How Wizards Manages its Savings Account

Tweet by SaffronOlive // May 29, 2015

finance

I've been writing a lot about reprints lately, mostly because of the release of Modern Masters 2015, but also because the more I research reprints, the more I have to say on the topic. This is mostly thanks to all of your comments which continually give me something more to think about. Last night I had a conversation with several people about opening Modern Masters 2015 and the feel-bads associated with so many of the packs. This got me wondering about why Ant Queen (and other similar cards) are in MM2 and why we get so many bulk rares in expert level expansions. Why can't every card be good? Why can't MM2 just be a collection of the most expensive cards in the format?

The answer to this question is reprint equity, the management of which has become increasingly important over the past several years with the proliferation of supplemental products (which are made up mostly of reprinted cards). Today we are going to be talking about supplemental products and the idea of reprint equity in an effort to understand the real reason bad cards exist (no, it's not because they are necessary for limited or to test our card evaluation skills), and why some of these cards show up in premium sets like Modern Masters 2015.

The Release Schedule

I had a long conversation on Reddit this week discussing how the release schedule of supplemental products has accelerated greatly over the past few years, and as a result we have many more opportunities for a card to be reprinted. If you look back over the first 15 years of Magic, supplemental products were few and far between. We had the infamous Chronicles in 1995, a set whose overprinting and design mistakes still resonate 20 years later. We had Portal in 1997, 1998, and 1999, which turned to Starter 1999 and 2000, but I'm not even sure that these should count since none of the cards were legal in tournament Magic at the time of their printing (they were retroactively made legal in Vintage and Legacy in 2005). Unhinged and Unglued, while popular, suffered the silver-bordered fate. So really, after the Chronicles debacle, it wasn't until Anthologies in 1998, Battle Royal in 1999, Beatdown in 2000, and Deckmasters 2001 that another true supplemental product (similar to the ones we see today) was printed.

In the early years of Magic through 2001 we averaged one tournament-legal supplemental product per year. Not to mention that fact that core sets were only released every other year, so the total number of sets being released into the wild during this time frame averaged 4.5 per year. Oddly enough, after the printing of Deckmasters 2001, supplemental products ground to a halt for the next six years. Not a single reprint set or supplemental product was released during this time and since core sets remained a biennial release, the total number of sets printed between 2001 and 2006 actually dropped to an average of 3.5.

In 2007 Wizards rebooted supplemental releases with the printing of the first duel deck: Elves vs. Goblins. The series proved popular enough that it was eventually upped to a twice-a-year release with a "faction versus faction" duel deck released in September and a "planeswalker versus planeswalker" duel deck released in the Winter. The following year we got the first of the annual "From the Vault" series which released every August.

2009 was a big year in Magic supplemental products. With the release of M10, core sets became a yearly release (which will end after the release of Magic Origins, the final core set). The first Commander theme decks, which now come out every November, were released along with the first Premium deck. The premium decks have sort of disappeared; you could argue that Wizards was doing some market research on Commander versus Premium decks in the early years and Commander won out. We also had the first of the yearly Summer supplemental products with the release of Planeschase, a series which has included not only Planeschase decks, but Archenemy, Conspiracy, and two Modern Masters releases. In 2010 the Deckbuilder's Toolkit was added to the rotation. Finally, in 2014 we got the first Modern event deck, which came out about a month before the Summer supplemental.

Take a quick peek at the following chart to see how much the release schedule has accelerated over the years.

Product Releases Set Release Date Torment February 2002 Judgement May 2002 Onslaught October 2002 Legions January 2003 Scourge May 2003 8th Edition July 2003 Mirrodin October 2003 Darksteel February 2004 Fifth Dawn July 2004 Champions of Kamigawa October 2004 Born of Gods February 2014 Duel Decks: Jace v Vraksa March 2014 Journey into Nyx May 2014 Modern Event Deck May 2014 Deck Builders Toolkit June 2014 Conspiracy June 2014 Magic 2015 July 2014 FTV: Annihilation August 2014 Duel Decks: Speed v Cunning October 2014 Khans of Tarkir October 2014 Commander 2014 November 2014 Duel Deck Anthologies December 2014

That's right, in 2014 we had more tournament legal Magic products and sets released than we did in a three year period between 2002 and 2004. Given that apart from the expert expansions, most of these released are composed partially, or even exclusively of reprints, any random card has about three times as many potential landing spots today than it did a decade ago.

Not All Sets are Created Equal

If you look over the massive list of releases that currently take place (an average of one per month in 2014), not all are created equal as far as the number of reprints they contain or the impact they have on prices of reprinted cards. Some have a massive, negative impact, while others have very little negative influence, and in some rare cases reprints actually increase the prices of some of the reprinted cards.

Probably the easiest way to separate these releases is by expert level expansions (the four major quarterly releases on the MTG calendar) and supplemental products (which includes every other release). Expert expansions typically include fewer reprints but have a huge impact on the prices of the reprints they do contain (since the supply is so high), while supplemental products typically contain a ton of reprints but have a varying impact on card prices based on the specifics of the product.

Expert Expansions

Expert expansions are value-killers for reprints. Since these sets are not only printed-to-demand (which brings the whole EV cap into play), but are also redeemed from Magic Online so the supply is massive. It doesn't matter of you are an eternal staple like the fetchlands, or a casual-tribal favorite like Preeminent Captain, your price is going to drop significantly, with peak supply prices often being at least half of the previous highs.

Since Wizards has made it clear that expert expansions will contain more high-impact reprints in the vein of shocks, fetches, and Thoughtseize, especially for Modern cards, they are certainly important to our reprint discussion even though the raw number of reprints is quite low. If Wizards really wants to increase the supply of a specific card or cycle of cards, this is the best way to do it. While there are some cards that I have a hard time imagining returning to Standard (Golgari Grave-Troll, Bitterblossom, the Sword of X and Y cycle, etc.), a lot of people argued that Thoughtseize and fetches were simply too powerful or problematic for Standard as well, and now we have both in the same Standard format.

I've been scratching my head for an example of a card that increased in value based on its reprinting in an expert expansion, and they are few and far between. The best I can come up with is the original printings of relatively low-value cards that go from unplayed in older formats to four-of staples in Standard. The best recent example of this probably the painland cycle from M15. The Apocalypse printings of most of this cycle were floating around $2 before they were announced in M15, and they eventually shot up to $10. Sure, we received more supply, but suddenly these previously demand-light cards are must-haves to play Standard and in this case the uptick in demand outweighed the increase in supply and the prices increased. These instances, however, are few and far between and a a huge majority of expert expansion reprints will decrease in price.

Supplemental Products

The impact of Commander decks on reprints is fascinating and I'm not sure it is that well understood. What sets the Commander series apart from most other releases is that every card is the same rarity. Sure, they might have red, gold, silver, and black rarity symbols, but since every deck is singleton (except for basic lands), there are just as many Containment Priests as there are Whitemane Lions printed in the set.

Because of this, cards that were originally printed at lower rarities (Harmonize and Vampire Nighthawk are two good examples) typically don't get hurt all that much when they are reprinted in Commander decks, although more expensive commons and uncommons, especially those that see no competitive play, do lose more. Cards that were originally printed at higher rarities take a nose dive. This is, at least in part, because as a percentage of total supply, Commander decks add much less to the supply of commons and uncommons, even though the raw number entering the market is the same.

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For instance, let's say there are 5,000,000 copies of Vampire Nighthawk in existence from Zendikar, Magic 2013, Dual Decks: Sorin vs. Tibalt, and the original Commander. Commander 2013 comes along and adds 100,000 new copies into the market — this represents a two percent increase in the total supply of Vampire Nighthawk. For a card originally printed at mythic, like Avenger of Zendikar maybe there are only 500,000 copies in existence. When Commander releases another 100,000 into the wild, this increases the supply of Avenger of Zendikar by a whopping 20 percent. Of course these are made up numbers because Wizards doesn't release print run data, but regardless of the actual numbers, Commander reprints hurt cards with high preexisting supply less than low-supply cards.

Another important factor is the age of the product. Although many of the Duel Decks were just reprinted in Duel Deck: Anthologies, there was a time when the first few Duel Decks printed commanded a premium simply because not that many were released. Elves vs Goblins, Jace vs Chandra, and Divine vs Demonic were from the very earliest years of Magic's massive growth period, so supply was low by default. Plus, back in the early years, the Duel Deck series contained more legitimate eternal staples and casual all-stars, sometimes with new art or a new border.

It's not so much that the new Duel Decks are bad, but more a combination of Wizards picking some of the low-hanging fruit first (four popular casual tribes in elves, angels, demons, and goblins), the fact that back in the day these were the only supplemental product around — so there wasn't really a concern about having enough good reprints for the other eight supplemental products coming out in the same year — and a change in focus with Duel Decks becoming a more casual/new player oriented product over the years. This said, if you compare the cards in these decks side-by-side, the earlier decks win out hands down.

Reprint Equity

Something else that jumps off the page while looking over these decks is how Wizards is learning to manage their reprint equity. I've written before about how any given Magic card can only be used to sell a product a limited number of times (eternal playable or casual staples cards start off with more equity than other cards) and how reprints typically suffer from diminishing returns. Well, the current form of the Duel Decks (especially the X vs Y Duel Decks) is actually a fairly brilliant way of using cards with very limited reprint equity to sell another product.

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Think about the most recent Duel Deck planewalkers: Elspeth, Sun's Champion, Kiora, the Crashing Wave, Jace, Architect of Thought, Vraska, the Unseen, Sorin, Lord of Innistrad, and Tibalt, the Fiend-Blooded. None of these cards can be considered anything more than Standard staples (although you might be able to argue that Jace, Architect of Thought is a fringe playable in Modern), and some are not even Standard staples. These cards are printed with the sole purpose of selling an expert level expansion; they are the faces of their respective sets, major parts of the storyline, and generate a significant amount of hype upon release.

The problem with these cards is that they are not the type of cards that are going to sell a Modern Masters or a Conspiracy a few years down the road. Hell, some of them would have difficulty selling a Commander deck a year post-rotation. Wizards knows this, so how can they leverage the limited equity of Elsepth, Sun's Champion or Vraska, the Unseen? They wait until these cards typically hit their peak (the winter after their expert expansion printing) and then print it again in a Duel Deck. This makes players happy because they have cheaper copies of these Standard-legal planeswalkers, but it also makes Wizards happy because they are able to squeeze some more value out of a card with relatively little reprint potential.

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This is the reason that the planeswalker Duel Decks come out in the Winter and the faction vs faction Duel Deck (which is more focused on selling the upcoming fall set than leveraging reprints) comes out in the Summer. This is the reason we don't, and I would argue will never, see planeswalkers like Karn Liberated, Jace, the Mind Sculptor, and Tezzeret, Agent of Bolas in Duel Decks. These types of cards have a greater purpose; these are cards that can sell a Modern Masters or two, along with a From the Vault or a Conspiracy. This is the reason I don't expect Ugin, the Spirit Dragon to be in next Winter's Duel Deck; it's an inefficient use of reprint equity. Why give it away to every Standard player now when you can use it to get players to buy $10 packs full of damaged cards three years down the road?

This is the same reason that we don't get fetches in Modern Masters. Sure they would sell the set, but Ant Queen and Long-Forgotten Gohei will sell a Modern Masters too. The difference is fetches, as we have seen with KTK, will sell an expert expansion even as reprints, which is something Ant Queen could never hope to do. Fetches are quite literally too valuable to be "wasted" on a MMA release.

This is why I don't even wonder anymore about filter lands showing up in the MMA series. Wizards can let them simmer for another year or two, reach legitimate pre-reprinting shockland prices (where they pretty much are already despite seeing a fraction of the play), stick them in the 2017 fall set and automatically have the next "best selling set ever."

This is why Wizards claiming that they don't watch or care about the secondary market is a joke. They don't make any money when someone buys a Scalding Tarn from a vendor, but they make a ton of money by leveraging their reprint equity effectively and reprinting Scalding Tarn at the right time in the right set.

This is the real reason that sets contain bad cards. It's not because of limited or to test player deck building/card evaluation skills; it's because including more expensive/good/powerful cards in one set than necessary to sell a set is a waste of capital. Look at it this way: you could print a set with fetches and guarantee yourself the "best selling set ever." You could print a set with shocks and have "best selling set ever." Or you could print a set with fetches and shocks and have the "best selling set ever." Printing both in the same set is a wasteful use of a finite resource, like in Arrested Development when Gob goes to work for Sitwell:

Wizards's Bank Account

Probably the best (and simplest) way to think about Magic cards from Wizard's perspective is as an interest bearing savings account. They spend a bunch of time working (designing and producing a card) to earn a paycheck (the initial printing of a card). Once they get paid, they stick some of this money in the bank (a cards reprint equity). Of course, not all cards put the same amount of money in the bank; a lowly common or a bulk rare has far less equity than a Modern staple or chase casual mythic. The easiest way to see how much any individual card is adding to Wizard's bank account is to look at its price on the secondary market (this isn't a perfect method, mostly because some cards have more/less reprint value as reprints than their market price).

Take for instance Damnation, which in 2011 represented $20 of reprint equity sitting the Wizard's bank account (this isn't the amount of money Hasbro would make by reprinting a card, instead it is the amount of hype, demand, and sales that can be generated by reprinting a card). Now, I said that these accounts, if left untouched, bear interest — this is the price increase that comes from dropping supply (and, assuming player base growth, increasing demand). By 2012, the $20 in Wizard's account had grown to $24, then $28 in 2013, $40 by 2014, and $50 by $2015. Every year Wizards can hold off on reprinting Damnation is another year for this account to gain interest, which not only make the eventual reprinting more effective (a $20 Damnation could sell a Commander deck or be a solid addition to a MMA, while a $50 Damnation can be the reason to buy a expert expansion or MMA), but also means there will be more left in the Damnation account once they make a withdrawal.

When Wizards eventually reprints Damnation (and they will, eventually) what they are doing is making a withdrawal from the account. They are turning their intellectual property into actual cash in hand. If there is $50 in the Damnation account before reprinting, maybe there is $25 left in the account after reprinting (the amount depends on where it is reprinted and at what rarity). At this point, they can let Damnation sit in the account again earning interest until they eventually cash it out again.

Of course not every card is a Damnation, Tarmogoyf, or Blood Moon. While the process is the same for less playable/powerful/in demand cards, the amount of interest these cards earn is much less. Take for instance Adarkar Valkyrie, a card which had about $10 in its account in early 2013. Wizards decided to tap into this account twice within 18 months. First they printed it in MMA, which withdrew about $7 from the account, then they printed it again in Commander 2014, squeezing the last couple of dollars from the account. Today the Adarkar Valkyrie account is basically tapped out; the Commander 2014 printing is $0.43.

So why did Wizards reprint Adarkar Valkyrie in such a fashion? Because they, despite their denial, understand the secondary market. The card wasn't worth $10 because it had a high level of demand (although apparently it is played in EDH), but because it was from Coldsnap, a set with notoriously low supply. They knew that a card like this would take forever to increase in price with more supply on the market, or worse yet, prices could continue to fall and slowly eat away at the little bit of equity left in the account. So instead of waiting, they figured they might as well just cash out completely and get what the could out of the angel while they still had the chance.

Changing Our Perspective

We like to think of Magic as a game — our favorite game, or even the best game ever created. Wizards does little to refute this perception by marketing its employees as players. As a result, I think most of us think of set design like we do deck building. I picture Gavin or Adam or Maro sitting down to create Modern Masters 2015 or a Duel Deck and thinking "how can I make this the best, most fun, highest value set possible."

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And in some ways, building a set is like building a deck. Instead of building the most optimal deck possible, you are building on a budget. You are replacing Tarmogoyfs with Hooting Mandrils and Liliana of the Veil with Liliana Vess. Instead of thinking "how can I make the best, most fun, highest value set possible," a designer has to ask, "how can I make the best set possible within specific budgetary restraints.

It's not by accident that Thoughtseize was in Theros (a set without an expensive land cycle), it's not by mistake we got Goblin Fireslinger in MM2 instead of Goblin Guide. This is all part of the master plan, all part of the managing of Wizards' bank accounts.

The moral of this story is that while Wizards makes money by selling us fun, their ultimate goal is to make their shareholders money (which isn't a bad thing because if Hasbro stops making money off Magic, they will, sooner of later, stop making Magic altogether). So we have to learn to live with this balance: Wizards gives us enough of what we want to keep us buying their product and having fun (as well as making Wizards money), but not everything we want (at least all at once) because it hurts their bottom line.

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I'm not saying that you should be happy when you open an Ant Queen at GP Vegas this weekend, but you can take solace in the fact that some number of Ant Queens are a necessary evil — an evil that is good for the long-term health of the game — and by association good for us. Careful management of reprint equity ensures that Wizards will be printing Magic cards and supporting the game that we love for a long, long time.

Conclusion

Anyway, that's all for today. Leave your thoughts, opinions and feelings in the comments, or you can find me on Twitter (or MTGO) @SaffronOlive.