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Insider: What Organized Play Changes Mean Financially

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There’s been a million articles written about this, and I know many of you are tired of reading about the subject. However, nearly every one of those articles came before some extremely important developments.

Of course most of these articles have come down on the side of #OccupyWotC, with players decrying the introduction of the new system and the perceived cuts to the Pro Tour. And these are real fears, summarized best in what I consider the seminal article on the dangers, written by Chas Andres.

What important developments are those? Director of R&D Aaron Forsythe and Head Designer Mark Rosewater took to Twitter this week with some big news. And by “big news,” I really just mean “any news,” since we’ve had nothing of substance from Wizards since this whole thing began.

If you haven’t followed the Twitter stream, here’s a handy breakdown of Aaron’s tweets. For MaRo’s, you can find them on his Twitter feed here. This is a big deal. It’s important to the community, and I’ve decided to address them this week and hold the Modern speculation until next week.

As more and more players have derided the new system, I’ve seen a number of people talk about selling their collection because Premier Play is dying and will take the market value of cards with it as the “casuals” take over and people stop spending the money on expensive cards.

I’m not here to tell you the new system will kill Magic. I’m also not here to tell you the new system is the best thing to ever happen to Magic. Instead, I want to evaluate what this means to you financially, because it could be the biggest game-changer in your Magic investment to ever occur. Or not.

Laying out the basics

The tweets from Rosewater and Forsythe can be summed up as follows.

-       Hasbro has NOT dictated any budgetary changes to Wizards of the Coast.

-       There is NO money being pulled from competitive play.

-       The money from the loss of Worlds/changes to Pro Player’s Club is all going to additional Grand Prix, more plane tickets for players qualified for the tour, and, most importantly, more coverage for tournaments. The goal with all of these changes is to increase “reach.”

-       We suck at Public Relations

These are the most important points, and I’m going to address each one and its affect on the value of your collection individually before offering some thoughts on the future.

Hasbro is NOT making the calls

This is, by far, the best news to come out of this. So far, the response to the announced changes has come in basically two flavors. A.) “The new changes suck!” And B.) “I’m on your side, Wizards. I understand everything about your business model and know why Hasbro made you cut money, but the new changes still stuck! But listen to me because I’m on your side.” Both approaches now appear to be unfounded, in light of this recent information.

I’ll repeat – this is the BEST news to come out of this. If Hasbro was dictating budget cuts from on high, it would truly be worrying that Premier Play was coming to an end at some point in the near future, based on the signs. That truly would take the wind out of the sails of many card prices, and makes selling out a fair consideration.

However, because this is not the case, it means people like Aaron Forsythe and Mike Turian, who care about the future of Magic as much as any of us, are making the calls. These people have no interest in killing the Pro Tour (after all, it did give them their jobs), and they will listen to the community and make changes for the better.

Magic cards have never been considered a serious “investment” by the masses, despite the fact that the game’s highest-priced cards have outgained the stock market over time, not to mention being much less volatile. The reason why it’s never been accepted is because of factors that could kill the investment (namely, the popularity of the game), were considered too risky to invest in.

At their core, investments work on a simple risk-to-reward ratio. For a long time people felt the risk of investing in Magic cards was simply too high to reward the risk. However, as time has gone on and the game has matured and grown a growing group of players have turned to Magic cards (especially duals, eternal staples and Power) as a legitimate medium-term investment strategy over the years. That investment would incur a much greater risk if Hasbro started dictating changes to the game instead of letting Wizards handle the game's future.

Luckily, we have confirmation that is not the case. As long as the above-bolded statement remains true, the risk of investing in Magic cards is mitigated to an acceptable point that in the opinion of this analyst makes Magic cards continue to be an acceptable investment, even in the face of the recent changes.

There is NO money being pulled from competitive play

This tweet from MaRo sums this up perfectly.

The current system was not designed for the world we live in. It's a product of days gone by. Our goal is to find a way to update what we do to match not how Magic used to be played but how it is played now.

Premier Play is not what it was in 1995, or even 2005. That system was fine for its time, but the success of the Star City Games Open Series has proven that independent tournament organizers can profit from hosting tournaments, especially organizers who operate a store. These tournaments have proven incredibly popular with players for a number of reasons, one of which is that there are enough of them for an average player to attend multiple Opens a year.

This is why Wizards is expanding the Grand Prix circuit. By making tournaments accessible to more people, Magic’s “reach” is expanded (you’re going to see more of that word). Expanding that circuit is great, but that money has to come from somewhere, ergo the change to Worlds (which we’ll also hit on again). Yes, Wizards is essentially cutting a Pro Tour. But that money isn’t disappearing, it’s being reallocated.

Again, the important takeaway here is that money is not disappearing from the system. There will likely be less money going to the top .01% of players, and more going to the top 2-3% (players who can realistically spike a GP). Yes, there is a real risk in alienating the top pros by cutting their benefits. The dream of the true Magic Pro keeps many grinders going. But these same grinders are showing up in droves to SCG Opens (which don't have a very lucrative bonus attached to their incentive system either); why wouldn’t they do the same to GPs?

Now onto the most important thing – What does this mean for you financially?

I feel like the risk to your collection is minimal here. As long as Wizards finds the balance between keeping the true pros happy and expanding benefits to the fringe in the form of more GPs (as they’ve indicated they will try to do), I can only see this being good for you, especially if you derive any income from trading rather than just collecting.

We’ve already seen the effect the SCG Open series has had on card prices. Players who might not have felt the desire to grind travel to PTQs or travel long distances to larger tournaments, have come out of the woodwork for SCG Opens. If we figure the expanded GP circuit functions as a secondary Open Series, then you have twice the number of players needing cards for any particular weekend. This can only be good for card prices, and will likely bring even more players out to events.

Another benefit to an expanded GP circuit comes if you are doing any buying/selling of cards. GPs offer the best collection of dealers and players in a single location. This allows you many more (and less expensive to travel to) opportunities to trade and sell your cards. And more dealers means better prices on those cards. You avoid shipping fees and aren’t regulated by one buylist as you often are at events such as PTQs or SCG Opens.

The money is going to increase “reach”

I’ve touched on the concept of reach above, and this is where the true changes are coming.

We’ve established that more GPs increases the reach of the game, which in turn is good for card prices. Now we look at the other areas where this money is going to increase “reach.”

The most important one to address is the “expanded coverage” promised. There’s no denying that Wizards is woefully lacking in quality coverage, especially now that SCG has pushed the limits of how a Magic tournament can be covered. These things cost money. What’s better for the Pros and the game over the long-term? Higher appearance fees or thousands of additional people watching them play? Wizards is betting it’s the latter, and I admit that their logic has merit, even if doesn't immediately sound sexy.

Another change I imagine we can definitely see coming is live video coverage at events. Yes, we already get this for PT Top 8s and the coverage is good, but when SCG is able to broadcast tournaments for an entire weekend, it makes you wonder why Magic's creators can’t at least match that.

I suspect we’ll also see more features on players. Yes, we get these now in the form of deck techs, but if Wizards really wants to push the game as they say, there needs to be more features of the players themselves. The World Series of Poker does this perfectly. Watch a WSOP on ESPN and you get features that make you much more invested in the game. Obviously Wizards is not ESPN, but there is certainly improvement to be made in this area.

And note that when I said “invested in the game,” I’m speaking literally. Again, it seems that Wizards believes that marketing the pros deserves a larger slice of the pie than paying them directly. Will Magic ever get to the level of Poker where pros are sponsored? I’m not sure, but that is certainly a viable business model that could actually create more income for the pros than they are losing in appearance fees and prize payouts if the game grows to that point.

For the rest of us, I think it’s clear that better marketing of the game will create money for us in the form of more players and, in turn, higher card prices.

Let’s look at this year as an example. Chances are you picked up a ton of Scars lands when they were $2-3. Now they’re $10. Yes, that increase is in part because they are the best lands available. But it’s also because Magic has experienced an explosion in popularity with the release of Innistrad. A rising tide lifts all boats and all that. And boom, there you have $10 fastlands that made you money just by having them in your collection. Increasing “reach” increases the game’s popularity, and therefore the value of your cards, as Innistrad demonstrated.

Again, that’s much more of a reason to hold your collection than it is to sell it.

The new Worlds structure is another example of this. The money for the expanded "reach" of the game had to come from somewhere, and it looks like it was Worlds. The new format gives Wizards a much greater opportunity to market the game’s best players (assuming Wizards get Planeswalker Points correct and the best players actually make it in). While the loss of the old Worlds format is very real, and extremely damaging to the game overseas, the new format will give them a chance to feature the game’s best. It's sad that the loss of the Nationals structure hurts so many players, and it will surely decrease sales, Wizards' cold logic seems to suggest that they believe this is an acceptable loss to increase the game's stature from a marketing perspective.

While this doesn’t have a big direct effect on your collection, it’s another example of Wizards strategy here – grow the game, let the rest take care of itself. And, as the popularity boom with Innistrad showed, that is a good thing for us on the whole.

“We suck at Public Relations”

This is the biggest mistake made by Wizards in the whole ordeal. The complete lack of communication on the front end of many of these changes and the Q&A they posted have all served to rattle the confidence of the player base. This is very dangerous to the company, and to you.

In the Real World we have indexes that measures consumer confidence and fear. What is  interesting is that these gauges correlate to changes in the economy much more than the latest earnings report by large companies. The U.S. economy runs on the middle class, and consumer confidence is one of the most important pieces to the puzzle.

If we had a similar index for Magic players, I think it’s safe to say that confidence would be nearing an all-time low.

And therein lies the danger to you. It’s not the changes to Organized Play that are leading people to pawn off their collections; it’s the fear that their collections are going to plummet in value or that Magic is dying. It’s the same fear that leads people to pull out their 401k when the stock market drops. Don’t think like the 99% here, think like Warren Buffett. Someone says it’s time to sell because the game is dying? I say it’s time to buy from these people! Buffett doesn’t buy stocks when they’re high, he buys them when they’re on sale. You should strive to do the same, and with the information given to us by Aaron and Mark, it doesn't look like Premier Play is dying at all.

It's just the result of Wizards’ failed PR effort that is creating the impression that Premier Play is dying, while the fact is it is simply changing. Changing to a format that Wizards feels is better for the long-term health of the game. Given that it’s our friends @mtgaaron and @miketurian making the changes and not Faceless Hasbro Co., I think we can have confidence they will lead the game in the right direction. If the PR department was involved in these announcements at all (I assume they aren't, since it's been a poor effort thus far), they would be highlighting the increase in popularity of both the pros and the long-term health of the game, rather than leaving cryptic sentences about the death of the Pro Player's Club and trying to sell the new Worlds format as the be-all, end-all.

I can only assume they’re learning from this experience and listening (as they’re telling us they are). That means that this loss in consumer confidence will too pass, and the game will find the right direction, even if it takes some time.

And that means it’s time to be buying, not selling.

Wrapping up

I don’t want this to read like I’m a Wizards fanboy. There are numerous issues with the new system, and there has been mismanagement of the transition, or at the very least mismanagement of the communication regarding the transition, which in many cases is actually worse.

Instead, I hope I showed you why the changes do not mean it’s time to sell your collection. With the glut of articles condemning the system, it’s easy to see why some people are selling out. But as I have broken down, there are valid and specific reasons why these changes are a good thing for you if you derive any income from Magic, which I assume you do as a reader of this site. I also hope you don't read this as a TL;DR "don't sell," because I believe that understanding the specific reasons behind how these changes affect your collection is vital to being an informed customer and investor. And if you own Magic cards, you are an investor, and you should treat it as such.

As I said in the opener, these changes are a pivotal moment for the game. There is a very real risk that they could spark a massive sell-off. But, at least for now, I believe the signs point to “hold” more than they do to “sell.”

Thanks for reading,

Corbin Hosler

@Chosler88 on Twitter

Corbin Hosler

Corbin Hosler is a journalist living in Norman, Oklahoma (also known as the hotbed of Magic). He started playing in Shadowmoor and chased the Pro Tour dream for a few years, culminating in a Star City Games Legacy Open finals appearance in 2011 before deciding to turn to trading and speculation full-time. He writes weekly at QuietSpeculation.com and biweekly for LegitMTG. He also cohosts Brainstorm Brewery, the only financial podcast on the net. He can best be reached @Chosler88 on Twitter.

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