Investing in Video Games: a discussion

[8bitmusic]

There are a lot of reasons to collect games. For me, it's about 80% nostalgia, 19% hoping the games appreciate in value, and 1% "That'd look neat on my shelf".

The question I'd like to put forth concerns the monetary aspects of games (what's it worth then/now/in the future) and collecting in general. You can make money buying and selling games right now, because there is a rather good market for a lot of it. People who grew up in the 80s are now 20 somethings or in their early 30s. Generally speaking, the average age of "Gamers" today.

With games as a medium rivaling (and actually out-earning) the film industry, I can't help but wonder if my boxed copy of Final Fantasy will be worth more now, or in 30 years when people who grew up in the 80s have more disposable income or even more of a desire to collect artifacts from their youth.

What are your hypotheses concerning the value/market for what I and many others lovingly describe as "Vintage Games"? I don't imagine sealed copies of games will ever be rendered obsolete, but how many seasons of American Pickers have to go by before someone comes knocking on my door to make me a great offer on a shoebox full of LJN titles?

[Aussie2B]

I think you need to swap your reasons for the 19% and 1%.

[Robocop2]

I don't really think games are any more/less of a viable investment than 99% of the collectible market. That having been said I also don't think that investing in a market as speculative as collectibles is any place to keep the bulk of your investments. A classic game is worth whatever anyone is willing to give you for it. Sure there's a minimum to that amount but will you find someone willing to give you more than you paid for it?
If its something you have a vested intrest in spend your money on a hobby you enjoy and get a nostalgia kick out of. Maybe someday someone will come along and you'll make bank off of it maybe not, at least that way you're enjoying what you have.
If you're looking at it merely from a profit perspective put your money in an intrest bearing account or some other type of proven investment.

[todesengel]

Never get into classic game collecting with any hopes that you'll be able to sell off your collection one day for big monies. I personally don't see my games as an investment, it's just stuff that I enjoy and love playing with. As for how I view the vintage game market though, it's a rollercoaster with it's up's and down's. It's not as easy as you'd think to make a living selling classic game items. There's tons of people that have started up a retro game store and it just didn't work out. I agree with Aussie2B's statement, swap your reasons for the 19% and 1%. Some game just aren't worth a damn thing money wise and probably never will be no matter how old they are.

[Polygon]

The main reason I collect games is because I want to play them. There is a small part of me that likes seeing them, complete, and in great condition on my shelves. I would say it's a 99% - 1% split there. As for an actual investment. I find it interesting to see what people are paying for them, but once it's in my collection it won't be leaving as I have no interest in selling them, ever.

[swlovinist]

Buying Videogames for Investment 101

1. Short turnaround is very hard to do and often inconsistant(See the people who are trying to already flip games of Pier Solar).

2. Long term investment is uncertain and IF you are to go that route, think 30-40 years out. The real challenge is what gamers and collectors are going to want to collect in 30 years. What you invest in is a gamble...and may never pay off.

3. Looking for a quick flip, videogame collecting is not the best. There are countless people attempting to cash in right now on games. The ones most successful are the ones who are selling at decent prices who have a wide section of games for many systems. It can be done, but is difficult, and really you have to know your games very well, or know what to look for.

4. I agree with Aussie2B comment.

[TonyTheTiger]

In another thread a while back I commented on just this very thing. I think it's relevant here.

http://www.digitpress.com/forum/show...17#post1734917

I just think that people tend to overestimate the number of rare games that actually exist and also how much they tend to be worth.

Ignoring prototypes and homebrews which are in a different class, there are a total of 24 NES games rated R7 and up according to the DP Guide, R7 being the definitive "rare" qualifier. There's about 800 NES games in total. So we're talking about 3% of the NES library is genuinely rare if we take the DP Guide as gospel.

Now let's look at dollar value. Again taking the guide as gospel, there are a total of 14 items worth $100 or more. That drops to 7 if we go to $200 or more.

That means we're talking about 2% of the entire library that's both rare and of substantial value.

Let's look at the SNES.

We have about 20 items R7 or higher. About 5 items worth over $100. 2 worth over $200 and one of those happens to be a Japanese game.

There are about 720 SNES games in North America. About 2.7% of the library is rare with less than 1% worth anything significant.

I know the DP Guide is of limited use for monetary value since it tends to lowball things but I don't think these numbers will change all that much even if we use Ebay pricing. The number of games passing the $100 mark are few and far between with the $200 mark being pretty much a once in a blue moon kind of thing.

Now lets look at a more current console like the Gamecube. There are about 640 Gamecube titles across all regions. Using similar numbers, let's be generous and say 3% of the Gamecube library is an R7 or higher and worth over $100. That means about 19 games.

Let's be even more generous and say that every one of those games is worth $200. That's $3800 minus the initial investment of about $50 per game if you bought new. So the net gain on just those games is $2850. Let's say you buy used and get good deals on all of them for $25 each. Now your net gain is $3325.

What this means is under the absolute best conditions in this fantasy land with a higher than normal number of rare + valuable games in addition to every one of them being valued at $200, plus a speculator being granted the power to predict the future and spot each and every one of these games the absolute best result is going to net a little over three grand. Given that this is a fantasy land scenario, the actual results will be lower. Considering that the average hourly wage in the U.S. is $18, that amounts to less than a month's salary for the average American.

To summarize, under the absolute best conditions, Gray's Sports Almanac kind of conditions, a speculator stands to make less than a month working at your average American office or pretty much the value of a large plasma TV.

There's a reason we can count the huge games that get mentioned at CNN.com on one hand. They don't just have a story behind them. They have the story behind them. Or they're just games that got lucky and happened to be in the right place at the right time which is bound to happen two or three times out of thousands upon thousands of video games.

Now if somebody is going for a fullset then obviously everything I've said doesn't apply to them. But those people tend to be few and far between. Whenever I see people talk about rare titles they seem to be interested for the $$$$ potential.

It just goes to show that when you crunch the numbers there's really not much to gain in the long run if you're in it for the money.

[8bitmusic]

...but once it's in my collection it won't be leaving as I have no interest in selling them, ever.

I feel that way as well. But what if you have a secondary collection of duplicates? Do you pawn them off right away in order to get some quick cash for your next collection item--or would you save them in the hopes that one day they will be more valuable?

[Lanzo]

I first started buying retro games about a year ago simply out of nostalgia. Within 3 months I spent between $1000-2000 on everything sega genesis. I had this feeling that I had to get these games now or they would be gone which led to overpaying for many games. I was always using the 'buy it now' option and next thing I knew I had 80 CIB genesis games 5 genesis' (one of each model) and a jvc x'eye. The one transaction that makes me cringe is when I payed $120 for a CIB copy of MUSHA (especially after seeing a copy on here go for 40 + shipping) but it didn't matter at the time. This obsession eventually spread to super nintendo and dreamcast.

If I sold my whole collection I honestly think I'd be lucky to get 70% of what I spent. So basically I collect for the sake of collecting and I do indeed like to look at them. I question myself about wasting my money because it really means nothing. I'll spend the time to clean every single case and cartridge and then swap cases if there's a single mark but I've only played 20% of my collection. I've concluded that it is not a good investment but I collect simply because collecting is fun to me and if one day I decide to sell my whole collection, then so be it.

[Polygon]

I feel that way as well. But what if you have a secondary collection of duplicates? Do you pawn them off right away in order to get some quick cash for your next collection item--or would you save them in the hopes that one day they will be more valuable?

Well, I have my complete copies. Then I have my duplicates which in most cases are the games only, so they wouldn't be worth much anyhow. I wouldn't sell them anyhow as I have the duplicates for when I have issues with my originals. Which we all know is inevitable.

[jammajup]

I think its good to have a nice collection of course but looking ahead i cannot see anyone purchasing games as an investment or anything like that because unlike antique furniture game carts have electric components and are prone to failure so in 20 years time people will not touch them with a 10ft pole,talking to other retro gamers its surprising how many people are quite happy playing games on re-release (download) or emulation for exactly that reason because they do not have to worry about game failure.
Personally i have seen many pics of peoples collection on this forum and others and think its outstanding but often wonder what are you going to do with all that stuff at the end of your years,sell it to a museum perhaps?

[Diatribal Deity]

First of all video game collecting can be an expensive hobby.

If you are talking about long term investing, it would probably be best to focus on your 401k, IRA and workplace investing accounts. Especially, given the tax deferred nature of them. As well as very selective investing in the overall stock market with after-tax money if you are careful. Diversification is the key to long-term investing. Real estate...well no need to go there...

What captivates me is the short-medium term nature of investing in video games if you will. I love the industry new and old and the market for games fascinates me as well. When a limited edition Mario game is released, it is almost a given the inital value will spike. If you bought two copies of the game, played one and later sold the other. You essentially probably got a copy for free (apart from your time and effort obtaining the originals and selling of the dup). Those who bought 2 at TRU and got a $25 gift card sweetened the deal even more.

This is similar to when the WB online store recently released the movie Inception in a limited edition batch of 2000. Buy two, keep one - sell off dup for 3-4 times its original value.

Obviously generating a considerable disposable income can offet the need to do this. But you know what? It can be fun and somewhat of a challenge to foresee these scenarios. Is this often viewed as hoarding, flipping, and other negative sounding connotations? Of course depending on the extreme to which it is taken.

My collection is made of of games I enjoy playing and games I intend to play in the future. But I do not mind speculating now and again especially if it helps to offset the otherwise considerable amount I spend accumulating my wants.

Speculating exclusively in video games in the long term is dangerous because of things like inflation and the fact you may be sitting on tens of thouands of dollars which otherwise could have generated a more sizeable return elsewhere. Although, the volatility in the real estate and stock market recently may make you think otherwise.

Also you need to consider the time/effort you spend, which otherwise could be more fruitful if focused somewhere else.

You should enjoy collecting first, offset you costs whenever possible if necessary, and possibly keep it as a very minimal part of your overall investment portfolio if you so desire.

[maxlords]

The only investing worth considering in video games is stock in game companies...and even that is quite risky.

For actual games, the market is far too volatile and fickle to be worth considering for any serious investor. From year to year, and month to month, games skyrocket or drop to virtually nothing. If you have a huge inventory of stuff (and I mean multiples of rares spanning multiple genres and consoles), are willing to sell it at the drop of a hat, and religiously check the values and going rates on a daily basis....yes, you could make a fair amount of money with some luck.

But literally it'd have to be a full time job. You'd be better off investing that same money, and it'd be a LOT less work. When I was broke and had no other options, I turned games for a profit...stuff I bought used and whatnot. It was a LOT of work and took most of my spare time...and I barely got enough to make the money I needed. It can be done...but it's not worth it.

[8bitmusic]

The only investing worth considering in video games is stock in game companies...and even that is quite risky.

I didn't really mean 'investing' in the literal sense. I suppose I meant it more as someone 'investing' in baseball cards or comic books. Collecting for pleasure, but also assuming that an event (ie--games in 50 years are all virtual, eliminating any need for consoles or cartridges---Miyamoto passes away and Zelda/Mario titles become super valuable--etc..) will boost demand for what we collect--subsequently appreciating vintage games like a fine wine or Stradivarius.

and if so..

How long must we wait before even considering selling off any collectibles?

[Aussie2B]

The only investing worth considering in video games is stock in game companies...and even that is quite risky.

Heh, that reminds me of a story my fiance has. When him and a buddy were around 14, one of their teachers, for whatever odd reason, wanted to invest in a video game console manufacturer without knowing anything about them, and odder yet, she trusted their advice: "Invest in Sega! The Saturn is going to be huge!"

[kupomogli]

The only video games to consider investing in are games that you're going to want to keep for yourself. There's really no money to be made from video games, especially now days. You can start any other business and have more of a chance of succeeding than starting up a video game business.

As a collector of games I'd say if you're going to invest in games you like, you might as well quit collecting after the sixth generation of games because in this generation rarity doesn't describe the cost of games anymore, but instead, rarity this generation is the amount of good games that are out there, as most games released this gen suck balls unless it's for the PSP or DS. You'll have a few good ones for the PS360 and even less for the Wii.

[Wraith Storm]

Heh, that reminds me of a story my fiance has. When him and a buddy were around 14, one of their teachers, for whatever odd reason, wanted to invest in a video game console manufacturer without knowing anything about them, and odder yet, she trusted their advice: "Invest in Sega! The Saturn is going to be huge!"

Well, maybe by chance she bought a ton of copies of Panzer Dragoon Saga and is setting on a goldmine of sealed copies in which she will steadily and systematically sell throughout the years.

Yeah... I don't understand the whole investing thing. Sure, if I find a game that's worth a bunch of money for real cheap, and its something I'm interested in, I'll usually pick it up. Don't get me wrong, if I buy a game that i'm interested in, sure I hope it's value goes up, but i'll never buy a game that I don't care about with the intention of reselling at a higher price years down the road.

[emceelokey]

I literally sold a sealed, black label, original U.S retail version of Kingdom Hearts for the PS2 on AMazon for $150 just last week. I originally bought the game right when the price of the game dropped to $20 and it was announced to be a Greatest Hits title. I originally bought it with the intention to play it but I didn't get around to it within the first two months or so and after that I figured that I just figured to keep it sealed and if I really wanted to play it, I could just buy a used one for less than $20. I still have never played a Kingdom Hearts game.

Right now I also have a sealed Vanguard game for the Atari 2600 listed on Amazon for $27 that's been up the for probably 6 months now.

On the other hand, I sold a sealed Castlevania game for PC, or IBM or whatever was considered the PC gaming of 1989, for $500.

Combined total, I probably paid $40 for those items. None of the items were even in my possession 8 years ago, with the item being in my possession the longest being the Kingdom Hearts game.

All complete random stuff but bottom line, trying to predict what might be worth something is a total crap shoot. A sealed Halo 3 legendary edition is only going for about $60 or so but a sealed original run of Kingdom Hearts got $150. I know I wouldn't have thought that. Look at the games that came out this past holiday season. Can you predict what game will be worth more than it's original retail value a few years from now? I doubt it.

The thing about video games, and anything collectable really, is that the value of it determined was after it's original availability. On top of that, with video games being based on current technology of the time, the value of something will always be up in arms.

About 5 years ago, a used Marvel vs. Capcom 2 for PS2 was going fro about $80. The reason for that was because of it's limited print run which was due to Capcom losing the license to use Marvel characters. It's valued was essentially determined by how had it was to find it and how popular it was.

Fast forward 4 years later and now there's an updated version of that game with new graphics and online play that's easily downloadable and is going for only $15 at full price. Now a used PS2 MVC 2 would be lucky to get $35 - $40. On top of that, there is now a sequel that is coming out in the next month or so which will most likely effect the value once again.

I think video games are the worst things to try to collect for value. There's so many other factors that will effect the preceived value of a game and the value typically has nothing to do with the quality of the game itself.

If you look at comic books, there's somewhat of a general concensus to the values of them and the values don't fluxuate so much. Chances are, Action Comics #1 will stay around the half a mil mark and will most likely just go up in value as the paper medium starts to die out and known copies of it start to level off if not grow less with time. Not matter how many times that same comic has been reprinted, re made, turned into cartoons, movies, tv shows or whatever. It will retain it's value.

With games, all it takes is a sequel for a game to lose it's value.

I'm a collecto rmyself but it's mostly of hardware. I like seeing old consoles and variations of the consoles and controllers and such but I collect because I like to collect. If things happen to have a higher value than what I piad for it then that's cool but doesn't mean much to me. If something have a significintally higher value than what I paid for then considered it sold. I'm not going to hold on to something in hopes that I'll be able to buy a house with it 10 years from now because that's NOT going to happen.