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Hello everyone, and welcome back to Insider Trading! Today is also my last column on MagicTheGathering.com, as I step down off of Building on a Budget. On my two+ year run with BoaB, I built decks that cost 30 tickets or less using Magic Online prices. And let me tell you... Magic Online prices are hitting rock bottom. What is causing the plummet in pricing? And what long-reaching effects will these prices have on paper Magic? Keep reading for the answers to these questions!

For those who aren't familiar with Magic Online, let me set the basics of that game's economy. Wizards of the Coast sells event tickets for $1 each. These Event tickets are technically used to enter events - five tickets to play in an 8-person constructed tournament, and 2 tickets (plus three packs) to play in a booster draft. These tickets are also the basis for the secondary online market - in the public trade rooms (set up by Wizards of the Coast in-game), players "sell" cards in exchange for tickets. The tickets, in turn, E-bay for an average of $.90 to $.95 each (a 5-10% depreciation over the Wizards of the Coast selling price).

Magic Online version 3.0 has not been a success; other people have hashed out reasons for this, but suffice it to say that, just by looking at the number of people in rooms at peak times, fewer people are using Magic Online now than with version 2.5. The biggest hit has been with Constructed players (more so than drafters).

A good portion of singles available on Magic Online come from drafters; they draft, play in tournaments, and then sell off their higher-ticket cards for event tickets, which they then use to purchase more draft sets (usually at a 1-3 ticket total profit for the person willing to broker the deal). The dealers then sell off the singles to Constructed (casual and competitive) players in exchange for tickets, making a cycle of life that goes Drafters give singles to → Dealers who sell them for tickets to → Constructed Players who win packs and sell them to → Dealers, who sell the packs to Drafters in exchange for tickets.

Right now, the Constructed portion of that cycle is heavily lacking, which creates a huge glut of singles on the market. Drafters (the ones who do not care about Constructed) are stuck trying to move cards when there are way many more drafters than Constructed players, which has bottomed out the price of singles on Magic Online. As some examples: Thoughtseize currently trades at 4-5 tickets online (our physical buy price is over double that), and the five Planeswalkers go for 7.5 Tickets total (Chandra: 0.75 tickets. Jace: 0.75 Tickets. Ajani: 2 Tickets. Garruk: 3 Tickets. Liliana: 1 Ticket). Once again, our physical buy price on just one of these planeswalkers (Garruk) is higher than the total cost of all five on Magic Online, so there is a pronounced and extreme downturn on Magic Online pricing right now.

The downturn on Magic Online Constructed interest is not the only factor contributing to such depressed pricing. One of the draws of Magic Online is (or should I say was) set redemption. Players could "cash out" complete sets (must be one of each card from that set) directly with Wizards of the Coast, in exchange for a physical copy of that same set. This provided two services. One, those cards were removed entirely from Magic Online, which, to a degree, removed a lot of the glut on the market (since those cards were no longer available online). Second, it made the cards online more valuable, because they could directly be translated to physical cards, so the price for physical cards would come down a little, and the price for online cards would rise quite a bit.

Currently, set redemption is disabled as a feature for Magic Online. Sources I've spoken with have said that this feature will be eventually restored, but until then, those cards are stuck online. The lack of set redemption has also played a factor in the rise in price of the hottest cards in Standard lately. I can't say how much of a factor, because I don't know how many sets are redeemed. However, my guess would be in the thousands (if not tens of thousands), many of which were put directly to the open market. With set redemption down for a good portion of Tarmogoyf, Mutavault and Bitterblossom, this outlet for getting significant quantities of those cards from Magic Online to the physical market has been removed.

The main place to sell cards in-game was the in-game Marketplace. This is a constantly-updated bazaar/bulletin board style system where anyone (dealer, player, whoever) can post a message regarding what they want to buy or sell, and players then can initiate trades directly with those people. As long as the person making the post is online, a trade can be initiated (regardless of what else they are doing). While some people manually trade, one of the ways to best facilitate trading were bots.

Bots are programs designed by computer programmers to automate the trading process. There are several different bots out there - ones that store up ticket information and buying habits over time (so you can sell cards for credit, and use that credit to buy cards later on), ones that automate trading (assigning ticket values to cards, so that you don't need to be near a computer to finish a trade), and ones that are designed just to buy specific quantities of each card from a set, to help make complete sets.

As of version 3.0, trading has become somewhat mired, with tons of people complaining about outright crashing, glitches, and lag associated with the trading process. This has also really hurt the ability for bots to work, which in turn has made it harder for people to trade cards/tickets using Magic Online. This is the third major factor (along with lack of Constructed interest, and lack of set redemption) that has really hurt the Magic Online economy.

So what does this all mean for physical Magic? First of all, Pete (the owner of StarCityGames.com) likes to say that a rising tide lifts all boats. Even though we don't directly deal in Magic Online as a business, we know that a healthy Magic Online means more people playing Magic. The more people that play Magic, the better the game does. And the better the game does, the better that StarCityGames.com does. Magic Online can bridge the gap to players who are not able to attend weekly tournaments, but might want to playtest for PTQs or larger events. The downturn in card pricing (without an upturn in Constructed players) turns off more people to Magic Online - drafters cannot recoup enough money (through tickets/packs) from their drafts, dealers cannot turn around the cards they are buying from drafters in enough quantity to make it worth their while to stay on Magic Online, and this causes a downward spiral of people abandoning the program.

On a more practical note, what happens once set redemption is live? This has potentially long-reaching effects for the physical Magic market. If/when set redemption is announced, prices on Magic Online will start rising - but they are currently depressed, for the most part, below our physical buy prices. Will this cause pricing on Magic Online to double overnight? Will physical cards take a major blow? It all depends on exactly how many sets are due to be redeemed if/when (and I believe when) this happens, but it could have really negative effects on the physical Magic market as well.

I believe in Magic Online in concept, because it is a great program, and it is a potentially huge cash flow for Wizards of the Coast. Wizards of the Coast knows this, and they are making every effort to improve Magic Online, so that more people will want to use it to play Magic. In the meanwhile, version 3.0 is more towards the failure than success end of fixing the problems with version 2.5 (and don't get me wrong - server stability is a lot better, but the interface and some functionality is lacking), which is hurting the game as a whole. How long will it take Wizards of the Coast to revamp 3.0 so that more players rejoin/join the game, and the online economy heals? That's only a question they can answer, but I believe it will happen. It's too important of a property for Wizards to let it flounder. So if you're looking to bolster your Magic Online collection, right now is the time to buy - the game will eventually get healthier, and prices can only go up from here.

Until next week!

Ben Bleiweiss