Gamestop. AMC. Dogecoin. NFTs. And now, some investors hope, Pokémon and Mario.
For investors willing to make risky bets, the next big “Gamestonk” could be a vintage copy of Pokémon Yellow. Companies like Rally and Otis (founded in 2016 and 2018, respectively) allow their customers to buy shares of these niche assets, which have been fetching astronomically high prices at auction: A copy of Super Mario Bros. sold for $114,000 in July 2020, and in November, a copy of Super Mario Bros. 3 was auctioned off at $156,000, making it the most expensive game ever sold. A combination of rarity and old-fashioned financial speculation continues to drive prices higher, which in turn attracts more and more interest from investors. The current record is about to be smashed by another rare copy of Super Mario Bros. up for auction now, which is set to sell at over $310,000.
Apps like Otis and Rally give customers the ability to get in on the hot market for collectibles without dumping their life savings into a single game. Otis has branded itself “the stock market for culture,” raising over $14 million in venture capital, while its competitor Rally recently raised $17 million. The Otis app features high-quality pictures of impeccably maintained vintage games encased in crystalline plastic, and offers average people the chance to buy a piece of an item that could, with any luck, fetch six figures at auction.
Of course, buying a share of a valuable game is fundamentally different from buying a stock, bond, or commodity. No one’s childhood was defined by 5,000 random bushels of soybeans, or a tiny percentage of a gigantic corporation. That’s a crucial part of the sales pitch at Otis. It emphasizes the intimate connection people have with beloved Nintendo franchises like Zelda and Pokémon, making the case that these cultural touchstones will only gain value with time. A blurb about Zelda on the Otis app explains that it “is one of Nintendo’s most prominent and successful franchises. Its success is in part attributed to the series’ consistent release cycle that’s covered every generation of Nintendo devices, thereby cementing its relevance.” Otis says that the success of 2017’s Breath of the Wild will “likely bring in demand for this franchise’s memorabilia.”
I want a little piece of the action, so I buy five shares of a pristine sealed copy of Zelda II on Otis, at $10 a share. For good measure, I snap up five shares of a sealed copy of 1987’s Contra for the NES when it debuts on the app. Why not? They’re not making any more of them, and it’s in perfect condition. Otis estimates its market value at $32,800, an optimistic target based, in part, on recent auction results.
The professionals who make their living from selling vintage games in dusty, cluttered shops in the East Village of Manhattan tend to be skeptical of those big figures. On a sunny, cold day in early March, only a few blocks from the glossy and immaculate Otis showroom, I meet Joe Tartaglia, the owner of 8 Bit and Up, a small store that specializes in vintage games. Out front, faded posters of Mario and Luigi and Ash Ketchum from Pokémon cover the windows. Inside, the stale air and dim lighting gives it the feel of a literal shrine: neatly arranged stacks of old cartridges, bulky TVs, weird-looking peripherals for games systems I don’t even vaguely recognize. The carefully maintained neglect hearkens back to an earlier era for both games and New York City. Tartaglia, who’s been in the games business since 2008, did some quick online research when I asked whether buying into Contra at $32,800 would be a good investment. Similar graded games were selling for prices more like $1,000 just a year ago, he told me. “You’re talking about one year, the price going up by a factor of 15 or more. It doesn’t make any sense to me.” He suggested the high recent sales prices could be new investors driving up the value. “I wouldn’t want to buy into that damn thing,” he said.
While Otis thinks the market for NES games is a good bet, Tartaglia said he’s seen just the opposite in his shop: “We’ve seen prices go down on NES games.” His theory was that buyers interested in NES games had grown up with them, and six or seven years ago, they were trying to recapture fond memories of their childhoods spent playing those classics. After that, prices for Super Nintendo games rose, as gamers who grew up in that era, newly flush with cash, did the same. Now it’s PlayStation’s turn in the spotlight. While he sees some buyers primarily interested in looking to make a buck from buying and selling games, most of Tartaglia’s customers are retro-obsessed hobbyists. Far from an interest that could potentially make money, visits to 8 Bit are more like pilgrimages.
Videogamesnewyork is a nearby store with a similar vibe. It’s packed with customers prowling the floor-to-ceiling glass cases, stopping occasionally to salivate at Sega Saturn classics or to admire neatly arranged copies of Pokémon Red, Blue, and Yellow for the Game Boy. A sealed, professionally graded copy of Pokémon Yellow is poised to start trading on Otis at a value of $79,500. The opened, ungraded copies behind the glass at Videogamesnewyork are going for $40. But what, really, is the difference?
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Much of it comes down to rarity: the exorbitant prices on some of the collectible games available on Rally and Otis have misprints or other quirks that makes them unique among their peers. But for others, like a copy of Super Mario Bros. 3 on Otis recently trading at $48,900, it’s a bit harder to explain. There are many, many copies of that game; it isn’t rare at all. But it is in unusually good condition, and that condition has been exhaustively confirmed by professionals in a process known as grading.
Grading is a mix of conservation and evaluation, in which experts are paid a fee to systematically evaluate a particular copy of a game, using factors like the quality of its factory seal, the condition of its box, and so on, after which the game is encased in hard plastic and kept somewhere very safe. But there is no guarantee that there aren’t other ungraded copies out there in similar condition; in a worst-case scenario for some Otis and Rally customers, a fresh surplus of high-quality copies of Zelda II or Contra could flood the market, tanking the value of ostensibly rare games.
I spoke on the phone with the general manager of Videogamesnewyork, Dan Mastin, to ask about new interest in old games and whether he’d noticed an uptick in sales of high-value collectibles at the store. “Absolutely,” he said. “There’s definitely people who are flipping things, that are looking for hidden value … trying to turn this around for something they can buy for $500, and sell for $5,000 or $10,000.” Sealed, never-opened games are particularly in demand. These collectors are looking to sell at auction and aren’t interested in collecting or playing games, but see them purely as an asset class. “There’s a lot of poking and prodding because essentially, we have a treasure trove,” he said.
But there is a wide cultural divide between those who are passionate about retro games and investors looking to collect tidy profits from trading them. While Mastin was aware of the six-figure Mario games sold at auction last year—they’re “hard to ignore”—his interest and expertise in games is unrelated to their burgeoning status as a store of value. “I generally abstain from following that,” he said. In fact, Mastin is dubious about the cottage industry of graded, sealed games in general. “I’m not a believer in grading … I’ve been kind of against that for a while … games are meant to be played. That’s the point.”
While Mastin flinches at the idea of high-quality games becoming financial instruments, people like Wyatt Cavalier, on the other hand, embrace it. Cavalier has a background in finance and contributes to a newsletter called Alternative Assets. He sees the growing interest in alternative investments—of which collectible games are only a small part—as part of a broader movement in the financial world to give more power to retail investors. In his view, platforms like Rally and Otis give average people the chance to invest in assets that would otherwise be out of reach—like a $30,000 copy of Contra. Before, only large institutions or the very wealthy had the capability to buy assets like that, plunking down the cash to hold a precious object long-term. Now, anyone with a smartphone and ten dollars in the bank can do the same.
A few days later, I check the Otis app. I’ve somehow made $4.75, thanks to my 5 shares of Zelda II in near-perfect condition—a handsome profit. The game hadn’t been sold; it’s other Otis investors driving the price up. It still doesn’t feel quite real, but in a world where people make overnight fortunes on fake cryptocurrencies, betting on Zelda doesn’t seem like such a crazy idea.
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