Masterpiece Series - Why Australian Prices Won't Drop

It turns out that the Zendikar Expeditions were such a success, that we’re going to get more of the same in every new set for the foreseeable future.

I think everyone agrees that the new cards look fantastic, and if you’re wanting to add some bling to your deck, then this is surely the way to do it. Look out for these new gems in our store when we get our hands on the new release of Kaladesh.

There’s actually a more serious intent to the way these highly-sought after cards are being released. One of the stated intents is that the high value that will be placed on the Masterpiece Series cards, will inevitably drive down the cost of the other cards in the set, with the effect of lowering the price of entry to Standard for new players. I don’t think anyone would have a particular issue with this goal, but I wonder if we’re really going to see much change in smaller markets, like Australia.

Now you may be aware that Wizards of the Coast places an artificial restriction on the sale of Magic: The Gathering products, which effectively prevents the products from being shipped internationally. This means that the prices for single cards in Australia are basically determined by the underlying retail price of boosters.

We’re all too used to paying the “Australia Tax”, and I’m afraid that Magic: The Gathering is no different. In the USA, a booster from a newly released set will probably sell for around $US 4.00, which is something like $A 5.50 depending on exchange rates. Now the fact that the recommended retail price is actually $AU 7.00 indicates that there is a significant price difference for Australian players. This price difference becomes problematic when US prices are used as a basis for valuation, often without any exchange rate conversions. It’s all too easy to assume that a $US 4.00 card must be only worth $AU 4.00 rather than the quoted price of $AU 7.00 to $AU 8.00 after taking into account all the business costs involved in selling singles.

Now the theory behind the Masterpiece Series pricing is that if you create highly sought-after cards, then more of the expected value of a booster box can be assigned to those cards, thus lowering the value of all the remaining cards. It is argued that booster boxes will continue to be opened as long as it is profitable to do so, and that in time all the card prices will settle to a level where they match the cost of the booster box to the retailer.

So far, so good.

I’d argue that perhaps this theory won’t hold up in a small and limited market like Australia. The size of the US market is immense. There are thousands of game stores and a large number of online retailers and other trading sites. In creating new Ultra Rare cards, Wizards of the Coast assumes that a sizable number of collectors and players with deep pockets exist who will prop up the value of these cards. This is probably true for a market place like the USA. I wonder, however, if the same applies for a much smaller market like Australia. Maybe all the value of the Ultra Rare card is going to just sit, unsold, in the retailer’s inventory as an unrealized asset.

If the economics of the smaller market have any impact here, I think we will be seeing little or no change to the pricing of Standard cards. If an Australian retailer can’t expect the same return on an Ultra Rare card in the same way that a US retailer can, simply because there are less people who are inclined to invest in these cards, then the only reasonable approach is for the Australian retailer to try to recoup enough of a profit margin from the remaining cards and treat any sales of Masterpiece Series cards as a windfall profit, if they occur.

If this plays out as I expect, then we may see a divergance in pricing between US and Australian prices, with US prices dropping, and Australian prices holding at current levels.