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At this point in time, an increasing amount of attention has rapidly been placed on the complete lack of overall market transparency as it exists within the Video Game Collectibles Trade. Furthermore, given the surging nature of this investment category as it relates to capital gains, many prominent Collectors have thus begun to engage in prudent conversations which ultimately compare many features of the financial markets to that of the antiques and collectibles trade. As such, these conversations are immensely important to have as I do not believe it is commonly known just how regulated Wall Street is in contrast to that of the trade. For instance, when someone begins to invest in stocks, bonds, mutual funds, securities etc… (items which mainly belong on Wall Street), there are a certain number of fundamental actions that an individual can take in order to analyze any of these assets. Whether it be crucial pieces of information including annual reports, information on trade history, the time/date of any given transactions, and much more; all of this information is readily available and accessible. Additionally, all of this is governed and regulated by the SEC (Securities and Exchanges Commission) in the United States or its counterpart SEDAR in Canada. As such, if anybody would attempt to manipulate these markets, spearhead the prices shown for these commodities, stocks, equities etc… it would be considered a violation of law and that individual could be subject to prosecution to the fullest extent of that law. This type of transparency is exactly the OPPOSITE of what happens in the antiques and Collectibles Trade.
By and large with very few exceptions, the antiques and collectibles trade is a free market in its purest form (completely unregulated). This means that nobody cares what you are buying and selling into the market, if you are manipulating prices, if you are withholding crucial information, etc.… overall; nobody cares. Further, it is extremely important to acknowledge this because when you look at the definition of market transparency, for the Video Game Collectibles Trade is completely lacking the fundamental conditions necessary in order to achieve true transparency. More specifically, market transparency “describes the extent to which the details of market activity are made public” (Madhavan, 2005) as well as “if much is known by many about what products and services or capital assets are available in the market, the depth of the market, what price is being paid in the market, and where this is taking place in the market” (Madhavan, 2005). Keeping this definition in mind, it is now time to unravel what this has to do with the grading companies and how they have facilitated such a clouded environment.
The two major grading companies in this space consist of WATA Games and VGA. In both instances, each of these grading companies WILL NOT PUBLISH the census or the population reports of the items that they grade. As for a large portion of the Collecting Community, rather than be outspoken and confronting these companies by saying ‘hey, you know people are paying up to 1.5 million for factory sealed Nintendo game… We deserve to know how many copies of those particular games are graded at present time in each subsequent grade, and how many copies exist out there… i.e What the DEPTH OF MARKET IS!?!?!’ Instead, many within the community are ultimately saying ‘hey, we don’t need that information… I just love the Legend of Zelda, I love Super Mario Bros so much, that I am willing to lose 6 or even 7 FIGURES to get this particular item, and you don’t even have to give me all the information relevant to making an intelligent purchase decision. I love Mario so much; I don’t care if I lose 6 figures.’ This has ultimately been the attitude of a huge section of the Collecting community in relation to this topic.
As a result of this lack of pushback, it is clear that many unsophisticated investors are ultimately being taken advantage of due to this lack of transparency and this has played right into the hands of high-profile auction houses and e-commerce websites which cater to these types of collectibles and Products. Further, I don’t think it is well known that if they were attempting to conduct business in such a way on Wall Street, it would be considered unthinkable. For instance, imagine if the SEC put out a statement stating, “Companies no longer have to issue anything on earnings, not even a yearly 10k report”. Again, these types of actions would be considered unthinkable given market transparency is ultimately protected by the SEC in order to ensure an efficient marketplace whereby investors consistently have access to vital information. In contrast, as a result of the Collectibles trade being a truly a free market, there are ultimately no regulatory bodies that can come in order to ensure that the public domain has access to these types of reports. Regardless of this lack of oversight, there are still extremely prominent grading companies out there in the Collectibles space which have released these reports on their own whim. This problem does not exist with companies such as NGC, CGC, or PSA; the leading authenticators of collectible coins & currency, comic books, as well as cards. For these companies, the population reports are right on their website where anyone is able to view what was graded, as well as how many copies of that collectible exists in such and such condition. Therefore, this complete lack of transparency as a result of a deliberate withholding of vital information by these companies has solely taken place within the Video Game Collectibles Trade.
However, with the recent purchase of WATA Games by the Collectors Universe (Owners of PSA) in July 2021, some have speculated that these reports may get released. Nevertheless, it is still of popular opinion that these reports will not be release anytime soon by either WATA Games or VGA. So the next time you go to bid on a certain Collectible Game, keep in mind there may be someone out there with a case of them in that grade or higher… you just never know without population reports!!!
References
Madhavan, Ananth; Porter, David; Weaver, Daniel (2005-08-01). "Should securities markets be transparent?". Journal of Financial Markets. 8 (3): 265–287.
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