Five Dollars, Five-Hundred Equations: A Rant and Reflection on the MSRP

Over the past few years, I’ve become increasingly frustrated by the cost of Magic boosters. I remember when the MSRP was only $2.69 – a very long time ago, to be sure, but now it’s climbed by an entire dollar. That’s a lot of money for a single booster, don’t you think? Thankfully, SCG thinks so, too. If it wasn’t for SCG, I don’t think I would still buy packs anymore. I’ve recently begun to see how the rise in the price of Magic has affected my local gaming community – and I’ve heard some cries on the forums lamenting similar stories about how their gaming stores are closing down, relocating, or are not planning on renewing their Magic inventory. I found this somewhat disheartening – so I talked with a few people that I knew and wanted to find out why this was happening.

If you’ve ever talked to someone who deals with Wizards of the Coast, you would know that Wizards is not the easiest company to work with. But do you realize that the company may be putting itself out of business without even realizing it?

Over the past few years, I’ve become increasingly frustrated by the cost of Magic boosters. I remember when the MSRP was only $2.69 – a very long time ago, to be sure, but now it’s climbed by an entire dollar. That’s a lot of money for a single booster, don’t you think? Thankfully, SCG thinks so, too. If it wasn’t for SCG, I don’t think I would still buy packs anymore.

But I’ve recently begun to see how the rise in the price of Magic has affected my local gaming community – and I’ve heard some cries on the forums lamenting similar stories about how their gaming stores are closing down, relocating, or are not planning on renewing their Magic inventory. I found this somewhat disheartening – so I talked with a few people that I knew and wanted to find out why this was happening.

Everyone told me the same thing: we can’t afford to sell packs anymore. They just cost too much to sell reliably. Sure enough, stores either closed or stopped carrying Magic, and we all suffered – there was no more place to meet and play, trade singles, or just learn about your local metagame. Things just began to disappear.

Armed with my recent knowledge, I began to seek out an explanation. What follows is most likely to be perceived by many as nothing more than a rant; and in many ways it is. Yet, from a customer perspective, I can’t help but hypothesize why this has occurred. In some ways, knowing why I feel like a disenfranchised customer will at least make me feel better. It might even tell me what I can do about it.

As part of this quest, every set I’ve decided to purchase, I’ve done a basic cost analysis to see if it’s worth it. After the increase in Magic products last year, it seems to be getting harder and harder to justify. For demonstration, I’ll prove my point using the most recent set, Betrayers of Kamigawa, particularly because it illustrates my point well.

(Warning: I love Phil Stanton. He’s the man. But for those who can’t handle the Magic Supercomputer or his sidekick Jeek, I’m letting you know there’s some math ahead. I’ll try to keep it simple, but keep yer hat on, okay? Thanks.)

Here is a list of all of the rares from Betrayers, a set with a fairly even distribution of value across it’s rares. There aren’t any twenty-dollar pulls, but the spread is fairly even without too many gaps and nicely symmetrical, so it works well for the purposes of statistical analysis. The prices next to them are the StarCityGames prices as of 4/5/2005:

$10.00 Umezawa’s Jitte (This will be going up.)

$8.00 Shining Shoal

$8.00 Sickening Shoal

$7.50 Blazing Shoal

$6.50 Ink-Eyes, Servant of Oni

$6.50 Yukora, the Prisoner

$6.00 Final Judgment

$6.00 Toshiro Umezawa

$5.00 Disrupting Shoal

$5.00 Hokori, Dust Drinker

$5.00 Tendo Ice Bridge

$4.00 Goryo’s Vengeance

$4.00 Higure, the Still Wind

$4.00 Isao, Enlightened Bushi

$4.00 Kira, Great Glass-Spinner

$3.00 Genju of the Realm

$3.00 Iwamori of the Open Fist

$3.00 Patron of the Orochi

$3.00 That Which Was Taken

$2.50 Heartless Hidetsugu

$2.50 Mirror Gallery

$2.50 Orb of Dreams

$2.50 Shirei, Shizo’s Caretaker

$2.00 Enshrined Memories

$2.00 Fumiko the Lowblood

$2.00 Ishi-Ishi, Akki Crackshot

$2.00 Lifegift

$2.00 Neko-Te

$2.00 Patron of the Akki

$2.00 Patron of the Kitsune

$1.50 Hero’s Demise

$1.50 Kyoki, Sanity’s Eclipse

$1.50 Oyobi, Who Split the Heavens

$1.50 Patron of the Moon

$1.50 Patron of the Nezumi

$1.50 Sakiko, Mother of Summer

$1.50 Shizuko, Caller of Autumn

$1.50 Sway of the Stars

$1.25 Day of Destiny

$1.25 Kentaro, the Smiling Cat

$1.25 Opal-Eye, Konda’s Yojimbo

$1.00 Baku Altar

$1.00 Chisei, Heart of Oceans

$1.00 Clash of Realities

$1.00 In the Web of War

$1.00 Kodama of the Center Tree

$1.00 Mannichi, the Fevered Dream

$1.00 Nourishing Shoal

$1.00 Ornate Kanzashi

$1.00 Reduce to Dreams

$1.00 Slumbering Tora

$1.00 Threads of Disloyalty

$1.00 Tomorrow, Azami’s Familiar

$1.00 Twist Allegiance

$1.00 Yomiji, Who Bars the Way

The average cost of a rare in Betrayers (as listed above) is $2.82, which represents a very interesting statistic. You see, the price of a booster pack from SCG is only $2.49. Sounds good, right? It is good, as it means when you order your packs from SCG, even with shipping and handling, you’re getting a good value. For most, when you buy a pack of Betrayers from this site, you’re very likely to break even, even if you have to pay sales tax. (On top of that, their service is terrific.) That, however, is not the end-all, be-all of the numbers. There’s some not-so-good news which affects you, as a customer, indirectly.

The problem is that the MSRP is $3.69, or around 30% more than the value of the pack’s contents (let’s ignore commons and uncommons for now). It’s almost 50% more than what it could cost you to actually buy the booster. If you have to pay sales tax on the MSRP, it gets even worse. For example, in New Jersey, there’s a 6% sales tax. That means if you buy a pack at MSRP, it actually costs you $3.91, or almost 60% more than the cost here at StarCityGames. (Seriously, when you look at the numbers, it makes me wonder how anyone would not buy their stuff from SCG.) [We did not pay Nathan to write this. – Knut]

(For those of you who don’t understand MSRPs, it’s basically what Wizards recommends their retailers charge for product. If Wizards raises the MSRP, it’s usually because they are raising the cost to wholesaler or retailer who you buy the cards from. It’s Wizards’ way of informing retailers what they think is a healthy profit margin. After that, it’s up to the retailer to charge whatever they can afford to sell it at.)

Local gaming shops and gaming stores are getting hosed by Wizard’s MSRP, which came out right before Darksteel was released. These retailers often don’t carry the volume of Magic sales that SCG does, and can’t afford to sell packs at the same low price. That means that more and more comic store shops are beginning to stop selling Magic, since most people aren’t buying packs from them anyway (or at least that’s what’s going on over here in Jersey).*

What becomes even more vexing, though, is that it is becoming more and more economical to buy singles than it is to buy packs. This was especially true in a set like Fifth Dawn, where there was a large price gap between the “good” rares (think Shackles, Crucible, and Rude Awakening) and the rest of them (Suncrusher, anyone? How about Reversal of Fortune?). Most of the rares in Fifth Dawn are downright awful – only about 20% or so are even playable – so it makes much more sense to buy Eternal Witnesses as singles rather than slog through packs to get a hold of a playset.

Let’s say you wanted a Shining Shoal – you’ve got two choices, you can either splurge on the single and pay whatever S&H you need for about ten bucks total, or you could spend an equal amount of money on packs, hoping to pull one. Let’s say you buy from SCG online, and (like me) you’re out of state so you don’t have to pay sales tax. You could get three packs (at $2.49 each + S&H) for the same amount of money, whereas I could only get two packs at my local retailer who charges MSRP costs with tax ($3.91 each) without going over the ten dollar limit.

Let’s assume I’m comparing buying singles against a local retailer charging MSRP (because if you’re ordering packs online you’re probably less reserved about just buying the single you need rather than packs – most people who shop at a local retailer do it for convenience or lack of a credit card). The ultimate difference is important: the chance of opening up a Shining Shoal in one pack is 1 in 55, or 1.82%. (Not very likely, but it would be the same for opening any other particular rare.) In order to get at least a 10% chance of opening up a Shining Shoal, you would need to buy 6 packs. If you wanted a 20% chance, you would need to open 13 packs. Want a 50% chance? You would need to buy somewhere around 38 packs – more than an entire booster box.**

Let’s say you want a 12% chance, so you buy 7 packs at $3.91 each, and thus pay $27.38 for your boosters. At that cost, you could afford three Shining Shoals online at SCG, or get ten packs instead – almost 50% more than what you could get at your local retailer for the same price.

You could argue, “Well, at least I get six rares instead of three.” Which would you rather have, 3 Shining Shoal; or Mannichi, Yomiji, Baku Altar, Lifegift, Azami’s Familiar and Sakiko?

Yes, you would also get commons and uncommons. And there are a few decent uncommons in Betrayers – most of the Genju command a couple dollars. If you think you can get some good value out of your uncommons, then purchasing packs often is a great alternative over buying singles. It all depends on how badly you want a specific rare, though; and also whether or not you want more than one. Commons, though are largely irrelevant: when a small set like Betrayers comes out, you can order a playset of all the commons for twenty bucks here at StarCityGames. You should be able to pick those up easily through trade or draft. Don’t even consider the notion that you would take foils into account – if you’re looking for specific foils, you generally don’t rip packs to find the ones you want. If you just like opening packs so you acquire random shiny cards, then I really don’t know what you can gain from reading this article.

Even still, if you’re planning to buy packs so that you can get commons and uncommons, why wouldn’t you buy your packs online from SCG? Nonethless, in general, when people are looking for particular cards, they either trade for them or buy singles.

The other argument might be related to choice of set: what if some other set has an average rare value of close to the MSRP or even more? Then it shouldn’t be a problem paying the $3.69 plus tax since you’re getting (in theory) the value of what you paid.

Unfortunately, that’s honestly highly unlikely. First, the power level of the set itself would have to be extraordinarily high. Even Darksteel, which contained many high-value rares (Colossus, Ravager, the Swords, Death Cloud, Pristine Angel, Pulses, Sundering Titan, etc), averaged out to only $3.23 per rare during its days when Arcbound Ravager was $25. True, it also had two very valued uncommons (Skullclamp and Oxidize) that would probably put it just close to MSRP in approximated value, but that set resulted in getting nine cards banned in Standard. I doubt we’ll see a power level like that happen anytime soon. Furthermore, the value per booster you’ll actually get is almost always going to be less than the actual MSRP, although probably more than the price you could actually pay for it. Even if it wasn’t, why spend $3.69 when you could spend $2.49?

So you see, buying packs from a local retailer charging MSRP doesn’t make any sense. StarCityGames.com certainly doesn’t sell them at MSRP, and I know I’m taking advantage of it. Yet it does affect you – the customer – since it means that some of your outlets for gaming are disappearing.

The best way for a local retailer to compete is one of two things: either open up their own online business, which is a venture in and of itself, branch out into singles, or open up their stores for draft events and tournaments, where the store can reliably move product. Sealed deck events can sell out a booster box, which is good business; especially if they can attract crowds weekly. [However, Magic Online is having a hefty effect on the usual store drafts. – Knut, who has seen a lot of anecdotal evidence there]

Not every business that sells Magic is willing to do that, though. Video game and comic book stores often don’t want to get involved in running tournaments or opening up their business online, especially when Magic may not be part of their core sales. Ultimately, that hurts you, because it means fewer and fewer places to draft. Wizards has already quietly acknowledged this by closing some of their own retail outlets in malls across the country, and by changing some of their sales agreements with distributors in an effort to make storefronts more competitive.

In the past couple of years, I have seen three stores in my area – including one Wizards of the Coast store – either shut down or stop selling Magic product altogether. When Wizards raised the prices that they charge their distributors, the cost was ultimately handed down to you; but it hurt a lot of people in the middle. I still can’t find a good place to draft in central-east NJ, and if anyone knows of a good place, please let me know. (The closest place I know of is by Osyp, and it’s quite a shlep from where I live.)

In my opinion, Wizards used that price increase to pay for the whole Magic Online debacle a while back, when they let go of the Leaping Lizards development firm and tried to do the whole thing in-house. That led to many problems with its stability, and ultimately it probably cost them a lot more than they had bargained for. I understand why they would increase costs to pay for their mistake, but in the long run, I think the increase in MSRP has hurt everyone, even Wizards. I’ve never once heard anyone claim that they liked the new price structure.

I would even venture to say that the secondary singles market sees a more rotational movement, so if people only buy singles, it ultimately means less money for Wizards. I’m guessing (although possibly incorrectly) that it probably takes fewer packs to fuel singles sales than it does to hold weekly draft events, since singles can come in through trades, store credit, bulk purchases, etc; and there are plenty of sales in singles that are outside the realm of sets currently available for purchase.

Maybe their surveys tell them differently, but perhaps the decline in American Magic could have to do with the fact that so many people no longer have a place to play, or even meet up with new players because the stores can’t afford to sell product anymore. Perhaps it’s because we can no longer afford to play Magic anywhere but online, using Magic Workstation because it’s free. It’s entirely speculation on my part, but regardless, I’m sure many of you will agree, Magic is an expensive hobby, and we shouldn’t have to feel like we’re breaking the bank just to get a few cards from the newest set.

I don’t know if there’s anything we can do about it, but if you ever write an email to anybody at Wizards, let them know how you feel. Alternatively, encourage local stores to hold more draft and sealed deck tournaments, and try and get some friends who can commit to coming regularly so that the stores see it’s a worthwhile endeavor. If we help out the local gaming stores by showing them they can actually sell Magic profitably, maybe we can stem the tide and all enjoy more places to play.

Hey, all revolutions began with rants.


-Nathan J

* I should note that if I come across as being anti-capitalist in this article, I’m not at all. I think the price wars are a very good thing, and I don’t want that to go away. I just want to be sure that I can have a place to play and trade cards.

**All statistics were done using a binomial distribution, which assumes completely random distribution of all rares. The numbers are thus only approximate, and the margin of error increases as the quantities of packs get larger. This is due to the way booster boxes are actually sorted. Since Wizards deliberately sorts rares in booster boxes to provide a more varied selection, the distribution isn’t random. For example, a completely random distribution would give you about a 14% of opening up at least one rare more than once in a given booster box. Wizards explicitly tries to reduce that probability by distributing the rares in a more even manner. For all intents and purposes, when discussing the probability of pulling one specific card from X number of packs, the actual difference between my calculated probability and reality is extremely small until you talk about roughly 22 packs or more. After that, the differences in probability become significant, leaning towards the probability that you will pull the desired card. However, the probability that you will draw multiples of the same rare is very much diminished, regardless of the number of packs.