A Financial Shake-Up On Magic Online?

Magic Online got a huge makeover in the way its prize structures and set redemptions work late last week! This means big shifts in the online marketplace! Is it a great time to get in on Magic Online? Chas answers your biggest questions and talks about the first week of Kaladesh here!

#GPAtlanta October 7-9!

Wow, what a week in Magic finance! Not only is Kaladesh finally Standard-legal, but there have been some pretty major shake-ups to everybody’s favorite program, Magic Online.

I’m going to devote the bulk of my column to the MTGO news, since I don’t love overreacting to the results from a single Magic tournament on the first week of a new Standard format. We’ll have a lot more information next week, and I’ll spend more time on Standard then. Even if you don’t play Magic Online, I’d suggest reading on. All of Magic finance is connected, and being well-informed is important—especially when things are in a state of flux.

Digging for Treasure

Starting with the release of Kaladesh, MTGO is replacing a large portion of their prize support with treasure chests. This is similar to how cards are distributed in other digital trading cards games like Hearthstone and Eternal, so it’s not a shock that MTGO would adopt a model like this at some point.

What is inside a treasure chest? Based on what we know so far, all treasure chests will have three slots:

  • Rare slot (can contain a rare or mythic from any Modern-legal set, a set from a “curated cards” list, or a number of Play Points)
  • Standard-legal common or uncommon slot
  • Standard-legal common or uncommon slot
  • In one out of every 4.5 treasure chests, one of the common slots will be replaced by a rare slot card.
  • In one out of every 239 treasure chests, both of the common slots will be replaced by rare slot cards.

First off, I think we should take a look at what WotC thinks a treasure chest is worth so that we can see if this is an upgrade or a downgrade for people who are going to be opening these. WotC already said they didn’t envision the switch to treasure chests as a drop in prize support, so we should be able to calculate the WotC expected value based on the change in the prize support for the three types of events currently awarding treasure chests, right?

For the purposes of this calculation, I am going to assume that 10 Play Points are equal to one ticket, and that one booster is worth three tickets. Obviously these numbers aren’t always going to hold true, but I’d like to at least get an approximate understanding of how treasure chests are being valued.

First of all, treasure chests won’t be showing up as prizes in all events. You’re not going to get them when you draft, for example. For now, only the two Constructed leagues and the Vintage Daily events will be awarding them.

In Friendly Constructed Leagues, 4-1 went from one booster and 120 Play Points (15 tix) to 80 Play Points plus three treasure chests, putting those chests at 2.3 tix each. 5-0 went from two boosters and 150 Play Points (21 tix) to 80 points plus eight chests, making those chests worth 1.6 tix each.

In Competitive Constructed, 4-1 used to get you 120 Play Points and six boosters (30 tix). Now, it gets you 180 points, three boosters, and three chests, giving them a value of just 1 tix each. 5-0 used to pay out 120 Play Points and ten boosters, or 42 tix worth of value. Now, you get 180 Play Points, six boosters, and eight treasure chests, which puts the value of a chest at just 0.75 tix.

Last, Vintage Dailies used to award six boosters and 360 Play Points for 4-0, or 54 tix. Now, you get six boosters, 180 Play Points, plus five chests. That puts each chest at 3.6 tix/each.

It’s also worth pointing out that each of these events awards “free” treasure chests to players at lower win totals, flattening the overall prize support a little. For example, going 3-1 in a Vintage Daily awards the same prize that is used to, except now you also get three treasure chests. A 3-2 in Competitive Constructed League still earns you 120 Play Points, but now you also get a treasure chest. That might need to be factored into WotC’s model as well.

Based on this, I wonder if WotC actually thought about what a treasure chest would be worth when they changed their prize support. If so, I can’t imagine how we ended up with so many disparate results. In truth, it looks more like WotC reduced the prize support for Vintage Dailies and Friendly Constructed Leagues while keeping it fairly intact for Competitive Constructed Leagues. In fact, the only way for this not to be true is if treasure chests end up being worth at least 1-2 tix in average.

But what are treasure chests actually going to be worth?

This is the part where I have to disappoint you. WotC simply hasn’t provided enough information for us to calculate the true EV of a treasure chest. We know that some of them get Play Points in lieu of a rare card, but we don’t know how many or what those odds are. We know that there will be curated cards every 4.5 packs, but we also know that WotC is juicing the odds of opening any given card based on an algorithm they aren’t willing to reveal. This prevents anything more than just educated guessing, since some of the curated cards are very expensive and others are worth very little.

Luckily, Reddit user benbuzz790 did some of the guessing for us. He calculated the buylist prices for all the curated cards, and found that they average out to about 5 tix each. Assuming a flat distribution (unlikely) and no depreciation in any of the cards thanks to increased supply (also unlikely), then the value of each treasure chest’s rare slot is just over 1 ticket—not counting the random Modern-legal rare, potential for Play Points, common slots, etc. Assuming all that stuff cancels out the non-linear distribution and the depreciation (again, we’re deep in guesswork-mode), I feel like 1 tix per chest is a reasonable figure to adopt for now. Just make sure you adjust your expectations once we start actually learning about some of the currently unknown variables.

How else might these treasure chests affect the MTGO market? Well, the influx of new “curated” cards is likely to lower the price of very scarce cards that don’t see much play, so those cards will probably drop in price as more and more treasure chests are opened. (Chests aren’t tradable, so every treasure chest earned will be cracked.) Before chests, Flashback drafts or reprints were the only way to get these cards into the marketplace. Now there will be a slow trickle of these cards coming in from chests.

I doubt it’ll affect the price of staples all that much, though. The curated list is very long, and you have an incredibly small chance of opening any given card. As long as the MTGO player base keeps slowly growing, prices will be fine.

The MTGO market is way down as a reaction to this announcement, and I think that they are wildly overreacting to a piece of news that is bad but nowhere close to devastating. If you’ve been thinking of getting into MTGO, now is a great time.

It’s also worth thinking about the fact that treasure chests are replacing booster packs in some payouts. The more boosters have to enter the marketplace for $4 each via the WotC store as opposed to through prize support, the more expensive they’ll be. This change will probably make Limited events a little more expensive for people who buy their boosters on the online secondary market. I doubt this will be a major change, but it’s worth paying attention to as the market develops.

Redemption Hurdles

As I discussed in an article I wrote almost exactly a year ago, redeeming complete sets via Magic Online is one of my favorite methods for long-term speculation. As long as you’re willing to jump through a bunch of hoops and you’re smart about how you buy your tickets and your cards (both can be had below market value), it’s possible to buy rotating Standard staples at a massive discount.

On Magic Online, a set’s low tide mark tends to happen just as it rotates out of Standard—meaning, incidentally, that now is a great time to buy and redeem sets of Magic Origins and Dragons of Tarkir. They’re both sitting right around the 50 tix/set mark, so you can grab a playset of either expansion for about $300. This is going to change with Kaladesh, though, and it’s worth taking some time to familiarize ourselves with the new status quo.

Under the old rules, Kaladesh would have been guaranteed to be available for redemption from 30 days after its MTGO release until a cutoff date that is usually about a month after leaving Standard. For Kaladesh, that would have been something like June 1, 2018.

In truth, though, Kaladesh would have likely been available quite a bit longer than that—WotC had a cutoff date that was about a year after the guaranteed redemption date, and most sets made it at least halfway there. Under the old rules, you probably could have redeemed a Kaladesh set on January 1, 2019. That’s a 26-month redemption window.

Thanks to MTGO’s latest changes, Kaladesh will not be available for redemption as soon as the first set in the next block—Amonkhet—begins its own redemption period, which will begin in mid-June. That means that you will only be able to redeem Kaladesh sets for seven and a half months—a 71% decrease in redemption time.

The second set in the Kaladesh Block, Aether Revolt, has it even worse. The new rules mean that Aether Revolt redemption will also cease once the Amonkhet period begins. Since Aether Revolt redemption won’t begin until 30 days after it’s released on MTGO, you’ll only be able to redeem those cards for three-and-a-half months. That’s an 87% reduction in the set redemption window!

For long-term speculators, the news gets even worse. Since no set will now be available for redemption after leaving Standard, getting your cards this way is no longer economically viable.

Let’s do the math. Right now, a set of Dragons of Tarkir is worth 49 tix on MTGO. Under the new rules, it would have only been eligible for redemption until a month after Battle for Zendikar came out. At that time, a set of Dragons was worth 148(!) tickets—over three times as much. Even if you bought Dragons at its pre-rotational low, you would have been paying almost 100 tickets per set.

The story is much the same for Magic Origins. Under the new rules, it would have rotated a month after Battle for Zendikar’s release as well. The set is worth 50 tickets currently, but you would have had to pay 134 tix at the redemption cutoff.

Does this mean that set redemption is dead, or that it’s never going to be profitable from this point on? Heck no. Don’t forget that Standard-legal cards are always worth a lot more than rotating cards and those pre-rotation redemption prices are that high for a reason. If you want to redeem sets in order to play with the cards in Standard or to flip while they’re still Standard-legal, your path to set redemption hasn’t changed all that much. The main people this change hurts are those who just want the cards for either casual play or long-term speculation.

Of course, the advent of the Masterpieces was likely to make rotational set redemption a worse strategy anyhow. The biggest redemption hurdle has always been the unavoidable $25 fee attached to each set. The lower the value of each set, the more problematic that $25 fee becomes. When I redeemed Born of the Gods last year, for example, that fee made up about half the cost of each set. If Standard sets continue to drop in price thanks to the Masterpieces, fewer sets would have been worth redeeming anyway.

How might these redemption rules affect your Magic Online collection? Well, bulk or near-bulk mythics have always held a slight premium online thanks to their relative scarcity for set redemption. Those prices will now drop off a cliff much earlier. This isn’t terrible, though—no set will lose redemption eligibility while it is still the current draft format, so if you draft a bunch and sell your extra singles right away, your flow shouldn’t be interrupted too much.

This change does make it harder for anyone who buys into Standard on MTGO, plays until the end of the format, and then redeems a set or two. In fact, online Standard players in general are hurt—if you buy a card at release and don’t sell until after the redemption period, you will not be able to get as much for it as you might have if set redeemers were also helping to drive the market. Just be careful not to overreact to this—by and large, Standard playability online drives the market, not redemption, and singles prices online bear this out—it’s why casual rares on MTGO can be less than a penny while multi-deck staples can be worth more online than in paper. The market will be affected by this, but not as much as the doomsayers seem to think.

Some people are worried that this change is just another step in the path toward set redemption going away forever. I tend to agree that this will eventually happen, and I do think that WotC will sever the link between digital and paper Magic at some point. After all, none of the other digital trading card games have an explicit link to non-digital objects. The game should stand on its own.

If that does happen, MTGO’s currency will probably become more volatile, at least in the short term. The event ticket will have to rise or fall based on people actually wanting to use it for Magic Online, not as a way to get cheap paper cards, which removes one of the safety valves in the MTGO economy.

Should you worry about the long-term value of your MTGO collection? Well, I don’t expect set redemption to go away any time soon—this major change should be with us for at least a year—so you’ve got plenty of time to think. I expect the bark of that change will be worse than its bite, though—MTGO may have a stone age interface, but it has been proven over many, many years that people will keep using it because the ability to play tons of Magic from the comfort of your own home is crazy awesome. Lots of Modern cards are worth money on MTGO despite the fact that they will never be eligible for redemption. I wouldn’t panic over this, but I’d be aware of the instability that a loss of set redemption is likely to someday bring.

Kaladesh: Week 1 and This Week’s Trends

Don’t forget that week one of a new Standard metagame is not going to tell you the full story of what is good and bad in Kaladesh. Not only will the metagame evolve, but the Pro Tour in a few weeks should bring a bevy of new strategies that haven’t been unlocked yet. Remember: Emrakul, the Promised End was mostly MIA until Pro Tour Eldritch Moon.

Chandra, Torch of Defiance is one of the weekend’s biggest losers. The card is quite good, but it doesn’t match up well with the format right now and it did not show up in many of the decks at #SCGINDY—even the ones running a lot of red mana. I expect the card to drop in price significantly over the next week.

There was a dedicated W/R Vehicles deck that looked quite good. Many of these cards could see a short-term bump in price, and the smaller vehicles are looking like the real deal.

This Four-Color Reservoir deck looked very fun on camera. Expect some short-term movement for the deck’s only mythic rare (and it’s a four-of!): Crush of Tentacles.

Jeskai Flash also looked explosive over the weekend, so the demise of U/W Spirits appears to have been greatly exaggerated. Now might be a nice time to buy Archangel Avacyn if you don’t have your set yet and like to play decks like this.

Verdurous Gearhulk and Noxious Gearhulk are also up this weekend, and both appear to be as good (or better) than expectations. I’m not all that interested in paying the current retail price for either, but I do expect them to be major players in Standard.

Over in Modern, Intervention Pact spiked from bulk to almost $10. This is probably thanks to its potential interaction with Madcap Experiment. I’m very dubious that this will end up being a competitive strategy, and I’m fine selling into hype.

Other Modern risers include Noble Hierarch, Crucible of Worlds, Arcbound Ravager, Eldrazi Temple, and Cavern of Souls. Not much new here. In Legacy, Unlimited copies of the dual lands appear to be up a bit, though the sample size is too small to say if this is the result of a sustainable trend or just a buyer or two looking to fill out their collection.

A few Japanese stores and players are attempting to jump-start a new format called “Frontier,” which is a non-rotating Eternal format from Magic 2015 forward. I’ll write about it in greater depth at some point in the future if more people seem to be jumping on the bandwagon, but for now you can check out their subreddit and see for yourself. What do you think? Is Magic ready for another new format, and is Frontier the answer?

Deals of the Week

It’s a pretty unique sale this week, with tons of promos on sale. WotC doesn’t really do the non-foil promo thing anymore, so if you love those textless full art cards as much as I do, this is a great opportunity to fill out your collection. Most of the APAC promo lands are on sale too, so if you’ve been looking to bling out your favorite Commander deck with Uluru Plains at some point, you can do so now. Some of the Judge foil and MPR cards are pretty cheap this week as well: Judge Bribery, The MPR textless version of Cryptic Command (how the heck did that card get a textless version?), and both promo versions of Damnation are pretty steeply discounted. Cubers should take note as well: older FNM foils like Fireblast and Fire//Ice are pretty darn cheap at the moment and tend to be impossible to find in local trade.

Comments from Last Week

I’ve sold my copies of Noble Hierarch, Brushland, and Engineered Explosives. Should I stay away from buying any other Modern staples or building another Modern deck until Modern Masters 2017?

– Junwei Mai

I don’t think you have to go that far, Junwei. Waiting until mid-March to play Modern deprives you of almost six months’ worth of games. That time has real value, and you should make sure to consider what that is worth to you before deciding not to buy any Modern cards this winter.

It’s also worth remembering that Modern Masters 2015 didn’t just lower Modern prices across the board. Because there were a lot of low-value cards in the set and MSRP was $10/pack, many of its staples only saw a small decrease in price. Furthermore, the key cards that weren’t reprinted saw major price increases. Remember what happened with Inquisition of Kozilek?

Of course, that doesn’t mean you should go out and buy Modern staples all willy-nilly. We know that Modern Masters 2017 will include key staples from the first Innistrad block and Return to Ravnica, so it’s fair to bet that Snapcaster Mage, Liliana of the Veil, Voice of Resurgence, etc. will be included for sure. These are the cards I’d avoid picking up between now and next summer.

Will players actually crack packs now that Masterpieces exist? Will people keep playing limited? I feel like only stores can open enough packs to offset the value lost in the non-Masterpiece cards.

– Kyle Rusciano

Your point about pack value is well-taken. With more of the value of a given set tied into cards that only show up once every couple of boxes, players who only crack a few packs and don’t get a Masterpiece would have been better off had the Masterpieces not existed. For that group of players, this new reality will be a bit frustrating.

That said, I think you’re falling into two logical traps that I think are worth pointing out.

First, the act of drafting has value in and of itself. Most Magic finance folks ignore it because it’s not quantifiable or transferrable, but it cannot be ignored. I love to draft, and I am not about to do any less of it just because my cards will be worth a little less if I don’t open a Masterpiece. I might think differently if I were drafting ten to twenty times a week or something, but those players are opening enough product to avoid the variance issues with Masterpieces anyhow.

Second, not everyone responds to incentives the same way that you do. For players who love quantifiable and incremental value, the new system is worse if you don’t open a Masterpiece. But most players don’t think like that. They’re not going to remember the handful of $3 cards they opened in Innistrad that might be $1 cards now under the new system—they’ll remember the one time they opened a shiny $100 Masterpiece, and that memory will drive them to keep buying packs. This is why people go out and buy Powerball tickets whenever the jackpot gets massive, even though their EV would be higher playing in smaller, local lotteries (or not playing the lottery at all).

Ultimately, I don’t expect Masterpieces to have a negative impact on consumers opening packs at all. In fact, I bet WotC will sell more packs because of the change (which, of course, will make singles prices even cheaper!).

#GPAtlanta October 7-9!