Retro Gaming Prices May Be Artificially Elevated, According to Investigative Report

PC: Rally

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In the past year, video game prices have skyrocketed. Recently a sealed copy of Super Mario Bros. for the NES sold for $2 million, an over 1400% price increase from when it was purchased for $140,000 last year. Before that, a sealed copy of Super Mario 64 sold for $1.56 million and The Legend of Zelda for the NES for $870,000.

Although this astronomic rise in the value of video games seems like it could be tied to a surge of interest surrounding the medium during the pandemic, YouTuber Karl Jobst did some deep investigative journalism and found something perhaps more nefarious. In an almost hour long video, Jobst outlines how the major players – game certification company Wata Games and auction site Heritage Auctions – have been artificially creating and manipulating the market behind the scene for their benefit.

Between these two companies and several collaborating individuals, the video game collecting market has been propped up to extreme heights that are unsustainable. While many will likely try to profit off of this surge, these companies are the ones who profit most, leaving those who enter in last pay the price.

For a pastime typically associated with an avid, but niche set of hobbyists, the market exploded in such a way that pushed fans and games out and brought in a sense of speculative marketing. As Jobst outlines, this was coordinated.

Wata Games and Video Game Certification

To get a clear picture of how this happened, first we should start with Wata Games. Wata Games was founded in 2017 and claims to be a company “by collectors, for collectors” with “objective grading standards… [which] reveals the true value of your treasured video game (source: Wata Games).

Yet, Wata is relatively new, not having established a track record of objectivity for a process of grading that is fairly subjective. They are not even the only video game rating company; Video Game Authority has been rating games for almost 10 years prior to Wata’s founding.

Wata gained public credibility strategically, hosting publicity stunts. Deniz Kahn, President of Wata, went on Pawn Stars as an evaluator and has been featured on several video game articles talking about the rising market in collecting video games.

Beyond that, Wata’s certification process is shady and opaque to say the least. Not only does Wata not disclose a population report – this report would indicate how many games of a kind it has rated, and thus give both sellers and buyers an estimate of how rare a game is – they grade games in ways that benefits themselves while acting as a neutral third party.  

The latter point is clearly illustrated when a man named Jeff Meyer bought the largest collection of sealed video games. Wata graded the games but put a special note on each of the games for being a part of “The Carolina Collection.” Meyer then sold the games, each seemingly made more special for being part of this esteemed collection.

What Wata did not disclose was that Meyer was affiliated with Wata, the act of grading the games going against Wata’s public statement that they would not grade games from company affiliates. Not only did they grade the games, they gave them a special tag which further elevated their price. Meyer also went on to purchase NintendoAge and GameValueNow, two websites largely run by fans and hobbyists who loved game collection and gave crowdsourced pricing on video games. Meyer quickly shut down NintendoAge in a move that reeks of suppressing information.

Wata Games Founder and Chief Adviser Mark Haspel also went around video game conferences searching for sealed video games from popular series. Essentially, it appeared he was trying to hoard copies of these games for Wata to be resold once the market grew.

It should be clear that Wata Games is not a neutral arbiter by any sense and had a hand in artificially creating a market for these games at such exorbitant prices. Yet, Wata alone would likely not been able to shape the market in this way. They had a little help – well, a little more than “help” – from Heritage Auctions.

Who’s Buying At Heritage Auctions

It may seem strange that an established auctioning site has sold several Wata-rated games at record-selling prices, especially because Wata had yet to really establish credibility. And indeed, Jobst followed his suspicions to find that Wata and Heritage were working in tandem to create this elevated video game market.

Their collaborative efforts started with Wata’s founding as the people behind Wata and Heritage run in the same circles. For example, co-founder and co-owner of Heritage Auctions Jim Halperin is listed as an advisor to Wata.

Halperin also was part of a team that made the first major purchase of a Wata-rated game on Heritage Auctions. He and two others made a successful $100,000 bid for a sealed copy of Super Mario Bros. At the time, this price point was unprecedented for a video game, sealed or unsealed. Yet both Heritage and Wata marked it as a harbinger for a looming market to come. Kahn even went around “evaluating” the game as worth much more than what it was sold for.

By intentionally purchasing Super Mario Bros at higher than market value yet publicizing a narrative that games would end up being worth much more, Heritage and Wata artificially set the market. In a way, it is similar to a practice called “shill bidding” which Heritage has been accused of practicing. Essentially, Heritage places fake bids in order to raise the price of the actual bid beyond where it would have been without these fake bids.

It should also be noted that since this purchase, Heritage has sold several other Wata-rated games at much higher prices. But these games have not really sold to collectors, but rather fractional share companies like Rally. These companies sell “shares” of games like stocks, speculating that the game will increase in value. But it is the purchase of the games at such high prices that could not be achieved by a typical collector that further raises the value of the games rated and sold.

And since Wata games continue to sell for prices beyond the imagination, Wata unscrupulously gains the public credibility it lacked. Wata becomes the de facto game grading organization and earns money from all those looking to cash in on their collection of games. Heritage becomes the site to sell games and they earn a percentage off each game sold.

Where Video Game Collecting Is Heading

So where does the video game market go after the $2 million? At the rate its going, it seems like a game is bound to hit $3 million or more at a certain point.

Yet, historically, market bubbles based on collector’s items tend to drop dramatically. As people see the value in these older video games, they start to put their items up online. The market gets flooded with these items, dropping the price significantly from its expected value. Those who bought games at inflated prices hoping to sell later or those looking to sell their own games lose a ton of money in the process.

Could Wata and Heritage be ignorant to the market conditions they are creating? Probably not as Jobst connects Halperin to a similar situation which happened in the coin collecting market in the 1980s. Halperin founded NCI, a coin evaluation company, which was found to have over-graded coins, deceptively inflated prices, and misled buyers.

Given everything Jobst has outlined, it’s almost clear that the market for these video games isn’t what it’s perceived to be. Instead, it’s been artificially made to benefit those at Wata and Heritage.

The current market is unsustainable. And it’s uncertain when the market will come crashing down. But what is certain is that Wata Games and Heritage Auctions will come out wealthier than before.


Update August 25, 2021 7:31 PM ET

Both Wata Games and Heritage Auctions have released statements since the video was released. A spokesperson from Goldin Solutions provided a statement to TechTheLead on Wata Games’ behalf:

Wata Games is the trusted leader in collectible video game grading and we’re honored to play a key role in this booming industry that we are incredibly passionate about. We’re humbled by the support of our thousands of customers who trust us to provide accurate and transparent grading. The claims in this video are completely baseless and defamatory and it is unfortunate that Mr. Jobst did not contact us to give us the opportunity to correct him.

Heritage Auctions provided a statement to VGC with regards to the claims:

Heritage Auctions wishes it had been given the opportunity to respond before the video’s publication, because there are numerous misstatements of facts and inaccurate conclusions contained within the piece. Heritage strongly refutes any allegation that it or its officers are involved in shill bidding, “market manipulation” or any similarly illegal or unethical practices. Heritage provides itself on our transparency and being a place built by and for collectors. With this in mind, we welcome the opportunity to discuss the video-game marketplace further, and would invite Mr. Jobst to our world headquarters in Dallas to tour our operations and speak further with leadership.

Jobst on Twitter has responded at least to Wata Games’ statement, stating, “I provided mountains of articles, videos, screenshots, SEC filings and testimony (and I have more). I am always happy to set the record straight if I get anything wrong, just let me know.” 

Additionally, he provided a screenshot seemingly indicating that Deniz Kahn was at least informed a month ago of Jobst’s investigation. 

The hero image has also been updated to the aforementioned sealed Super Mario Bros. for the NES which sold for $2 million.

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Retro Gaming Prices May Be Artificially Elevated, According to Investigative Report
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