MTG Core Set 2021 Post-Mortem, Remastered!
Throwback Thursday presents an article from June 23, 2020
Today we continue our look back at the Magic: the Gathering release post-mortem articles from The Backstage Pass! In some cases the hindsight on this stuff is fairly significant. In other cases, not so much. In other cases, it’s a howl of laughter. Please feel free to amuse yourself at my expense as you read this.
On the Backstage Pass, I stopped writing the rigidly formatted post-mortem articles around the time of the store move to Chandler in 2017. But for many sets, I still wrote debriefing articles on their prerelease/release and market outlook and so forth in much the same way the post-mortems had been set up. I decided here on LGSNI to repurpose those articles as post-mortem Remasters as well, so that I can extend the series all the way to the end of the Pass to where LGSNI took over. This is one of those articles, originally called “Five Weeks of Plenty” and discussing the release of Core Set 2021 and the releases of Jumpstart 2020 and Double Masters immediately on deck to follow.
We’re actually getting toward the end of these post-mortems now, so I’m going to have to delve into the vault to find notes and contemporary impressions on the business outcomes for Rise of Zendikar, Kaldheim, and Strixhaven for sure, and likely more. I think I had some material on AD&D Forgotten Realms, and then I definitely didn’t spend any time disserting (on the Pass at least) about Midnight Hunt, Crimson Vow, Kamigawa, or New Capenna. LGSNI started when Phyrexia All Will Be One was current, so that projects to be the final bridge point.
As always, original in normal text and my new annotations in italics.
Here we go!
Starting with the Magic Core Set 2021 on July 3rd -- prereleasing June 26th -- and continuing to Jumpstart on July 17th and Double Masters on August 7th, we are about to get an unprecedented bounty of three enormous, stacked, loaded Magic: the Gathering booster expansions, all released into a tenuous market. And I really do mean "loaded;" the spoilers and set contents thus far are off-the-charts great and follow up on the pace that Mystery Booster set as a reprint panacea. [All three sets really were awesome. What a 2020 we had in store for Magic, before it became illegal to go to the LGS and play cards.]
It will be extremely interesting to see what the sales curve looks like in terms of pre-orders into release day rack sales into following weeks' sales, and how that compares to a normal booster release's sales curve. Players only earn so much money and they still gots' bills tuh' pay.
Double Masters is two products of course, including a "VIP pack" targeted at high spenders that features an array of the most demanded cards in the set in each ~$125+ "booster pack." (Pricing is tentative this early on.) It's a substantial enough configuration that I believe it will behave in essence like an additional booster release, except in tightly allocated quantities. For that matter, we're only two weeks removed from Secret Lair Fetchlands, a ~$300+ box set, so we're really looking at a release slate that will feel like five major booster releases over a span of seven weeks. Firehose of product, indeed. But the sets are so loaded, I'm not sure demand will waver much. [The VIP packs were clearly, in hindsight, trial balloons for the absurd four-booster boxes we got for Double Masters 2022 and Commander Masters, and probably also for the 30th Anniversary NTL reprints. It was such a weird direction and it wasn’t really all that well received by anybody. I guess we’ll find out whether they plan to keep it up by what happens with high-profile releases for the rest of this year and 2025. I hope that configuration is done and over with.]
I am more interested to see how game stores handle this overflowing chalice. Many game stores float Magic releases on terms or on credit cards. If the initial movement of a given product is slower than expected, because players have moved on mentally to the next one, that could hit their tripwire and result in a cash flow underrun. [I really think the coder nerds in the audience missed a chance to chuckle at that phrasing.] Or, worse, if a store has been floating cash from one pre-order run to the next, and distribution forces a cash call or a second shutdown cuts off the daily sales that pay their ordinary overhead, or what have you, the same cash flow underrun danger exists.
Most stores won't broadcast their cash position, so the telltale sign that they were in trouble will be an unexpected closure or broad clearance sale during or shortly after the big releases drop. In order to teach and be informative, I will now broadcast our cash position and explain what we're doing about all this. [Yes!!! Man, I was in a spicy mood that day. And I am absolutely here for it. No apologies, no backpedaling, no retraction. I had been making lemonade out of a year of lemons and I was getting a little fed up thank you very much with how loud and obnoxious some of the more aggressive competitors had gotten. I hope they read that paragraph and got that impending-doom gut drop feeling. You know the one. Probably instead they just waved it off as “herpaderp DSG is obviously lying” but as it turns out, no, we were not. Unlike them, we had cash flow flooding in by mid-summer from video games, and that allowed us to deliver some competitive comeuppance on the TCG side.]
Video games have run strong during this pandemic. We are sold out of all current-generation systems and cannot get any more until we don't know when because none are arriving from manufacturers, production runs are still in progress as east Asian factories ramp back up post-COVID. We get big shipments of controllers every week and almost immediately sell out. White-hot game titles have been landing and selling through for the most part. And the used market is on fire; we are almost out of Nintendo consoles, period, and low on games for most of them. And we've seen big sales bumps for Playstation 3, Xbox 360, and Sega Genesis, in terms of used games that people are presumably catching up on that they missed. [It was like a force of nature. The entire world was working from home and they really, really wanted to play console video games.]
Meanwhile, Magic cards have sold just fine, despite the lack of in-store events or gameplay. This is surely a vote of faith on the part of our player community that we will eventually re-open the game room, and they are correct, we will. It's great to have their support now, however, because it puts us in a position to be strong in ways like we're about to be. And the flow of collections coming in on buys has been substantial, because several stores in town are not paying cash on buys, so those players are all coming to us. [So, by the time the pandemic ended we really did understand that in-store play was no longer essential, and in fact in many instances was a drawback. Nevertheless, DSG had cultivated some amount of really awesome, healthy community. And in fact it was the majority of our community that was these great people, despite the bottom quintile being the loudest and most noticeable. Our ownership group, the Council of Mikes, did some deep brainstorming and kept all possibilities on the table as far as whether or how to host gameplay again, but we ruled out going zero-tables permanently at a fairly early stage of that discussion. We ended up settling on a venue fee arrangement that we rolled out the following spring when in-store events resumed for WPN stores. The worst guys in the regional player base lost their absolute minds and hated us ever after, and didn’t stick around to find out that within two months, we’d had the store fire and our move, and we ended up dropping the venue fee anyway because our seating went from 200+ to 32 and it was no longer as much of a burden on staff to supervise freeloaders. The degenerates continue to tell on themselves by complaining in store reviews about the venue fee. They’re the only ones who didn’t know it got dropped.]
Moreover, our expenses are mostly lower than usual right now, with the glaring exception that we are obligated to pay rent on square footage that includes an empty game room. Due to the lack of events, staff hour counts are down in absolute terms. Due to the product mix tilting so much toward used merch, distribution invoices are a lower percentage of the weekly nut. Payroll and cost of goods are the two largest expense buckets, so when they both run shallow, life is pretty good. And we've been fortunate to avoid any serious emergencies, like last summer's sudden air conditioner failure of one of our three roof units. I'm not driving a Lamborghini just yet, but my stress level while sitting at my desk with the checkbook open is pretty low lately. [I can think of several cars I’d want before the Lamborghini now. That article came out during the tail end of my enforced hiatus from the automotive hobby. You basically don’t get to be into cars when you’re thin on bankroll, and we had hit a difficult stretch at home since the mid-twenty-teens. It sucked because I’ve loved cars since I was literally a toddler. The step-off point was selling my 1996 Integra GSR in 2013 so I could upgrade to a newer Odyssey for the kids. I know, I know.]
We do have credit terms with distribution and will accept shipments on that basis, and in an ordinary time you'd typically see us tailoring the numbers so that any given shipment is the amount of restock product and a few new releases that will sell through before the invoice comes due, freeing us up to use cash on hand to buy used merch walking in the door. This is common to business. The idea is that you use "someone else's money" to generate sales with margin and then pay back what you were fronted and pocket the profit. Our cash flow is sufficient right now that we are purchasing the maximum available of each new set, and unlike many stores, we went in heavy on Jumpstart from the beginning, expecting it to be a hit and guessing correctly. We're taking amounts well above what would sell through during the invoice's terms, because we already know we can cover the invoice without having to sell all the merch first. [Jumpstart, like Mystery, was an utter triumph for DSG. Nobody else in town pushed their chips all in on both releases, but we did, and both GTS and Alliance came through for us on allocation when both got white hot at the last moment. (Mostly GTS as they were our primary, but there’s a lot of love to go around here.) Here was a marketing photo I took on release when most stores were getting a few cases at most. This wasn’t even close to our full order.]
All Magic products are allocated on release to some degree; as Michael Caffrey of Tales of Adventure noted in a Wizards discussion group, if you ask your distributor for one million dollars worth of a new Magic set and offer to pay up front in cash, they still won't do it. Distributors are limiting all stores to purchases within their historic volume range and will surely continue to do so. In our case this means we'll be getting our biggest ever purchase invoices, plus a bit more for growth, and know in advance that with no urgency to flip the goods quickly, we will be able to keep it in stock long after some of our competitors sell out. We've been climbing into this position for a while now, and it's a far cry from 2015 when we struggled to hit invoices before they came due. Now that constraint is gone, which means we can put our attention on having the goods for as long as possible, which is ultimately one of the strongest means of drawing business. [In fact this worked for 2020 through early 2022. By the time the sealed product market crashed in late 2023, the only major misstep on our part was not having shed enough of it. We actually kept a bit too much. I don’t mind that much now because it helped build to a strong business-selling position, but my life would definitely have been easier if I had taken a looser approach to “standard” booster releases of Magic and Pokemon throughout 2021-2022.]
So that's where it all sits, today, on the cusp of five weeks of plenty. I hope in week six I can look at the shelves and see a comfortable surplus of product and look in the bank and see a nice substantial balance. Given the demand levels for both the Magic sets and for video games and other things we carry, that outcome seems likely. And that's pretty great.