Wednesday, October 4, 2017

MarketWatch Summer 2017 Round-Up: State of the Market

Pete writes:

 Happy October Space Freaks! As we look back on the Summer this month on the MarketWatch, we dive deep into the vast sea of Vintage floating out there at nearly record low prices and absolute bargains as the sky has literally fallen. The bubble has burst, the champagne has popped, the bottom has fallen out, this is it folks...the Dark Times are near. Loose Vinyl Cape Jawas for $19.99, complete 12 Back runs for $100, Revenge of the Jedi proof cards at $1.00 a piece.  

If you haven't realized by now, I’m being a tad bit facetious! But who can blame me? It seems every week there’s a new thread popping up somewhere in social media about how the market is crashing. Most of these threads fall into a few categories: perception, speculation, trolling(?), and one data point theories.   

It reminds me of a famous line from The Simpsons when Lionel Hutz was asked by the judge if he has any evidence, and he replied in kind “Well Your Honor, we've got plenty of hearsay and conjecture...those are kinds of evidence.

The fact of the matter is that for as long as eBay has been around there have been great deals in the marketplace, and using these outliers as the basis for predicting patterns in the market is one of -- if not the most -- damaging things to the hobby. I know that may seem a bit extreme, but the fact of the matter is that a false perception is damaging to any hobby, especially a highly socialized one such as ours. It’s all about belief. Things such as scandals shake the hobby quickly and aggressively, whereas false perceptions of value kill the hobby slowly by eroding one of its founding aspects: the belief that there is value in what we collect.

This month we take a hard look at the market through the Three Cs - Categories, Condition, and Characters, and where things are hot and where they may be cooling off.  In addition, we’ll look at literal results from eBay and discuss the assumptions that are made with each of the channels of buying and selling in the marketplace today.  

So what’s going on with the market these days? What are the trends that we’re seeing?   

At a high level the overall health of the Vintage market is good. Now that may seem a bit vanilla, and to be honest it is. I look at this as a balancing situation. Some things are up, some are down, but the only extremes in the market are actually on the positive side of the equation. The market is what it is, not because of a lack of engagement, but because of a lack of buzz. This for better or for worse has normalized the trends that we’ve seen leading up to the release of The Force Awakens and directly following its release given the overall positive reception for Star Wars as a brand. Even though this buzz has died off a bit, we still have movies coming out regularly which are receiving praise from critics and fans. The other factor that is keeping the market up while we are seeing declines in awareness is the global economy, and more-so the economy in the key countries where the majority of collecting occurs. The simple rule is the hobby thrives when people have more money to spend on it.

To dive deeper into what’s happening and uncover areas of growth and areas which have seen a decline, I dissect the market through three factors, the aforementioned three Cs of the collecting community.

Condition:
-          High grade* = Flat. The best will always demand the most and hold its value. This seems to be the case still today with higher grade items doing extremely well.

-          Mid grade* = Down. I won’t say the middle has fallen out, but this segment has seen the most decline across all categories and characters of toys.

-          Low grade* = Up. Surprisingly the lower end of collecting packaged toys has actually seen an uptick over the past year. This really has to do with the barriers to entry for both new and existing collectors. With prices swelling throughout the past several years more and more collectors are fine with accepting lower grade items in their collection then previously, it all comes down to the elasticity of the market.

*Grade = overall condition and is not specific to items graded by a third party such as AFA, CAS or UKG

Categories:
-         Packaged Toys = Down marginally to slightly up, so there’s a little Yin and Yang when it comes to the core packaged toys category. On one hand we are seeing Star Wars atrophy in a few segments. Specifically, more common items like the first 21 on Star Wars cardbacks are at the core of this decline. As most people know, the first 21 characters on Star Wars cardbacks are the most readily available of almost any in the series, with 12 Backs being the most common of the series. It feels like a greater part of the market has realized this over the last year as we continue to see 12 Backs decline in price. Collectors are getting smarter and as long term collectors reach a more mature phase in their acquisitions, there seems to be diminishing demands for Star Wars back MOC figures.

The same can be said for the MIB segment. Common items are seeing some decline, although not as rapid as with MOC figures. The other side of the coin are rare items which continue to go up in value. And when I say rare, I’m not stating it in the true rarity scale index, but in broad strokes. Things like MISB short release items and 12” sealed figures seem to be on the climb, as do popular mainstays like the Falcon and AT-AT. Additionally, the exception to the 12 Back dive are items such as carded Double Telescoping figures and Vinyl Cape Jawas, which continue to remain strong and show some signs of growth.

-         Pre-production = Still at an all-time high in some segments like Revenge proofs, first shots and other 3D pre-production, as well as early pre-production. Although it may not be as noticeable on social media, proofs hit an all-time high at Celebration this year. With lower demand, 45 Back and Revenge characters were reaching upwards of $2,000 a piece on the show floor. 3D pre-production is hotter then ever, with prototype limbs and torsos going for thousands of dollars for tertiary characters like Ackbar and Prune Face.

-         Loose = Hot as ever. I mean come on guys, if you ever have a doubt that things are looking good, look at what graded loose figures sell for: more than beat up MOCs. It’s a new trend and one that’s been sustaining itself for over a year now. With new and exciting designs from CAS mixed with more attainable price points than high quality packaged items, there’s new excitement in this segment of collecting that’s driving up demand across the board.

-         Mailers and Multi-packs = Holding flat to last year. In short, there’s not much to say about mailers and multi-packs. What was one of the fastest growing categories over the last 5 years has now leveled off and in turn created a new normal for collectors of tiny white and brown boxes. Another factor to the plateauing of this segment has to be associated with the fact that AFA wasn’t accepting submissions of these items for nearly a year. That has since changed and in the last month we’ve seen things take a bit of a jump, but not enough to call it anything other then a blip on the radar.

Characters (Supply/Demand):
The last factor that I’ll be discussing is related to a core aspect of the hobby that’s hard to quantify. Call it popularity, call it desirability, or even call it rarity, for all of these descriptive terms come down to one thing: what is the item itself. Characters as a measuring stick for the market is used a bit ambiguously, as not all items are characters in the hobby. But what we’re talking about here is really how many people will go after an item and how much they will spend. When it comes to this past year, we see some interesting results.  

Common Characters = Up dramatically in pockets. The interesting thing that has really impacted the less popular characters in the series is the advent of focus collecting and a deeper interest in variants. Here we see new collectors jumping into the fold and gravitating towards a specific character or item that is more obtainable. Another aspect that is impacting this is the fact that collecting hobbies have changed. As I mentioned earlier, two of the strongest segments of the hobby are loose and pre-production, and this is driving some of the growth we see here. A few examples to think about would include trying to find a good condition Black Bespin Guard, a figure that is fairly plentiful, but finding one that has all of his gold in tact is nearly impossible. The same can be said on a Death Star Droid with his black paint. On the pre-production side, as the category goes up so do all things pre-production. Thus we’ve seen examples of Revenge proofs reach over $1,000 for very common characters. Again I’ll bring up the Bespin Guards and even the disco king Lobot. Going to vehicles and playsets, we’ve seen appreciation in Mini Rigs and other small items that typically have all been sub $100 in price.

Average Characters = Flat. As I mentioned before, there’s been some fallout in the middle to the extent that it’s hard to really separate the category into three segments. Sometimes the line isn’t just blurred, it’s been erased. As common characters and items appreciate and middle-ground characters and items stay flat, it’s hard to distinguish what side of the line items reside on.

Key Characters = Flat to slightly up. The top of the food chain will always demand the highest dollar figure in the hobby. Over the last year we’ve seen things like Vinyl Cape Jawas, and Double Telescoping Luke Skywalkers hold their value and appreciate slightly, however the variation hasn’t been dramatic. There are exceptions to this rule, and the major exception is the extremely rare. Always realize when I use the term "rare" in the Star Wars hobby that it’s about proportionality, not the true measure of rarity as outlined by some other hobbies like comic books. Items such as Double Telescoping Vaders, Meccano carded figures, and other short release or non-domestic release items continue to see increases in value. Overall, the theme of "value" in the high end is very similar to where we’ve seen over the past decade: steady predictable appreciation in pricing.

AUCTIONS:

Although the topic of this MarketWatch update was really about the market itself, I wanted to cover some of the high points that have been seen over this past Summer and share some of the impressive auctions that we’ve seen.

Vinyl Cape Jawa (Carded) - $5,950 Ungraded - eBay listing
Although the lower end scale of condition always seems to take a hit, this is an exception to the rule. With no POP and some significant creasing, this items did fairly well.


Boba Fett AFA80+ 21 Back - $5,655 - eBay listing
         Always a popular figure and the cornerstone of many collections, the 21 Back Fett is still one of highest value items from the first 21 release and this example was on par with where these have been priced in the past year.


Yak Face POTF MOC - $4,200 - eBay listing
Yak Face sees a lot of fluctuation based on his grade and condition, and this one was right in line with where the market has been over the past few years.


"Collect All 21" Bell Display AFA90 - $3,000 - eBay listing
The highest price "Collect All 21" Bell I’ve ever seen on eBay of course has the highest grade I’ve ever seen on eBay. Where great condition loose versions go from around $1,500-$1,750, this particular piece did extraordinarily well driven by its condition.


ROTJ Millennium Falcon AFA 80 - $1,776 - eBay listing
One of my personal favorite pieces of box art is without a doubt the ROTJ release of the Falcon.
·       Falling right in line with my estimates, this particular piece is one of the few graded pieces of this version existing in a sealed package today -- fewer then either the ESB or SW releases.

ROTJ Yoda MOC AFA 95 - $1,981 - eBay listing
·       The central theme behind the market today is that condition and characters drive price in the hobby, and what we have here is a perfect example of this. What is traditionally a $400-$500 figure in 80 condition skyrockets when you have the best of the best. Finding a MOC that is graded a 90 is difficult. Finding a 95 is nearly impossible and thus this item was able to demand a 4x lift above that of its other high grade counterparts.


That’s it for this month. I hope you’ve enjoyed the update, the coverage of the market, and are able to take away a grounded and informed analysis of where the market is today, where it’s been, and what factors to continue to look at to evaluate the hobby as a whole.   

I’d like to dedicate this article to a good friend of the hobby who I had  some great interactions with over the years, Mete Akin. You’ll sorely be missed my friend. Gone to soon, but so many of the good die young and you were one of the best, honest, friendly and knowledgeable, rest in peace my friend.

Wampa Wampa,
Fratastic Pete