After a high-flying 2021 that saw video games enter the more mainstream collector’s and fractional investor’s consciousness, the first major auction of 2022 was met with heavy anticipation and uncertain expectations. With momentum faltering to close the year, was widespread market pain just ahead? While this weekend’s Heritage Signature Auction certainly didn’t signal a return to broad and rapid appreciation, it was similarly emphatic in the assertion that the market isn’t dissipating as quickly as it materialized.
To use video game terminology: did the video game market spend a life this weekend? Maybe you could argue that. But it also might have gained enough experience to advance further on the next try.
It should be noted up front that this auction featured significantly fewer lots than either July or October, with 324 here vs. 490 and 632 respectively. So, it comes as little surprise that the total sales realized of $4,989,510 is down significantly from $8,179,434 in October and $8,454,233 in July. Total bids & registered phone bidders also declined to 6,815 from 9,616 in October and 9,855 in July (in the ballpark of a 30% drop in both instances). And finally, without the same caliber of eye-popping assets at the high end of the auction, page views suffered, with 76,805 views down 81% from the enormous 403,427 in July and 55% from 168,867 in October. Those numbers...aren’t so fun, nor should they be ignored.
Perhaps there was more tourism in the prior auctions, as the headlines of mid 2021 drew spectators from outside of the space. The July auction, in particular, which saw the record for the most expensive game ever fall twice, was must-see auction action (to the extent that any auction is). The reality is that this auction was simply not as strong at the high end, and that’s not necessarily a reflection of market performance alone, but rather the assortment of assets on offer. Not to say there weren’t some remarkable games available - there were - but rather, this time around, you didn’t see the No Rev-As, the Hangtabs, the 9.8 A+ grails. While the Madden game was a gem, there was nothing in the auction likely to truly threaten the nine figure level, so some level of decline in attention was probable, and there was likely a natural recession of attention as many or most of those summer tourists were not likely to be converted into consistent collectors.
The high end of the auction was weaker compared to the July and October editions. Every portion of the top 50 sales reflected a similar decline in average sales price versus prior auctions.
It’s after the top 50 lots that things start to look less bleak, and…even promising? The strength of this auction was not at the top but really in the depth. Across mean, median, 25th percentile, and 75th percentile sale price statistics, this auction actually outperformed October handily. It also outperformed the high-flying July auction on median, 25th percentile sale, and 75th percentile sale.
While the collecting crowd has perhaps become more discerning at the high end, reluctant to throw huge sums of money at just anything, there may be growing depth of collectors building collections at lower tiers, in addition to established collectors recycling gains into overlooked opportunities at those lower levels. The proportion of total lots that sold for over $5,000 in this auction was 44%. That’s up from 38% in July and 32% in October. Now, perhaps the lower overall supply put upward pressure on the lower end, but the overall wallet chasing games was large enough and eager enough for that to be possible.
So, reduced attention and interest? Yes, it appears so. Consolidation of sorts at the high end? Yes, there appears to be heightened trepidation. But the bottom falling out from under the market? Not so fast. As we’ll touch on later as well, there was evidence in this auction of results that held up well against October or even exceeded those levels. The space is no longer flying up and to the right in lockstep - there’s a lot more nuance - but there are many pockets of healthy activity, particularly as the process of consolidation unfolds at potentially more sustainable levels. We'd also look to the April auction as one that should feature numerous high-end grails to provide further evidence of performance one way or another.
In terms of console performance, Sega won the day, as the top two lots - John Madden Football and Sonic the Hedgehog - were Genesis titles. Nintendo 64 accounted for a greater number of lots in the top 50, but continued its decline in terms of value realized. In the absence of the top-notch grails we referred to earlier, NES also experienced weakness in average sales price among the top 50 lots. Playstation notably settled after an emergence of sorts in October. GameBoy appears to be commanding a fairly steady share of high end collector’s wallets and attention.
Before we dive into fractional comps, let's answer some of the questions we posed in our preview last week.
Emergence of newer non-Nintendo consoles? We were watching closely as key Playstation and Xbox titles in high grades came to auction again this weekend. Tomb Raider in 9.4 A++ condition sold for $43,200, down significantly from $102,000 in October. Final Fantasy VII’s first production, graded 9.8 A+, was also well off of record highs for the title. The suggestion is that perhaps the ascendancy of these titles from newer consoles was a bit rushed in the second half of 2021. On the flip side, though, Halo: Combat Evolved sold for almost 30% higher than it did in October, breaking into the six figures.
There were no standout results from even newer consoles like the Playstation 2 or Xbox 360.
N64 taking a breather? We highlighted a few games to watch to understand the extent to which the high end of the N64 market has pulled back in recent months. A 9.8 A++ Zelda Ocarina of time sold for 26% less than it did in July, still garnering $168,000. Super Smash Bros in a 9.4 A+ sold for $72,000, which is exactly half of what a 9.4 A++ sold for in July. Finally, a 9.4 A++ copy of Super Mario 64 sold for $40,800. Remarkably, that’s only about $2k more than a 9.4 A+ copy sold for a full year ago, despite the superior seal rating. At the high end of the market, it seems buyers have adopted somewhat of a wait-and-see stance, and things may continue to reset at lower levels as we learn more about supply. Still, even with that being the case, these are large sums being paid in the absence of full information.
Can Pokemon stop the slide? Ah, not yet. Not really. The highest end of the market met its challenges this week after a stellar October. First production copies of both Pokemon Red and Blue came to auction in 9.8 A++ condition - the second straight signature auction that this is the case. The Red copy sold for $102,000, down from $156,000. The Blue copy held up better, drawing $111,000 versus $116,000 a few months back.
At lower grades, the damage continues to be worse. A 9.4 A+ copy of the first production Red sold for $21,600; in July, a 9.4 A++ first production Pokemon Red sold for $132,000, and in October, a game with the same attributes, drew $45,600.
Gameboy Color’s Pokemon Sapphire and Emerald may be finding their floor, as 9.6 A++ copies sold for $6,000 and $9,000 respectively. Both sold for $6,600 in October, so the latter is a bounce off of the bottom, and the former represents a slowing decline.
Population report impact? There does seem to be an impact in values for those games that have been revealed amongst the most graded in the NES population. Super Mario Bros 3, the most graded game in existence, continued its slide (more on that in the comps section). Teenage Mutant Ninja Turtles (99 total copies graded) strengthened at the 9.8 level, with a $48k sale besting a $43.8k level from October, but lower graded copies had weaker performance.
Certain titles, though, appeared impervious, as a 9.6 Oval SOQ Legend of Zelda (which has over 30 graded copies), equaled its October result. And on the low end of the population, Baseball, which features just 11 total graded copies, saw a 9.6 Hangtab sell for $144,000.
New demand for sports games? Whether there would be increased demand for sports games in 2022 was answered with a resounding yes this weekend. The $480k sale of the original John Madden Football for Genesis was the headline sale, but Tecmo Bowl and NBA Jam also had huge results. Tecmo Bowl, graded 9.4 A+ in the latest variant drew $144,000. A 9.6 garnered just $14,400 in April. A $38,400 sale of NBA Jam in Wata 9.8 A++ condition was also a record, besting a sale for $31k in October. And of course, Baseball, perhaps more for its rare Black Box status and low population, sold for $144,000 to kick the auction off.
And now, on to the key sales for fractional investors to be aware of from the weekend.
Legend of Zelda
Heritage (Rev-A, Round SOQ, Wata 9.2 A): $180,000
Rally (Rev-A, Round SOQ, Wata 9.4 B+): $145,000
An encouraging result for Rally shareholders. Though the Rally copy bears the higher numerical grade, the disparity in seal will temper runaway hype from this outcome. Still, demand for the title clearly remains strong, and with the IPO valuation being based on the pre-July market (gaining 22% since), this isn’t an asset that has gotten carried away. The $156,000 sale of a Wata 9.6 A+ Oval SOQ copy (later variant) is further evidence of strong demand, and will perhaps provide even more encouragement than the 9.2 Rev-A Round SOQ. That was right in line with an October sale.
Halo: Combat Evolved (NFR)
Heritage (Wata 9.8 A+): $108,000
Otis (Wata 9.8 A): $88,400
Otis (Wata 9.8 A+): $301,000 (bought out)
The Not for Resale copy of Halo: Combat Evolved continues to be a gift that keeps on giving for fractional shareholders. The first copy was bought out for an obscene $301k at the end of August, before Otis scooped up another copy in the October auction. Strength for the title returned this weekend, with the $108k result for a 9.8 A+ representing a 29% increase over the October sale of Otis’s 9.8 A copy.
Legend of Zelda: Ocarina of Time
Heritage (Wata 9.8 A++): $168,000
Rally (Wata 9.6 A+): $32,500
We include this result not as a comp, but to illustrate the trajectory of the game. This title in the same grade sold for $228k at the peak of the market in July. The result here is 26% lower. Notably, a 9.4 A+ copy of the more common Collector's edition also slumped at this auction, selling for $13,200, which is below a $14,400 sale of a game with a slightly worse seal grade (A+ vs A++) in October, and well below the $22,800 sale of a game in the same exact grade in July. Whether the standard edition in a higher grade has consolidated sufficiently for further appreciation is up for debate, though the copy trading fractionally has lost considerable ground in recent sessions.
Super Mario Bros 3
Heritage (Bros Right, Oval SOQ ™, 9.6 A+): $22,200
Otis (Bros Right, Oval SOQ R, 9.6 A): $28,750
Rally (Bros Right, Oval SOQ R, 9.4 A+): $42,500
The most heavily graded game of all-time continues to slump. The sale here actually comes from a variant that is considerably rarer than the one offered on Rally and Otis. The Oval SOQ TM variant, which likely came briefly between “Bros” left and “Bros” right Oval SOQ R, has just 10 graded copies, versus 163 for Oval SOQ R. Nonetheless, the market has ascribed no real difference in value between the two, and it may be fair to expect continued pressure for these titles fractionally, though, general demand for Mario has buoyed the space in the past. One of these last sold in October for $27,600.
Heritage (Wata 9.8 A++): $38,400
Otis (Wata 9.8 A++): $32,800
As mentioned above, this is a record result for NBA Jam, up 23% from an October sale, and 17% above Otis’s valuation. A favorable outcome for those bullish on the sports game space.
Heritage (Wata 9.8 A+): $26,400
Rally (Wata 9.8 A+): $59,000
We now get into a string of results that don't bode well for games that launched in the fall, with valuations presumably based on summer strength. The result for a directly comparable Batman here is less than half of the IPO valuation on Rally. There were no relevant, high-grade comps at the time, and now one of just two other 9.8s has set the market considerably lower.
Teenage Mutant Ninja Turtles
Heritage (Wata 9.6 A+): $19,200
Rally (Wata 9.4 A): $24,100
This game was offered in September on Rally at a $22,000 valuation and it’s up 10% since. At the time, the most recent relevant data was the sale of a 9.2 in early August for $9,600. However, fast forward four months, and we now know that TMNT is amongst the most graded NES games, with 99 total copies graded, and 13 graded higher than 9.4 (with 11 9.4s). The sale of a 9.6 for 21% lower than the lower graded game’s valuation will introduce concern, as will the fact that a 9.2 sold for $7,800, down 19% from the aforementioned summer result.
Castlevania II: Simon’s Quest
Heritage (Wata 9.6 A+): $8,400
Rally (Wata 9.6 A+): $18,000
This was another fall IPO, and this one has yet to trade. The most recent data point at the time was the sale of a 9.6 A Oval SOQ for $5,280 at the end of 2020. Since then, a 9.6 Round SOQ sold for $13,800 in October, and a 9.4 sold for $6,000 in December This result, for a Round SOQ like Rally’s, is less than half of the IPO valuation, and is also down 39% from that October result. There are nine 9.6 Round SOQ copies, with none graded higher.
Final Fantasy VII
Heritage (First Production, Wata 9.8 A+): $32,400
Rally (First Production, Wata 9.8 A+): $40,000
There has been some variant confusion in the past, but still, both the first production and mid-production copies in 9.8 condition have appeared at Heritage in the past, the latter with increasing regularity. Interestingly, a mid production 9.8 A++ bested a first production 9.8 A in October, $33,600 to $18,000. So, while the result here is an improvement on the October sale of the first production, it falls short of the mid-production result and of the Rally valuation. The record price for this game is $144,000 which was paid in July for a 9.8 A+ copy of the late production variant - that provides a major warning that information discovery for games, particularly of newer consoles than NES, is still a serious work in progress.
Heritage (Rattata screenshot, Pixelated ESRB, Wata 9.6 A++): $13,200
Otis (Rattata screenshot, Pixelated ESRB, Wata 9.6 A++): $43,875
As covered above, the trajectory for Pokemon games that aren’t of the highest grade and/or earliest production has been challenged. While this game does feature the pixelated rating, 9.8 copies of both the Sandshrew screenshot (clear first production) and Rattata screenshot variants have surfaced at recent auctions. That being the case, 9.6 Rattata copies, even with the pixelation, have fallen out of favor as large Pokemon dollars chase copies assured to be of higher (highest?) caliber.
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