The Big Things: Magic 30th Anniversary Edition

Happy Holidays Everyone! It's that time of the year – time to talk about... 30th Anniversary Edition.

 

One primary disclaimer out of the way: this article is going to be focused on the market conditions surrounding Magic 30th Anniversary Edition, the fallout from the product's development, and some discussion of the long-term valuation analysis for Hasbro as provided by Bank of America. As odd as the sale of Magic 30th Anniversary Edition was (debates over the words "the sale has concluded" still haunt my inbox), we need to operate with the information which is publicly available. The sale is over, product was sold; so, what do we do now.

The first consequences of Magic 30th Anniversary Edition which I'd like to discuss are its implications for the reserved list. A few weeks ago, we launched the MTGStocks Discord server, wherein our Premium members can find the Minute-Movers channel. I mention this in order to properly attribute the following data; since the launch of this function on the MTGStocks Discord server, there have been 21 recorded instances of reserved list cards falling by 3% or more in price over a 15-minute window, whereas there have only been 5 record instances of comparable rises in prices.

Similarly, we may also look to the Monthly and Weekly Interests sections for comparable data metrics (both in terms of market price). There, we find that the Weekly Interests clocks in at 23 reserved list losers versus 5 reserved list gainers. As for Monthly Interests, there are 80 reserved list losers versus 10 reserved list gainers.

So far, the numbers don't lie, the reserved list is in a bit of a rough patch right now. That being said, so too is the broader economy. While the S&P 500 index is up over the course of the past thirty days, markets are still down more than 15% year-to-date. Looking back at the Monthly Interests, those 80 reserved list cards are part of a broader set of 845 cards which lost value in November. Compare this against the mere 255 cards which gained value in November, and the context surrounding our reserved list dilemma becomes much clearer: it isn't specifically reserved list cards that are falling right now, it's all classes of Magic cards that are falling.

I mention this because it is important to look at the long term when evaluating reserved list card prices, and in order to do that you need to zoom out and read the bigger market picture.

There has been a lot of chatter recently surrounding the stability of the reserved list as an asset class. The market has watched as prior-standing individual statements about the "spirit of the reserved list" are now dead and gone, and even through all the chaos the actual data for card prices suggests that the market is steady. Magic 30th Anniversary Edition simultaneously created a panic in the consumer base and a new product model for Hasbro. In spite of both of these things, the secondary market for reserved list cards seems to have taken things just about as well as possible. So, for those of you out there with binders full of dual lands and Rock Hydras and everything in between, I wouldn't worry too much about prices collapsing.

Circling back to the subject of product models, we can't escape Magic 30th Anniversary Edition without also talking about its own secondary market reception as well as the broader stock market's reception of the new direction Hasbro has taken Magic in. So, let's start small and zoom outwards.

As of December 1st, the average price for sold sealed listings of Magic 30th Anniversary Edition on the secondary market is approximately $1600, representative of a 60% revenue margin versus the retail price (some have gone for as high as $2000, pushing the margin to 100%, but those sales are so few and far between that they are more so outliers at this point than truly representative data points). That being said, it's important to understand the difference between revenue and profit, which is most definitely going to become pertinent as we swap on over to Wall Street and the Bank of America.

For most retail purchasers, we should actually be using an $1100 price point in order to factor in taxes and fees related to the initial sale. Similarly, we can expect a conservative 15% gross sales and processing fee to be applied, regardless of vendor (eBay, TCGPlayer, etc.). This means that, on a cost basis of $1100, the average sale of one Magic 30th Anniversary Edition would net roughly $260 in profit, or about 23% in returns. It's not awful, but for a product so viscerally rejected by the market it is certainly representative of a small incentive relative to such a substantial investment risk. Given that we now know promotional reserved list reprints are possible and that there is no official policy stopping Hasbro from doing this ad nauseam, the idea of investing more than $1600 in such a product appears unappealing to the vast majority of the market, as can be seen in the limited number of completed listings. The sale may have concluded, and the product may be unavailable for purchase from Wizards of the Coast, but the secondary market certainly doesn't seem eager to move Magic 30th Anniversary Edition around.

Finally, I want to cap this off by briefly discussing the November report from Bank of America which stated that Hasbro is "killing its golden goose."

The frequency of new product releases has skyrocketed in recent years. Consumer fatigue is a very real phenomenon, and with an ever-growing section of the Magic player base shifting to the non-rotating Commander format as the flagship means of engaging with the game and with Magic as a product, the driving need for new cards as a core game function is dwindling (even Magic's designers are openly questioning as to why Standard is dying). Couple this with Hasbro's push to have Magic double its profits as the rest of the economy remains in a bit of a slog, and what was once a dangerous situation can quickly become truly catastrophic to the viability of the game long term. This, in short, is what the Bank of America report attempted to highlight. Of course, there are also issues with print run overproduction and stale inventory, but as someone who doesn't directly interact with distributors, the full extent of this section of the report falls outside of my intended scope.

This is where the incentive for creating Magic 30th Anniversary Edition comes to light. As a complete reprint product with minimal, if any, product research and development budget necessary, Magic 30th Anniversary Edition was as close to a pure-profit injection into Hasbro's baseline as Wizards of the Coast was ever going to create. Many players, creators, and investors in the Magic community have asked the question "who was this product for?" It further degraded player opinions of Wizards of the Coast as a company, damaged the reputation of perhaps the most stable asset class within Magic as a product line, and has been largely rejected by the market. At the end of the day, Magic 30th Anniversary Edition wasn't a product for players or for Magic investors; it was a support line for Hasbro's investors. We will have to wait and see how the markets move until Hasbro's next earning's call, but as of this moment, it looks like that support line sank.