Starving Scalpers: How to Combat the Reseller Market

Published: April 3, 2015 9:00 AM /


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Anyone trying to purchase certain Amiibos, the Special Edition of Majora’s Mask 3D or even the 20th Anniversary Playstation 4 may have sticker shock upon seeing the prices on eBay and other auction sites. The sellers who drive up prices are commonly referred to as scalpers because of their efforts to profit from people willing to pay a premium in a niche markets. Granted, a degree of scalping and market manipulation is a given in almost every form of commodity transaction. However, the Amiibo availability fiasco has revealed the shadiness of the video game scalping market to a much larger audience.

There are now would-be profiteers who buy entire shipments of a certain character Amiibos. They do this for no reason other than keeping the figures off of the market until the going price is high enough. This model of hording goods to unload later isn’t unique to the video game market; it has previously manifested in the ‘Comic Book Bubble’ and Beanie Babies fad of the 1990’s. The question remains: how did it become this bad and what can be done about the problem?

Every speculator market needs an initial ‘shock moment’ to catch the attention of outsiders to suggest there is big money in play. The video game industry’s equivalent to the Action Comics #1 auction was the story of the sale of a sealed copy of Stadium Events for $41,000 in 2010. It later came out that the bidder never paid for the game and that the actual sale in 2011 was for $22,000, yet the blood from a sensationalist story was already in the water. Objectively speaking, a sealed copy of Stadium Events does have inherent value from its rarity because only 200 are believed to have ever been released to market. As one episode of the A&E show Storage Wars showed, a small bit of misinformation can have major effect on any given market. As silly as it may seem, the ‘NES 001’ claim may be the single reason why the retro game market has become such a bubble.

How much should a used copy of a common NES game like Megaman 1 go for? Is it somewhere below $10? According to the going rate on eBay, it is somewhere in the $60 range for the cartridge alone. This isn’t an isolated case as more and more retro games are increasing in price for seemingly no reason. The word ‘rare’ in reference to a video game becomes a bit questionable when there are more unique eBay sales of the title in a few months than there were total copies of Stadium Events distributed. What makes this even more baffling is the thought that many retro console games are playable on other consoles through ports, compilation releases and the Virtual Console. The games in the market have mostly ceased in their original function as a form of entertainment in favor of serving as a perceived investment. This mentality is why dealers buy video games at garage sales and flea markets without a second glance. They’re only in it for the profit from suckering someone into paying a grossly inflated price.

Is it possible to actively combat scalpers of modern and retro video games alike? Yes and no. Apart from truly limited special editions, there really aren’t many games or accessories that won’t eventually be reissued or made available again in some other fashion. The physical release of Fire Emblem Awakening in 2013 perfectly encapsulates the behavior of a small-scale bubble. For whatever reason, physical copies of the game were hard to find in some areas for over a month after the launch. This led to a market where on-line sellers doubled the price to sell to desperate fans, despite the digital purchase alternative. The ‘premium’ for a physical copy evaporated once distribution was fixed. Waiting to make a purchase later instead of immediately indulging is the kryptonite to short-term scalpers. The Amiibo bubble may eventually end in a similar fashion to this since there is a distribution problem in the United States. The issue is apparent enough and the market is so rabid that selective re-releases of rarer figures almost seem guaranteed. Knowing the enemy is half of the battle.

Dealing with retro game scalpers, on the other hand, is the other half. Whereas modern scalpers can be dealt with passively, it is entirely possible to profit off of retro scalpers. Recently, I decided that I wanted to upgrade my GPU to a GTX 980 only to discover that selling my old GPU wouldn’t be enough to cover the cost. I pulled out my copy of Megaman 1, listed it on an ‘enthusiast forum’ and made up the difference that way. Understandably, there are some who may be reluctant to remove parts of their collection for cash or trade. The reality is that flipping some titles now during the bubble may fund purchasing scalper stock in fire sale lots once the bubble bursts. Something only has value in the market if the narrative of scarcity is maintained. Here's a handy guide on how to monitor game prices over time. Websites like eBay keep logs of sales for a particular item over a span of a few months. A gradual increase in the sold 'buy it now' listing prices and unexplained price spikes might be signs of price tweaking.  Perhaps the most egregious example of a market jump was when eBay decided to highlight a Gold Mario Amiibo speculator mere hours after Walmart sold out.

Gradually flooding the market with titles that are now considered ‘rare’ will force the scalpers into quite the pickle. Do they lower the price to make back some of their loss or do they keep building inventory? Eventually, there comes a point where the scalpers are each left with potentially hundreds of copies of the same game that are only worth a fraction of what they had paid at the peak. The gamers who sincerely want the copies of the game at that point can swoop in to purchase for pennies on the dollar while the leftovers end up in a bin next to unsold Star Wars Episode I ‘Naboo accessory sets’.

In the end, the length at which any person goes to add to their collection is entirely subjective. Knowing the scalper mentality and how to combat it may help to decrease the instances of people being suckered into their game. The ready availability of many older and modern games through digital distribution negates the necessity of purchasing from scalpers. Even Earthbound, the face of expensive retro games for over a decade, is now available via the Wii U Virtual Console. Apart from Panzer Dragoon Saga, a game where the code was completely lost, and a few hyper-obscure games, there really isn’t much out there that you can’t experience elsewhere. After all, why engage with a market when there is a chance the game isn’t even real?

Sure... Let me just put in an order with Office Max for 100 of these.
Sure... Let me just put in an order with Office Max for 100 of these.

They just so happen to sell repro labels of all the rare titles.
They just so happen to sell repro labels of all the rare titles.

What are your thoughts on resellers? Are they a necessary evil providing a service for a price or are they complete opportunists?  If the former, what is your cutoff point?

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I'm a contributor to the tech and gaming sections here on TechRaptor. I hold a B.A in English from University of California at Davis.

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