The Video Game Collecting "Bubble"

[bikingjahuty]

More and more I hear people, specifically video game collectors, talking about this so called video game collecting bubble. As most of you know it has to do with the demand for retro games, and the increase in prices that we are all too familiar with. Whether that demand and increase in value is real or artificial is not always clear, but essentially many people believe the bubble is going to pop soon because of gamers no longer putting up with the high prices, resulting in a decreased demand for retro games, causing prices to plummet.

So do you believe in the retro collecting bubble? And if you do, what is your opinion on it? Will it pop, and if so when? Your thoughts please

[bikingjahuty]

A really cool guy I know had this to say about the topic:

"It's known as a market bubble, pretty much anything that involves money and buying shit has a bubble. It means that when a certain product is 'hot' on the market, demand for your hot item supply grows exponentially. In respond to this demand, people start gathering up or making that said supply in large quantities, and raising the product's price to above its perceived value. The product sells like hotcakes for a short period of time, but soon the market grows tired of either the product or its overstated price. Eventually people stop buying this product as its become too over-valued. interest drops. however, the people selling the product are stuck with an inventory that they can't sell for their expected price. When you have an over abundance of product with little demand for it, the bubble bursts. the people hoarding the product are essentially fucked, and end up selling off inventory for usually less than what they paid. It's a trend that's been seen in stocks, housing markets, toys, collectibles, cars, everything. and you know why it keeps happening and repeating in the same basic pattern? Because people are fucking idiots.

That's my perception of it anyways, I'm not an economist haha. As far as oldschool video games go (age and brand play a huge variable of course), they're getting pretty hot right now. The bubble is inflating with the many people gaining interest, and I'd think it's due for a burst within maybe 3-5 years."

[burningdoom]

A really cool guy I know had this to say about the topic:

"It's known as a market bubble, pretty much anything that involves money and buying shit has a bubble. It means that when a certain product is 'hot' on the market, demand for your hot item supply grows exponentially. In respond to this demand, people start gathering up or making that said supply in large quantities, and raising the product's price to above its perceived value. The product sells like hotcakes for a short period of time, but soon the market grows tired of either the product or its overstated price. Eventually people stop buying this product as its become too over-valued. interest drops. however, the people selling the product are stuck with an inventory that they can't sell for their expected price. When you have an over abundance of product with little demand for it, the bubble bursts. the people hoarding the product are essentially fucked, and end up selling off inventory for usually less than what they paid. It's a trend that's been seen in stocks, housing markets, toys, collectibles, cars, everything. and you know why it keeps happening and repeating in the same basic pattern? Because people are fucking idiots.

That's my perception of it anyways, I'm not an economist haha. As far as oldschool video games go (age and brand play a huge variable of course), they're getting pretty hot right now. The bubble is inflating with the many people gaining interest, and I'd think it's due for a burst within maybe 3-5 years."

You just described the comic market in the 90s. And yeah, the retro collecting market is starting to feel this way. But it's still not quite as big and mainstream as comics got in the 90s (Death of Superman and X-Men).

[sin2beta]

You just described the comic market in the 90s. And yeah, the retro collecting market is starting to feel this way. But it's still not quite as big and mainstream as comics got in the 90s (Death of Superman and X-Men).

Well said. I also am seeing a lot of game markets stabilize. Turbo Grafx is getting insane. If you want one soon, pick it up now. But things like the SMS is starting to plateau. In the 90s, any #1 comic was insane.

I think the retro game market will just move on rather than burst. Right now the 8 and 16 bit consoles are hot stuff. This will move on to the PSOne/PS2/N64/Gamecube in 10 years. At that point the 8 and 16 bit guys will either be done, or be done and forced to sell their stuff by their wives or to fund money for kids. Early on, you have money. Then life happens. And you may have the money, but may not have the time. This is not true for everyone. But a lot of people do sell. Ask any comic store. Most stores will have people just unload their long boxes for free.

One big difference is that video games have a big divide in modern and retro. Comics had no such thing. If you were into comics, you were into retro. Video games seem to have retro gamers and modern gamers. And there does seem to be a divide. I think this will help stop it from popping.

[stethebubble]

it will not happen soon enough.
as long as people are paying stupid amounts of cash for old games this bubble will not pop.

[jcalder8]

This is what I said about it a year ago and I think that I am still pretty close in my time line:

Yup I said it. I don't mean that it will be dead in a week or anything but I am calling it now that it will be dead within two years(really one and a half years since it is more likely to die over the summer than around Christmas)

Over the last year I have seen the posts and interest on 3 of the forums that I frequent drastically decline. Long time users no longer posting and a lack of new users joining(of course this site is awesome(because of me.... and a little bit of soera) so it is still growing). What this says to me is that interest is starting to fade. It happened with sports cards and comics and it will happen with retro video games.

Over the course of the year I think we will start to see an increase in the number of Ebay sales, everything from low end to high end, sales will be strong and people who are late to collecting will continue to buy or collectors will still need to pick up the missing items to their collections. The sales will increase because of the bump in resellers it is now more common knowledge that video games are worth uber monies(lol). This will over saturate the market and as the demand decreases resellers will end up being stuck with items they can't give away ex: SMB/DH. When this happens it's only a matter of weeks until the whole market crashes.

The expensive items will always hold their value but, for example, Final Fantasy VII will plummet in price because there are so many of the damned things(lol).

So what do you think? Am I on the money? Do you think it will happen sooner? Later? At all?

I will also add that I think collecting will die with the SNES generation. I don't think people will spend the same amount of money to replay N64 or PS games. For one thing most of them have not aged well but also because most people who wanted them had them. With the crash after Atari a lot of parents didn't buy the NES and some didn't buy the SNES for fear of the same thing but by the time the N64 came out video games were a stable market so parents were buying the systems. Also kids who had missed out on NES or SNES had the money to buy themselves an N64 or PS.

[foxhack]

I hope the bubble bursts right after I sell off most of my valuable games.

[turf]

Too many people are hoping the bubble will pop. It can't pop if we're all still interested.

[blipcs76]

I don't think we'll see the bubble 'pop' like tends to happen with other things.  With other bubbles, product was continually increased to meet demand.  More houses were built, more comics were printed, etc.  Retro games are a finite resource, so the market can only get flooded if everyone dumps their copies of Chrono Trigger at once. 

We've seen how this can happen -- look at the nose dive Xenoblade took after Gamestop printed more copies.  The average price dropped 40% within a month because people panicked and dumped their copies on eBay, quickly driving down the price.  The introduction of new stock from Gamestop combined with the flood of discs by panic sellers drastically increased the supply and cratered the price.

This generally doesn't happen with retro games because there's no real way to mass produce old carts.  A game can get a digital rerelease, but collectors don't care about owning zeroes and ones.  They want the physical product.  It can hurt the value a little bit -- Earthbound has dropped about 25% off its record high after the Wii U release -- but it's starting to climb again.  The price is flat between Aug. 12' and Sept. 13'.

What I expect is to see the bubble 'deflate' rather than pop.  "Trend" collectors who have entered the hobby as of late will largely tire of the hobby and sell off their collections, which will lead to an increase in supply and we'll see prices come down once this starts to happen, but there have been dedicated collectors for well over a decade who will continue to be collectors regardless of how many new collectors enter and leave the market.  With the only forces that can manipulate the demand and supply being these trend collectors, we won't see the same effect you would with a commodity that can double supply in a short time, like printing 500,000 comic books.  There will always be a solid base to keep prices up a little bit, but only the rarest games will continue to see crazy prices.  No more loose Zelda carts selling for $50.

[burningdoom]

You're point still stands, not arguing that. Just pointing out the Chrono Trigger thing. People seem to forget that Chrono Trigger was a very popular game at release and sold many copies. It's not a rare game. It's just that damn good that people don't want to let it go too often.

[jcalder8]

I don't think we'll see the bubble 'pop' like tends to happen with other things.  With other bubbles, product was continually increased to meet demand.  More houses were built, more comics were printed, etc.  Retro games are a finite resource, so the market can only get flooded if everyone dumps their copies of Chrono Trigger at once. 

The problem that I see with this argument is that there are a finite number of classic comics and sports cards printed too.