MTGO: Is The Sky Falling? Nov 20, 2018 • by Cardhoarder

In the wake of Magic Arena (MTGA) reaching open beta at the end of September and a more-drastic-than-usual autumn price drop in modern, legacy and vintage staples on Magic Online (MTGO) players find themselves pondering the future of MTGO and whether Wizards of the Coast will continue to support it in a healthy way for the foreseeable future.



If you’ve played MTGO long enough, you’ve seen it weather many, many storms - from the V3 debacle, to the introduction of treasure chests - and it has succeeded over 15 years despite the software which has given it the reputation it has today. However, with many folks with hundreds, thousands, tens of thousands and even hundreds of thousands of dollars tied to the MTGO economy, past resiliency isn’t enough to calm that sinking feeling. The intent with this article is to explore what we know, what might be, and how to analyze that information to arrive at “what to do about MTGO/MTGA” that best fits each player.







What We Know

The MTGA economic model is the “freemium” model popular with many games, which allows users to theoretically play the game for free. There is no trading in-game, thereby eliminating any secondary market to obtain/trade cards.

MTGA offers both draft and standard play. WOTC has stated that there are no current plans to add older sets to MTGA, nor create a new format for cards rotating out of standard.

WOTC has stated they will continue to run MTGO in parallel to MTGA, emphasizing the ability of players to use MTGO for formats MTGA is unable to replicate due to card availability (modern, legacy, vintage, pauper, commander).

WOTC announced plans for the Magic Online Championship Series to continue in 2019, as well as utilizing eternal formats (vintage, legacy, pauper) as paths to the Pro Tour via the series.

WOTC has stated they see MTGA as a future eSport contender. They have announced an announcement pertaining to the “future of competitive Magic gaming”, on December 6th at The Game Awards. One might surmise it will involve a WOTC sponsored MTG Arena eSports tournament similar to those seen by Hearthstone and Artifact.





What People Are Saying

What the MTGO Optimist is Saying - "Not only has WOTC explicitly said they plan to run MTGO parallel to MTGA, but MTGA also doesn’t offer the full gamut of Magic sets - and likely won’t for at least a few years. The F2P experience may appeal to a larger casual user base (especially non-current MTG players), but MTGO’s replication of the paper experience will appeal more broadly to competitive players and therefore should have a place in the WOTC lineup. Even more optimistically, a successful Arena may prompt Arena players looking to expand beyond Standard and Draft to try MTGO and may allow for future funds to be available for a badly needed MTGO V5 (which could also leverage MTGA’s existing technology)."

What the MTGO Pessimist is Saying - "Although WOTC won’t say it publicly in order to protect a current cash cow, the second they deem it financially feasible, Modern (and then Legacy/Vintage) will be added to MTGA and MTGO will be phased out. If you’re lucky, your then-worthless MTGO cards may be ported over to MTGA somehow. Pessimists sold their collection the same day MTGA was announced, have been playing MTGA since then, and haven’t looked back."





What the MTGO Capitalist is Saying - "WOTC needs the cash MTGO generates. They’ve said that MTGA won’t have older sets, but this is just a hedge to keep MTGO generating cash until MTGA can take over. Who knows how quickly - or if - MTGA can become the flagship, but once it is, WOTC’s entire business model shifts and MTGO is not likely to be a place to continue to put resources. WOTC won’t risk completely screwing over all MTGO players, so expect some compensation in the form of MTGA “stuff” when that transition happens."

What the MTGO Conspiracy Theorist is Saying - "Although they can’t admit it for financial reasons, WOTC knows what it wants to do with MTGA, and they are making moves to make as much money as possible before those plans are revealed to the general populous. WOTC has been making aggressive moves monetizing the secondary market on MTGO via Treasure Chests, and the paper market via Masters sets - lots of Masters sets, with UMA seemingly the most aggressive reprint play yet. Ultimately, these moves will devalue the MTGO economy to the point of worthlessness, allowing WOTC to shut it down without inciting an angry mob. The future is digital, and WOTC is going to be going all in on Arena."

What the MTGO Tinfoil Hat Optimist is Saying - "With MTGA functioning entirely different than both Paper and MTGO, there is an opportunity for WOTC to diverge entirely with Arena and make it a separate digital version of Magic. This would allow WOTC to be nimble with what cards do - instead of banning, they can just change what it does. It also would allow them to develop cards that would only work digitally and develop the game to be more watchable and relatable to the broader eSports world. All this, while allowing the MTG purists to continue to enjoy the game they love in Paper and on MTGO."





What is Cardhoarder Saying



Of course, our business is inextricably tied to a successful and vibrant MTGO - and people may view what I say as biased. At the same time, I (and other large dealers) are also one of the largest secondary market investors given the inventory we hold, and so our future expectation of the MTGO market is a very expensive question for us - and so something we keep a close tab on.

I’d like to believe the MTGO optimists are right — and I think there’s real merit to their argument — but I think it’s a long shot; I have doubts that MTGO can continue to thrive in the long run alongside a wildly successful Arena. If Arena grows significantly and begins supporting older sets, I believe we will see MTGO made redundant and eventually phased out. Where we diverge from this pessimistic view, though, is (1) whether Arena can indeed achieve the kind of success that threatens MTGO, and (2) over what time period we would expect a decline of MTGO given that success.

When Arena was announced (without much detail), I figured MTGO had a 2-5 year window that looked similar to the previous years, and some number of years thereafter that may be in decline (assuming Arena was a runaway success). It’s been a year since that announcement, and I think this assessment still holds true - which means I see a 1-4 year window of good MTGO years even with a successful Arena. With WOTC’s recent announcement of a 2019 MOCS series and renewed focus on older formats, I am even more confident that it would be past the 1 year mark even with a very successful Arena product to contend with.



Inherent in that time estimate is the assumption that Arena will become everything WOTC hopes (or needs) it to be. One thing to me is certain - WOTC is all in on Arena. They NEED it to work given the amount of money they are spending developing and promoting it. But, they’ve decided to go for those Hearthstone dollars and move away from trading, which has been a cornerstone of Magic since its inception - and while a freemium model is absolutely the new hotness in gaming, it requires a massive userbase for success. From what I’ve heard publicly said about Arena, the gameplay is sweet and includes a lot of what MTGO users have been asking for in MTGO V3 and MTGO V4; but the complaints I’ve heard have also said the game is too expensive as it is currently set up, and that Magic as a game doesn’t work well when one can’t easily acquire the cards they want to play (via a secondary or even primary market).

WOTC has yet to say publicly how many users Arena has. Based on some estimates I’ve heard, people are saying a few hundred thousand. Personally, I feel Arena really needs many millions of active users to be a runaway success, and so everyone has to evaluate whether or not they think that is going to happen. I don’t think it is impossible for Arena to reach these numbers, but I also don’t think it is likely, either. If the economic model is set up to be pricey so that cannibalization of their primary business lines (MTGO, and to a lesser degree, paper) isn’t as painful (which is a smart move in some sense of the word), I don’t think they can get there. I also think that some of the things that make Magic great - like it’s complexity - is not something that will make it interesting for a wider audience that is needed to reach Hearthstone level users. This isn't to say that I don't believe Arena can achieve some measure of success, of course, but the question those involved in MTGO need to ask is whether the level of success it can achieve will drive WOTC to phase MTGO out.

One thing I think working in MTGO’s favor is that the revenue per user it generates has always allowed it to be a massive cash cow despite a small userbase compared with paper. I believe this allows MTGO to be considered a good investment for WOTC far beyond when one might otherwise think it is time to shutter the doors (similar to how an MMO might still make decent money on an older game, and just cut things on the cost side while maintaining consistent revenue from the game). Further, I think this allows for a path for a wildly successful Arena to funnel even just a small number of users to MTGO (either for a more competitive atmosphere or to play formats not available on Arena) and actually potentially increase its (MTGO) userbase.

I believe the general sentiment in the MTGO marketplace has been about the same as this overall assessment - that MTGO is still in the game and likely will be for several years. While we’ve seen some notable declines in secondary market values, they are more in line with seasonal dips (though more pronounced) than a general market panic - and the declines this fall were steady drops, not panic sells (like we saw other times on MTGO in the past). While I think Treasure Chests are the primary reason for the drop in prices we see on MTGO (not Arena), the cheaper MTGO formats get, the more attractive it will be as compared to Arena. WOTC hasn’t given the complete reassurance about MTGO that many of us would like, but they’ve done enough to maintain confidence in the MTGO economy for the foreseeable future.





So What Should You Do?

As with all things Magic, the only people who truly know WOTC’s intentions for MTGO, MTGA and even paper are WOTC/Hasbro higher ups. Regardless of which interpretation noted above - or if you have your own ideas of what the future of Magic Digital will be - the most important advice we can give is to know your risks and be in a position to absorb whatever comes. This means that you should treat whatever you have invested or will invest in MTGO as an expense for entertainment just like you would for Arena - be prepared to absorb a full loss (similar to how you can’t cash out on Arena), but then be pleased when and if you’re still able to cash out some of what you put in (or are able to get it ported to Arena in some way, if that happens).

For Cardhoarder’s part, we’re committed to offering the best services we can for the MTGO secondary market for as long as we can. We’re going to roll out programs and ideas to bring Arena players to MTGO to give it a shot. We’re going to continue to invest in the MTG/O community. We’re going to continue to invest in our product offerings and technology to stay a leader in our field. And most important of all, we’re going to be here facilitating cash into and out of MTGO by buying collections and tickets for as long as it is in business.