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Why I’m wary of MTGO of late

By any metric MTGO is a hugely successful program, the appeal of being able to play 24/7 with automated rules enforcement is an understandable one. Along side that are 1. being able to do Constructed for cheaper than in paper and 2. Being able to do limited events and grind out as much value as possible by winning and then selling any valuable cards. Said valuable cards had value because of bots who determined the market price in large part due to set redemption. WotC has announced that they are raising the price of set redemption by 400% from 5 dollars to 25 dollars starting with Gatecrash.

So what does this mean? As my friend Charlie, who blogs over at the Time Stream, gave me the proper economic term for this as a neoliberal market shock. In simple English this means that an unexpected factor has emerged which is going to shake up the market. It’s also not that hard to figure out how roughly this is going to play out. Given how important set redemption is to the MTGO economy as there are a number of people who redeem sets and use this supply to run their small or medium sized business(also known as not SCG is my understanding) means that set redemption isn’t going to be a dead letter, instead it just means that prices are going to drop in order to reflect this 20 dollar increase. This is going to create two effects to start with: 1. EV conscious drafters are going to draft less and 2. Constructed, specifically Standard might see an uptick in popularity as depressed card prices will cause more people to buy cards.  However these in turn will have their own effects and can effect each other.

The central assumption here is that set redemption by vendors is still going to happen in comparable numbers, or at the very least it will be attempted. The reason for this is that people do this for a living and aren’t going to close shop when it looks like they can continue to do business. While this will have problems for the MTGO economy, the way I see it the real doomsday scenario is if set redemption ends or if these big scale redeemers pull out, which effectively means the same thing.

The point of EV conscious drafters drafting less assumes that there are enough drafters who are this EV sensitive to affect the supply of cards that is being created from limited events immediately. What is more likely to happen is that those who aren’t as EV sensitive will be that they are still money sensitive and can’t draft as much since they’re making less to let them keep drafting.  Now this only extends to the preexisiting player base, new players will come into the system and could keep the supply going. The problem being that this isn’t sustainable and doesn’t generate good word of mouth.

While depressed card prices could result in an uptick of popularity for Constructed, I don’t think this is all that likely on the grounds of barrier of entry is only one thing that keeps people from playing Constructed.The other big one being that they just don’t see the appeal in it. While there will be an uptick, it may not be significant.  The other big problem is that Constructed will lose value as the prize payout is in packs, which are consumed in limited events, which will fire less since they have less appeal.

The result of this is that card prices at first will climb back up to some extent as supply will shrink while demand isn’t moving. The result is that vendors will either increase their prices in order to compensate or the supply of paper cards will decrease, causing prices to rise.  If redemption are cut down then the supply will increase, or to be more specific never decrease. Players will adjust to the new reality and assuming no mass exodus, or at least a mass exodus that is counter acted by an influx of new players, which is possible; the value of cards will decrease as the supply continuously increases but isn’t really decreasing. Since players never need more than 4 of any card and only a percentage of players will want 4 to begin with(limited players and singleton format players, specifically commander aren’t going to care) the value of cards is going to increasingly approach zero.

The easiest fix that would keep everyone happy would be to revise redemption policy so that Wizards is making more money bu it doesn’t completely destroy the economy.

Gatecrash will be the first set under this new policy and while the prices of cards from there will be indicative of how trends will play out, the full effects won’t be seen until next October with a new Standard season and RTR only under the old policy. Of course the fun part of all of this is that it also just screws over people who use redemption on a small scale in order to get cards for paper play or to just cash out.

In short this is going to be highly problematic in the future and the stated reason is that the increase in redemption costs are due to accounting for the costs involved have increased. This is probably true to a certain extent, as 5 dollars seems like a bargain, but it honestly seems more likely that it was done to increase profits. Which is to be expected, but in increasing profits it seems to have horrible repercussions in store that will create long term problems. I don’t see this ending well except for the casual constructed players and even then there could be problems.

Now the reason why this post is titled “Why I’m Wary” instead of something more along the lines of “DOOM AND GLOOM FOR MTGO” is because this set redemption is only the latest issue designed to generate more profit at the expense of the players in a way that only works because it is a de facto monopoly. While there are other games out there, what MTG has makes it hard to challenge and is effectively a monopoly. The other big issues being: the new client, cube tickets, and axing 4 pack sealed.

While V3 of the client is god awful objectively, its still better than v4. While WotC keeps pushing V4 it needs serous work to be functional and not just prettier. Cube tickets are a scam. 4 pack sealed had lots of problems, it wasn’t a real format, milling was super strong and the EV was good. The stated reason was that it wasn’t a real format, which while true, should have stopped them from doing this in the first place. The real reason was that the EV was really good and WotC was probably losing money on them.  At the very least phantom sealed came out of this, which satisfies my price demand for phantom and is fun. They could make all the events phantom and have a reasonable payout based on that and derive value of cards from cracking packs.* On the other hand they have made prereleases not usurious so there’s that.

So to conclude, the direction of MTGO as a whole passed upon its high profile actions lately makes me cautious about the future of mtgo. I would highly recommend that you don’t do Gatecrash prerelease if you expect value and if you’re thinking about getting an MTGO account I wouldn’t.  Instead I’d wait to see how things are playing out and then decide from there.  For my part I’m going to be severely cutting down on the money I put into mtgo until its clear how the market is going to shake out.

*Note, please don’t actually do this

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One response to “Why I’m wary of MTGO of late

  1. Pingback: Economics, how does it work?: Yet another thing about MTGO | Another Gamer Guy

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