Yesterday eCommerce giant eBay announced it had entered into an agreement to buy rival ecommerce platform TCGPlayer, which specializes in collectible card game products. The deal is expected to close in Q1 2023, and for a total deal value of up to approximately $295 million.
You can find the full press release here: https://www.prnewswire.com/news-releases/ebay-has-entered-into-an-agreement-to-acquire-tcgplayer-301609889.html
This is a big and interesting development in the space, and as a result we have a number of thoughts we wanted to express on the topic and how we think it might affect things moving forward.
The Roundtable:
- Robert “TheChirurgeon” Jones
- Raf “captainraffi” Cordero
- BPhillipYork
- FromTheShire
What’s driving this move? Why is it happening?
captainraffi: Money. More specifically, the big money that boomed into the TCG scene of the last couple years. Yes, yes there has always been big money in cards but the last couple of years saw a TCG bubble swell to heights rarely seen before.
With big money comes big scams, however. eBay is a popular place to sell cards and accordingly a popular place to scam buyers. Over the last couple of years eBay has introduced various controls and protections but it’s still an issue. In addition to just giving eBay more money, a future in which all TCG eBay sales funnel through TCGPlayer gives eBay access to a company that actually knows how to evaluate cards, grade them on a basic level, and identify counterfeits.
TheChirurgeon: I see this a branding play for eBay, first and foremost. Yes, the market’s huge, but eBay’s already captured a massive portion of that. What they lack however is strong branding and a more stable marketplace, and the perception of having either. As a marketplace eBay is flooded with scams and counterfeit cards, and has long been seen more as a place where you put big lots of cards up for sale at below market value rates or specific individual high-value cards rather than being able to move the middle portions of your collection at good value. Additionally there was no trade-in proposition, forcing you to go through eBay as another middle man when dealing with other buyers and paypal. On top of that, there was no way to determine if what you were buying in eBay was worth it or good value without going through another source like TCGPlayer. Adding TCGPlayer immediately improves the eBay brand and gives them previously unearned legitimacy in the space.
So the short version here is that if eBay wanted to continue growing its card business, it either needed to build out something like TCGPlayer or to acquire it, and it was faster and easier to do the latter, even at a $300M cost (which comes out to something like a 5x valuation for TCGPlayer based on current revenue estimates).
BPhillipYork: I don’t think this is really about branding, I doubt TCGplayer’s brand itself is worth all that much, and they may well re-brand it as ebay cards. To me that is about buying an operational unit that has expertise and experience and is scaled up enough to demonstrate that it is, in and of itself scalable.
TheChirurgeon: It’s not about the value of the TCGPlayer brand, it’s about where ebay’s brand is at and what this adds to it – it improves the ebay brand substantially. I don’t think eBay needs an operational unit for a marketplace it already owns – but that expertise and experience is definitely value they get to add to their own brand. Why buy TCGPlayer at all if someone can already list the same cards on both eBay and TCGPlayer? The answer is because you go to TCGPlayer for a better environment where that expertise is known – and that’s what eBay is acquiring. It’s not going to keep the TCGPlayer brand around long-term.
BPhillipYork: They’re buying a market participant in a marketplace they already own. Much like Amazon introducing Amazon basics and then competing in their own marketplace. And they can manipulate the search algorithm and shut down market participants when they want for vague reasons. Suddenly, eBay cards is the only place you can sell your singles to, on eBay, and it’s the only place you can buy your singles from, to protect you from fraud.
TheChirurgeon: Sure, but marketplaces aren’t zero-sum (I hate that we are talking about a market of marketplaces, btw) – you can just be on both, and sellers will be – the only difficulty is managing your inventory across multiple digital storefronts. You’re basically buying a trusted marketplace and the customers who wouldn’t go to eBay because of the reputation of said marketplace. Thus, improving the brand by adding a more trusted marketplace. It’s branding all the way down, York!
Though, I do see your point here – there are plenty of non-brand benefits to buying TCGPlayer.
FromTheShire: Much of the multiple storefront issue is handled with Crystal Commerce by a lot of LGS’s to let them list across Amazon, TCG. eBay, etc, but it is certainly not without its detractors. Not only is eBay buying a trusted marketplace, they’re also buying one of their main competitors as a singles marketplace. There’s Cardmarket but that’s mainly used in Europe, there’s various trading sites that pop up and fade away, there’s always the LGS or some of the big names like StarCityGames or CardKingdom… where else are people going for a marketplace right now?
Is This Good or Bad for players? Who benefits?
captainraffi: In general consolidation is not great for customers and given that TCGPlayer recently acquired Channel Fireball this is more like losing 2 options. In the short term I don’t think much will change. They’ve said that TCGPlayer will continue to operate independently and it almost certainly will for a while.
Long term is another story. TCGPlayer offers options to sellers that eBay doesn’t, like the option to take payment in credit and cash out in various ways. eBay has restricted that over the years. Additionally, I would imagine that eBay would want to grow TCGPlayer to capitalize on the re-re-re-booming sports card industry. My gut says that any work TCGPlayer is investing in making things better for gamers (like expanding their card scanning app) will get tabled to shift resources into other TCG game-adjacent industries.
BPhillipYork: Well, this is what Hasbro did with Wizards of the Coast when they first acquired them 20+ years ago – they were a totally independently run division. Now they are pumping out new cards every 6 weeks, and spoiler and pre-release season is forever, making it a sisyphean task to keep up with it all. And that’s setting aside Arena and Alchemy, which is its own endless toil.
TheChirurgeon: What’s interesting here is how it affects the other retailers caught in eBay’s ecosystem. If you’re a store currently buying or selling on eBay, you’re now competing with eBay itself as a buyer and seller of those same cards, and they’re the ones providing grading and tools for setting prices. That can get ugly real quick if eBay wants to squeeze out competitors, though the open questions here are 1. What happens to TCGPlayer’s marketplace, and 2. What does the process look like for people who want to sell direct to other buyers instead of going through TCGPlayer in the long run? It seems likely those sales will still be allowed, but again, you’re also selling against eBay when you do that, and this could further drive down the prices you can ask for your own lots.
captainraffi: At least three shops in my local area use TCGPlayer to host their buylists, even when you’re selling to them in person.
TheChirurgeon: That’s a good point Raf, and to your initial comment, this definitely reduces the number of options you have as a buyer and seller in ways that aren’t good for the end consumer in that regard. Though as much as I’m harping on the value you get, the Magic singles market is fairly stable in that regard – you seldom see much fluctuation in individual card prices from retailer to retailer, since those can be scraped and updated dynamically over time. I’m less sure about other games in that regard, but that seems likely to be the case as well. But that’s had a knock-on effect on local stores which still do singles sales, where I’ve seen stores that set their prices based on online retailers.
BPhillipYork: In the short term Ebay obviously isn’t going to try to squeeze out independent sellers and buyers. But why would they not try to capture as much profit as they can, if they can set up a card grading marketplace, they can set themselves up as an intermediary between buyers and sellers. In a strange twist this is almost the opposite of how e-commerce began – long ago, Amazon was trying to dis-intermediate book buyers and sellers.
TheChirurgeon: Yeah but I think in the 25 years since we’ve all come to realize that was less about disrupting the market by removing the intermediary and instead just becoming the intermediary, unfortunately.
captainraffi: A net effect of pushing sale prices down could be good on the consumer, so long as the consolidation doesn’t put a large upward pressure on buying prices. A lot of Magic sales happen in person and if individual shops can now buy cheaper, continued competition in the TCGPlayer marketplace can drive prices down which knocks on to your in-person purchase. This will depend on the continued health of the TCGPlayer marketplace and how many individual sellers continue to operate.
BPhillipYork: This only remains true so long as the market is competitive and everyone in the market is a price-taker (in economic terms) if ebay wants to continue to consolidate they can buy a couple more operations and suddenly they are setting prices. There’s no way there’s going to be any kind of anti-trust action if someone is buying up online tcg card players. ebay may also flex some lobbying and connections muscle and force other organizations out of business, arguing that only they can prevent fraud and such, there’s any number of agencies which have the potential to get involved for various reasons, ebay is a large enough company they should have the technical expertise to get the IRS via whitepaper or the FBI due to inter-state shipping.
TheChirurgeon: True. Sometimes you just want a card right there. At the very least I’m hopeful that this helps cut down on scams and counterfeit cards. I’m generally not anti-proxy, but paying full price for a counterfeit card sucks shit.
Short-term this likely won’t mean much for players or collectors; it won’t even finalize until January, and as usual it’ll take months from there for whatever integration plans to take hold. But then it’ll be very interesting to see how eBay makes use of the new marketplace they’ve bought and whether they force buyers and sellers to TCGPlayer or vice versa. I suspect they’ll sunset the TCGPlayer brand relatively quickly, though.
FromTheShire: The other knock on effect I’m worried about is the impact on the LGS – a lot of them are heavily dependant on Magic cards and operate on thin margins, and are already being squeezed by some moves a few years ago by WotC that were decried for their impact on small businesses as well as the general prices of everything. Not only is it obviously bad for players if price drops put lots of stores under and force people to turn to eBay/TCG to sell their collections, it’s also terrible for the game. As well as the digital side is doing, a massive part of the games popularity is in being in the room with friends holding your cardboard and slinging spells, and you lose both an important communal space and an onramp for new players if those stores close.
Other Thoughts
captainraffi: I sell on both TCGPlayer and eBay and use them for different purposes. When I just want to unload some $5+ cards and turn them into new singles for a commander deck I take advantage of TCGPlayer’s massive pool of sellers with buylists. I get less value per card, yes, but I can just mail out 60 cards to one place and feel secure doing so. I can also buy simultaneously from multiple sellers easily.
eBay is for the couple times I opened $150 Flesh & Blood cards, board games, and other high value promos. The higher value makes it more appealing to deal with the risks of eBay and individual shipping. TCGPlayer makes it a lot harder for individuals with short selling track records to sell big value cards (this is a good thing) so for now I use eBay.
I hope that no matter what happens down the road both platforms continue to have their own distinct uses. I’m more optimistic of that than I am some merge attempting to combine the best of both into one.
TheChirurgeon: This move makes perfect sense for eBay, who have been looking to solidify a dominant position in the trading card and TCG marketplace for years – check out their 2021 state of the industry whitepaper on this – but have had issues with consumer trust and being generally unfriendly to buyers in a way that TCGPlayer solves. We saw the US trading card game market explode in 2020 and 2021 as Pokemon enjoyed a huge resurgence, and that’s definitely fueling some of this action, but as we move back into regular in-person play and events, it’s not likely to slow. It’s a good investment on eBay’s part, but it’s an open question as to how things will shake out for the end consumer.
One of my biggest concerns right now is that TCGs are in a bit of a bubble; the publishers seem to be over-catering to collectors and speculators in ways that seem unsustainable and unhealthy for the games attached. If that comes crashing down, does this acquisition still look good for anyone?
BPhillipYork: It could be great, if eBay is just trying to help remove fraud and abuse from their system and make customers not have bad experiences, but the long term likely outcome I see is not a good one for consumers. Assuming there is sufficient profit to be had, eBay is easily in a position to start a consolidation of online card retailers and then erect an economic moat to prevent non-sealed product from being sold elsewhere.
FromTheShire: Doomsday scenarios aside, I would like to think that this will turn out to be kind of an afterthought years from now. eBay could easily just let TCG keep being what they are under their umbrella and making tons of money with their expanded footprint and cred, and if there’s one thing Magic players have shown over the years, it’s that there is always someone new waiting in the wings with the next Pucatrade.
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