The Next Wave?

[delekkerste]

This could be a 'next wave' if a competing grader springs up.

 

I tend to doubt whether the market can support multiple grading services, for many reasons:

 

1. Sure some have gripes about certain things that CGC does (no longer noting date stamps, not penalizing miscuts & off-centering as much as some might like, etc.), but *in general*, CGC's grading is very strict and consistent. I have ENORMOUS doubts whether people would resubmit many existing slabbed books. Frankly, I think any competitor to CGC would have to grade LESS strictly than CGC to attract submissions from people wanting the higher grade on the label.

 

I think there is a certain amount of "I'm a stricter grader than you are" one-upmanship on this Board. I think that the overwhelming majority of collectors and dealers would NOT say that CGC is not strict enough and would NOT submit to a service that graded even stricter than CGC.

 

2. Competition will put downward pressure on grading fees for all competitors

 

3. Competition will force CGC and its competition to increase marketing costs

 

4. I suspect that much of the "low hanging" fruit, so to speak, has already been slabbed by CGC. I tend to doubt whether the future volume of submissions can support multiple grading services.

 

5. Comics are not sports cards or coins. It takes more time/labor to grade a comic and thus there are far fewer economies of scale. Thus, just because the coin & card markets can support multiple services does not necessarily mean that comics can too.

 

Gene

[blowout]

meth, could you post some of the articles you are refering to?

[blowout]

"I suspect that much of the "low hanging" fruit, so to speak, has already been slabbed by CGC. I tend to doubt whether the future volume of submissions can support multiple grading services. "

 

i don't think this is true at all.

what we have seen graded so far (i'm talking silver/bronze here) is a small fraction of what is out there IMHO.

if a new grading company stepped up to the plate with lower submission rates and faster turn around times, i think many more books would come out of the woodwork.

 

[Guest]

I agree with Gene, and have stated in the past that, outside of Beckett, I can't see any other grading service springing up. CGC was an offshoot of the family of NGC/SGC and the parent firm had experience in setting up a professional grading service.

 

Frankly, I think any competitor to CGC would have to grade LESS strictly than CGC to attract submissions from people wanting the higher grade on the label.

 

No. Those companies that do this in the sportscard market routinely see their graded product passed over by buyers who are aware of their reputations for soft grading. This leads to far lower sale prices, and a realization by submitters that the return on the grading service suffers as a result.

 

 

[delekkerste]

what we have seen graded so far (i'm talking silver/bronze here) is a small fraction of what is out there IMHO.

 

Maybe so, but I think much of the low-hanging fruit has been slabbed already. CGC is now an established entity which has slabbed thousands and thousands of books (and I am highly confident that people won't be re-submitting these books to a competitor) and the market shake-out this year has rendered the vast majority of the comic universe unworthy of slabbing on an economic basis.

 

Personally, I have slabbed virtually every book in my existing collection that I want to slab. Any future submissions will be based on either new purchases or because of price appreciation of some of my existing books warrants it. I'm sure others have submitted many of their obviously slab-worthy books as well over the last 3 years. Sure, people will continue to submit books, but I do not think the hyper-growth phase of submissions will last much longer (if it hasn't ended already). I think potential competitors probably realize that they should've moved sooner to cash in on the hyper-growth phase, before CGC established its monopoly on the market.

 

 

if a new grading company stepped up to the plate with lower submission rates and faster turn around times, i think many more books would come out of the woodwork.

 

True, but keep in mind that any company charging lower fees with faster turnaround times will force CGC to do so as well. That will make the business hugely less lucrative. I suspect one or both services would go under within 24 months (mutually assured destruction). I think potential competitors have done the math and that is why you haven't seen a competitor emerge yet.

 

Gene

[delekkerste]

No. Those companies that do this in the sportscard market routinely see their graded product passed over by buyers who are aware of their reputations for soft grading.

 

I am well aware of this, but if I understand correctly, the "soft" grading companies came first, and so the "strict" grading competitors moved in to take advantage of that fact.

 

My point is that the vast majority of collectors and dealers consider CGC to be plenty strict. On this Forum, everyone wants to be stricter than the next guy and so it becomes a point of pride to say how lenient CGC is. IMHO, that's just not true. I know it's not true because Overstreet, Wizard, Mile High and any other grading guideline is LESS strict than CGC.

 

Would dealers submit their books to another service if they got a 9.4 instead of a 9.6? I doubt it. Would they submit to another service if they got a 9.8 instead of a 9.6? Maybe. I think CGC learned from the sports card market and realized that to succeed they had to move quickly to establish themselves and grade very strictly to keep other services out who would claim to offer a stricter, superior grading product.

 

Gene

[blowout]

"True, but keep in mind that any company charging lower fees with faster turnaround times will force CGC to do so as well. "

 

that's exactly what cgc needs, it can't go on operating in a monopoly situation, fixing its own prices because there in no-one to challenge them etc.

i believe competition in the marketplace will not force both companies under, but force out more books/ business for both companies. lower prices, faster turnaround, disclosed grading guidlines etc will increase collector confidence in professional grading and cause more of them to submit books.

i for one, have submitted only a hanfull of my books, but would probably get more graded if the above scenario occurs.

[supapimp]

interesting reading

http://www.collect.com/interest/article.asp?id=5024

[comicinvestor-migration]

I always love reading your posts CI - you're such an upbeat, positive guy!

 

Hey, if being realistic about the future of comic collecting is beig negative, then I guess that's the cross I'll have to bear. I'm not a valuation freak, but when I'm thinking about laying down $500-$1K for a non-functional collectible, I like to think I won't lose my shirt on resale a few years down the line.

 

I simply feel that comics are the stamps and coins of this generation; popular and with high-ticket prices, but unsustainable simply due to this fact.

[FlyingDonut]

The next wave of comic stuff will be books that were popular 20 years ago. There are very few truisms in comic collecting, but ones that hold true is the Rule of 20 and "Everybody's Golden Age Was At 12".

 

Simply look at what was being purchased in quantity by 12 year old boys (and girls, too..) 20 years ago and that is what will be in demand by the 30-35 year old set who has just gotten some disposable income. All of the other stuff surrounding this thread is basically chest beating.

 

Sooo, what was being scarfed up 20 years ago? X-Men, Amazing Spider-Man....

 

See, there aren't any "surprises" out there. You want a good buy now? Teenage Mutant Ninja Turtles. Fish Police. Undergrounds. Cherry Poptart (!). Archies. Stuff like that. Silver and Bronze books have already seen their price spikes.

 

You want a real speculative buy? Pre-1986 video games...

[comicinvestor-migration]

Del, the only part I agree with is that comics are much tougher to grade than sportscards and coins, thus making a company like Beckett think twice about the potential profit margin.

 

Other than that, I could see a company walking in with an innovative and less-confusing pricing matrix, a "no qualifiers" grading standard (IOW, date stamps, writing, etc. detract from the grade), and faster turn-around times and get a ton of subs.

 

Always remember that the ultra high-grade collectors drive the submissions, and if a grading company offered much stricter "no qualifier" guidelines (and published them) buyers would feel safer with that product. That's exactly the window PSA left open, as they gave structurally perfect, though mis-cut, gum-stained, printer error cards 9.5 and 10.0 grades, and let the buyer beware.

 

That didn't sit well with many and was one of the main reasons why BGS and SGC ramped up in popularity. You buy a Wayne Gretzky BGS 8.5 and it's like a hypotehtical PSA 22.0.

[delekkerste]

Simply look at what was being purchased in quantity by 12 year old boys (and girls, too..) 20 years ago and that is what will be in demand by the 30-35 year old set who has just gotten some disposable income.

 

Very true, Donut. Not coincidentally, most of my recent purchases have been 9.8 Marvels from the 1982-1984 period! That was my personal "Golden Age". One problem with your thesis, though, is the supply factor - most key books were hugely hoarded/preserved from the early 80s on up (even more so than during the pre-comic book shop era), so there will likely be plenty of supply to meet this increased generational demand (at least for Marvel & DC and the big indies). I'm not holding my breath that my Simonson Thors or Jon Sable, Freelances are going to skyrocket in value.

 

Also, the fact that the quality of comics and overall comic sales fell off a cliff between 1991 and 1999/2000 is very disturbing. Nobody I know has any fond memories of those books and I think the "Rule of 20" and "Everybody's Golden Age was 12" rules of thumb will be severely tested with regard to this era in the future. And, unfortunately, the recent rebound in comic sales in 2001-2002 is probably not being fueled by 12-year olds buying. More likely speculators picking up cases of books like Origin and USM. That is what I fear most about the hobby - companies are not hooking the young readers that will become big spending collectors like they have in the past.

 

 

You want a good buy now? Teenage Mutant Ninja Turtles. Fish Police. Undergrounds. Cherry Poptart (!). Archies.

 

I think that's a great call with TMNT - that franchise was absolutely enormous in the 1980s. Though I wonder if the toys might not benefit more than the comics. I'm not sure if Fish Police and other mid-80s indies had enough of a lifespan and readership to spawn a revival 5 years from now (though I'd probably bid on a CGC Adolescent Radioactive Black Belt Hamsters #1 in 9.6 or 9.8!). Same with Cherry Poptart, with the added detraction that I think adult stuff has both a narrower fan base and the added pressure of the "looking over the shoulder to make sure the wife isn't watching" factor.

 

Gene

[delekkerste]

Oh, one point that I've been meaning to weave into some thread (I'll spin it to fit into this one) - anyone counting on the Spidey movies to spawn a lasting resurgence of demand for Spidey comics either now or, as Donut suggests, 20 years from now, should analyze this tidbit very closely:

 

Columbia TriStar's Spider-Man sold an estimated 7 million DVDs and videocassettes on its first day of availability earlier this month, with a projected 11 million DVDs and videocassettes to be sold in North America during its first weekend.

 

People who become fans of the comic book movies will buy DVDs (or maybe videogames), not comics. 11 million units! Meanwhile, what's the monthly circulation of ASM and USM? Still in the high 5 figures or low 6 figures each, I think. Marvel is doing a great job of creating comic movie fans. Not such a great job at hooking new readers...

 

Gene

[comicinvestor-migration]

Just an FYI that your comics were mailed out Air this morning.

 

Marvel isn't doing anything to hook anybody, and I think Bill and Joe should personally thank Brian Singer for finally making a Marvel super-hero movie that didn't suck, and for getting the whole ball rolling.

 

Without a successful X-Men movie, I also doubt we'd have seen the sale or hype on Origin, and that book literally saved Marvel from going under.

[FlyingDonut]

Without a successful X-Men movie, I also doubt we'd have seen the sale or hype on Origin, and that book literally saved Marvel from going under.

 

This statement is untrue, and I'm surprised you made it.

 

What saved Marvel from going under was a bunch of factors, not the least of which was the infusion of cash in the late 90s from investors looking to pick up the character licenses for toys. Origin 1 was a nice little bump in sales, yes, but there were several other nice little sales bumps around the same time.

 

Here's a hint: Marvel isn't going anywhere . The value of their intellectual property is so much higher than the value of the company as to be absurd. Just a personal anecdote - my 2 year old daughter knows who Spider-Man is, but does not know who Superman or Batman is. She does know who Cassie and Ord are (there's something to buy!!), however.

[awe4one]

People who become fans of the comic book movies will buy DVDs (or maybe videogames), not comics. 11 million units! Meanwhile, what's the monthly circulation of ASM and USM? Still in the high 5 figures or low 6 figures each, I think. Marvel is doing a great job of creating comic movie fans. Not such a great job at hooking new readers...

 

I wouldn't even say that....

 

These people are movie fans and are feeding their nostalgia to some extent as well. Movies and videogames (where the players has an interactive experience) will always beat comics hands down.

 

When magazine and newspaper publishers are fighting a losing battle for the consumer dollar, these type entertainment options make comic books look old fashion in comparison.

 

 

Jim

[comicinvestor-migration]

What saved Marvel from going under was a bunch of factors, not the least of which was the infusion of cash in the late 90s from investors looking to pick up the character licenses for toys. Origin 1 was a nice little bump in sales, yes, but there were several other nice little sales bumps around the same time.

 

In March-April of 2001 Marvel was so hip-deep in debt that they took a huge loan from CitiBank and even had to put up 100% of their character licenses as collateral. They were one step from DOA.

 

The company was living hand-to-mouth after that, but soon after Origin was released, Marvel supposedly (in the words of Jemas) has a war chest of millions. It doesn't take a genius to figure out where a large percentage of this money came from.

 

Plus, their movie/license sales never netted them much cash, other than Spider-man which they partly financed/produced for a share of the revenues. I remember an interview where revenue's from the X-Men movie were discussed and it was pretty well a non-issue in terms of actual money coming in.

[delekkerste]

Here's a hint: Marvel isn't going anywhere . The value of their intellectual property is so much higher than the value of the company as to be absurd.

 

True, but with two qualifiers:

 

1. Marvel characters may be around for decades to come, but there is no guarantee that the comics will be. That's not likely now, but it was a real possibility during the bankruptcy (rights to the individual characters would have been sold off and the publishing division thus closed down) and could be a possibility again at some point in the future.

 

I would suggest that anyone interested in the topic should go read Dan Raviv's "Comic Wars" book and try to hunt down Chuck Rozanski's articles a few months ago in CBG about the Marvel bankruptcy and how close they came to shutting down.

 

2. While the IP value of Marvel is huge, so are the company's debt obligations. I was analyzing the company's SEC filings earlier this year and I was very worried that the company was again on the road to bankruptcy. I have not looked at the last couple of quarters of filings, but I understand that the success of the Spidey movie gave them the ability to retire their preferred obligations and reduce their debt load, which probably staves off any bankruptcy issues for a while. Still, the company has been leading a very tenuous existence since emerging from Chapter 11 reorg. The licensing mess they got themselves into (numerous counter-parties) is a deterrent for any one buyer to come in and purchase the company as a whole. If not for that, I am sure the company would have been sold by now to a major media company and its long-term future secured.

 

Gene

[Mister_Comics]

There are still a lot of comic folk out there that don't even know about CGC. None of the comic shops around were I live even have one (a CGC) to sell or show. I don't believe the common comic Joe cares about CGC books. When I start to see comic shops selling CGC books then I think we'll see some change.

But I also believe CGC prices and long time waiting has some people scared off.

If there is any kind of "new wave" it will probably be DC comics submissions will go up and maybe Chalston and other companies.

 

[greaterfool]

doc - i think the only entity that could conceivably go into the grading business would be Overstreet. however i doubt if they have the energy or know-how to go into the business. if they did - look out CGC.