Level 11: Are retro games an investment?

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Investment and speculation are common themes in the retro community,  but how much of an investment are these games actually?

Anyone who’s been around the retro collecting scene for a while has probably read more than a few forum threads, etc about buying games as an investment, but how viable are retro games as commodity that will give a solid return for what you’ve initially invested in them?

The main thing about investments is to remember is: is this something that will grow enough in value to be something that someone in the future will buy for a higher price? People play the stock market because stocks and portfolios can grow and create wealth, but is this something that translates to the retro game market? 

What exactly are you investing in? These are old games who’s sole value is determined by supply and demand, being a finite resource because there’s a limited remaining amount of these games this creates value by scarcity.
Some games are known to be less available than others and thus command higher prices but does that always mean this will continue to
A: hold it’s current value?
B: continue to grow in value in the future?

With regular stocks, the company affects the price by showing positive profit margins and returns each quarter and year which entices investors to put more money into company x in order to cash in when the stock goes higher in price again. With retro games the only real determining factor is whether collectors are willing to pay the price being asked.

Currently speculators, profiteers and resellers have built up a market where the prices have hit all time highs due to the resurgence in interest in retro games. This is in part because there’s a whole generation who grew up on the tail end of the Atari, moved into the Nintendo Era and eventually the Super NES, Sega Genesis, Turbo grafx, and Nintendo 64 and on…this cohort also happen to be in their early 30’s, have careers and the expendable income to purchase these products.

This demand paired with the fact that the target market has available cash to relive their childhood memories is a recipe for printing money…but for how long? Nostalgia is a strange beast, some people just dip their toe in the water and buy an NES and Mario 3 for some laughs and never bother collecting, but some go in full bore and want to get their hands on the games they had as kids or always wanted as a kid.

I know for myself, at times I’ve had to pay a pretty big premium for a little nostalgia, the first thing I did as a collector was try to round up the games I had as a kid for a starting point. Fortunately I was able to grab a large majority before the prices really went up but there were a few that I wasn’t able to find right away and ended up having to pay higher prices to get them.

With some of the higher priced games being in the $40+CAD, how do I know these are a solid investment? Their not is the simple answer. Just because I wanted to own say…Contra doesn’t mean the demand for it say 10 years down the road will be the same, what if they find a pallet of boxes of contra’s somewhere and the price plummets and my $40 game becomes a $5 game? This is possible as I talked about last time in regards to the sealed shipping box of stadium events.

Also how can I be sure that by the time I’d want to relinquish my collection that there will be any interest in it? What if the retro game trend stays around but shifts? As collectors like me get older and possibly start losing interest in the hobby will new NES collectors be there or in 10 years will things like the Playstation 1 and 2 be the popular retro system thus rendering my games worthless unless I can find someone to pay me what I feel it was worth.

Which brings me to my next point: these games are only worth money to collectors…things like stocks are valuable to anyone because they can always be converted into cash, not always true with retro games. If I have a “rare” title like say Bubble Bobble 2, I buy it for $800 now so it’s worth $800 to me, will it be worth $800, $1000, $2000 later just because it’s rare? Maybe if the demand for NES games is still there, not so much if the market has moved on to the next big thing. I’ve made the connection between retro game collecting and sports cards several times but it’s the best example of what we as collectors have to look  forward to when they hype around retro games dies off.

What happens when the kids of today becoming adults and get bit by the nostalgia bug? Their first thought isn’t going to be “Man I wish I had an NES!”, their going to look back fondly on that GameCube or Playstation they had as a child and the cycle will start anew. So what happens then? What happens when the new “investors” don’t want my Bubble Bobble 2? Just like in the real stock market when people are not longer interested in your stock, the price can plummet.

Thinking of game collecting as an investment is a short game for profit as the window of opportunity is limited unless you can see into the future to know when the retro bubble (pun intended) will burst or interest will shift. This hurts the guys who are hoarding  boxed systems and have their Stadium events, Bonk’s adventures and Little Samson’s locked away in safety deposit boxes hoping that in the future their going to be able to retire off selling these items again.

Collectables are super fun, they add value to your life by being awesome and are mostly priceless to you because they have intrinsic sentimental value…they should stay that way. It’s hard to transfer the excitement you had from playing Metroid to the person you’re selling it to, so they don’t see beyond what it’s worth monitarily. So unless the price of the game has risen in value and there’s a demand it will only be worth what the market will bear at the time. So if you’re planning your retirement around your game collection it might be time to better invest your money in something that won’t possibly leave you with less than your original investment and just enjoy your game collection for what it is, a hobby.

Ok rant over…thanks for hearing out my rants, I promise the next one will be about something more fun and upbeat.
Cheers!

#retroredneck
#8bitliving

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