight into the state of the retro games market online.  Resources like PriceCharting are useful but clinical and gaming news sites will often have an undisclosed bias and I found that some can even give flatout bad advice.  I won’t call anyone out but if you do get any info from any source online (including me), check and double-check it, especially if it will cost you money.  Never take anyone’s word for something straight up.  Also note that with a market as volatile as retro gaming, what is true one day may not necessarily be the case months or especially years down the road, so check the dates of your sources as well and if the information is old, make sure prices, demand and news still apply.

I have a new 8-bit Disney around the corner and some other retro games articles.  I plan on doing another company spotlight as well.  So, until next time...