The retro video game market is bonkers! Some suspect foul play.

What’s behind the massive surge in prices that has upset smalltime collectors?

Heritage Auctions

Charles Reid was always interested in games, but when he first saw 2002’s Grand Theft Auto: Vice City in action at a friend’s house, he felt something different. “I was instantly obsessed,” says Reid, who’s now 26 and lives in the U.K.

Reid’s obsession would take the form of collecting. He has amassed a sizable trove of GTA must-haves, including a baseball bat offered as a rare bit of merch alongside GTA IV, and a factory-sealed version of the original PlayStation GTA game. Nothing he’s bought has ever cost more than £200 ($277). Now, he can’t really buy at all. He’s been priced out of the market. A sealed, “black label” edition of GTA: San Andreas he bought in 2017 for around $110 now sells for upwards of $700. Graded copies cost thousands. “It’s crazy, because San Andreas was the bestselling PS2 game ever, and there’s no shortage of supply,” he says.

What’s changed, he says, is the market — and who’s buying. A combination of institutional investors and official companies offering “grading” services — essentially, rating the condition of games and therefore the price they’re likely to go for at market — have pushed up prices. In July, a near-mint copy of Super Mario 64 sold at auction for $1.5 million, making it the most expensive video game in history. It doubled the price of the most expensive video game ever — a copy of The Legend of Zelda, which sold just two days prior. And that’s before you even buy the hardware to play retro games (should you choose to), which is also increasing in price.

Some people believe the massive surge in prices of late is fishy. In August, Australian YouTuber Karl Jobst produced a 52-minute video alleging that auction house Heritage Auctions and video game grading company WATA Games have colluded to pump up the price of video games. Among other claims, Jobst alleges that WATA overgrades games in order to inflate its income — it takes a cut of sales — and that WATA and Heritage work symbiotically.

“It’s all a song and dance,” Jobst tells Input. “It’s all completely fake. The more I looked at it, the more I realized, ‘Yeah, there’s something going on here.’” Both Heritage and WATA have denied all the allegations. Separately, journalist Seth Abramson has made similar allegations of collusion between the two.

Jobst tells Input he’s making a follow-up video this month outlining more specific evidence behind his allegations after his charges were dismissed as “baseless and defamatory” by those accused. He claims that the principle guiding these comparatively new market entrants (WATA was founded in 2018) is simple: “‘Video game collecting hasn’t been tapped into yet. Let’s build a grading company. Let’s pump out the press. Let’s get the public eyes on it, then use that to increase the value of video games to sell through Heritage.’”

The implication is that ordinary gamers are being cut out of their hobby because of the inflated prices. Far from it, say those involved. “That’s sort of the normal progression of any collectible market,” says Valarie McLeckie of Heritage Auctions, which runs weekly Tuesday night video game auctions where 100 to 130 lots are offered, alongside quarterly tentpole auctions for rarer items. “As there is this boon in interest, there are certain pieces that people get priced out on.”

Look at the spread of what’s available to collectors, says McLeckie, and there are still affordable pieces anyone can buy. “Sure, we have seen in the media the tremendous results that have been achieved on the free market — but that’s because they are so tremendous,” she adds. If a gamer wanted to pick up a loose cartridge of a game to collect, they still could.

“It’s not uncommon for there to be sour grapes when third-party authentication begins to become popular.

McLeckie says she’s watched Jobst’s video. “Heritage denies the accusations, and they’re completely unsupported,” she says. (WATA did not respond to Input’s request for comment.) “Across other collectible hobbies, it’s not uncommon for there to be sour grapes when third-party authentication begins to become popular,” she adds.

The controversy doesn’t seem to have damaged the sector at all. In early September, Heritage saw its first six-figure sale on a weekly video game auction. “Most of my days these past few weeks have just been trying to keep up with the deluge of consignment inquiries that we’ve been getting for video games,” McLeckie says.

The extra interest in video games is a boon for collectors like Eric Naierman, a cosmetic dentist based in Hollywood, Fla., who has spent the last several years buying some of the world’s rarest video games for millions of dollars. He operates on behalf of a range of unnamed collectors who pool their money to invest in and build a world-renowned collection — with the goal of eventually realizing a return on their investment.

“I’ve been very, very transparent about it,” Naierman says in an interview with Input. “I tell people: ‘It is financially driven, and it’s also collector-driven.’ I’m a true collector at heart, I really am. But this has become its own animal as the stakes get higher and higher and people put more money into the hobby.”

Naierman reckons a lot of the criticism of big-value collectors is driven by a desire to be in their place. “A lot of people are very judgmental, just based on envy and jealousy,” he says. “And they force themselves to be very closed-minded to people who are doing things differently to how they do it.”

Naierman draws a link between the way he and others have been treated and cancel culture. “That’s how I feel like I’ve been treated in some corners of the market,” he says. “‘If you don’t collect how I collect, you shouldn’t be collecting at all.’” He can see the other side of things, though. “It’s a very traumatic change, to change a hobby into a market,” Naierman says. “I do understand why people are upset about that.”

“It’s not the first time money ruins the fun.”

As one of the aggrieved, Reid aims his ire less at the collectors and more at the cash they’re flashing. “I’m all for people collecting whatever and however they like, but something has changed with it recently,” he says. “It’s not so much the grading itself that is the problem, it’s the massively inflated value that has become attached with it.”

Jobst, for his part, stresses that he’s “not saying that video games shouldn’t be worth millions and collectors are only hurt by this if the price of games goes up.” He adds, “What I was saying is I don’t believe the current spike in video games was organic. And I believe the ethics involved were poor. Therefore I don’t believe the current market is real.”

Whatever the cause, all this has an impact on the ordinary Joes wanting to complete their collection. “If I was just getting into collecting sealed games now,” Reid says, “there’s no way I would be able to afford the titles I want and currently own. It has sadly priced out a lot of younger and lower-income folk who are collecting for the passion of the hobby instead of the financial gain.”

That’s likely to continue, if McLeckie’s forecasts are correct. Video games have “tremendous potential,” she says. “At the end of the day, video games are the most consumed format of media in existence. We celebrate the release of triple A titles to a degree that’s even more intense than blockbuster movies.” And because of that, people will continue to pay high prices for rare, graded games.

“Such is the way of the world, I guess,” concludess Reid. “It’s not the first time money ruins the fun.”