Download Pikachu in peril: The bottom falls out of the Pokemon market

Chapter 9 – Current Events
‘Pikachu in peril: The bottom falls out of the Pokemon market’
LEAD STORY-DATELINE: The New York Times, January 20, 2001.
A mere year ago, Pokemon cards were 'the most popular plaything on the planet'. Elementary
schools banned the cards in their playgrounds as students ignored homework to 'do deals', trading
basic Pokemon character cards and buying and selling rare holographic cards. Bullying behaviours
and taunting from the 'haves' (those with a wide selection of cards, especially the limited edition
ones) caused educators concern. Parents complained of the cost of endless sets of cards bought in
the hope of completing sets.
But not dealers and Nintendo, the owner of the Pokemon franchise. $3 packets of cards could be
marked up to $12 without a decrease in demand. An original set of trading cards was worth a
conservative $400. On e-Bay, the rare first edition base-set Charizard card was valued at $375.
Kids 'sat on their assets', watching the value of their cards increase, glorying in their status as
'thousandaires'. For millions of kids worldwide their first introduction to the world of high finance
was Pokemon cards, learning how scarcity can drive up value. Nintendo assisted these minimoguls by sporadically issuing limited edition cards in the card packs, making lucky finders not
only popular but wealthy - at least on paper.
However, like investors in flamboyant dot.coms and other volatile high-technology markets learned
- often the hard way - the secret is timing. While fads can send the value of assets soaring, these
bubbles inevitably burst.
So too with Pokemon, catching many mini-moguls by surprise, as they watched their net worth
wiped out. Original sets now are worth around $200 - assuming a buyer can be found. The once
prized holographic Charizard now attracts bids of $100 on e-Bay. Booster packs that dealers paid
$4.75 for now can be purchased for $1. Boxes of Japanese cards that sold for $300 in the past
now sell for $80. Many specialty card and comic stores now give store credits instead of cash for
cards. Those running web trading sites have witnessed first hand the death of the bull market as
fewer visits inevitably led to fewer sales. Toy companies have also suffered. Wizards of the Coast,
the division of Hasbro that publishes cards and operates specialty stores to sell them, laid off 100
employees in late 2000, citing softening demand for Pokemon.
So, does this mean that kids have deserted Pokemon? Not entirely. Kids still play and trade but
Digimon and another trading card game called Magic: The Gathering are the current 'in' games.
According to one Pokemon trainer, 'Pokemon was getting old and boring', another complained that
the game was based too much on luck and not enough about strategy, and many believed that
'people were selling Pokemon at outrageous, unjustifiable prices'. Other Pokemon trainers are
more philosophical. According to one 'Everything old is new again. Lava lamps went out and came
back, so this might too'.
One mini-mogul, who bought in early and resisted the urge to sell when prices were high, says
that Pokemon improved his maths and organisational skills, taught him the value of collecting and
introduced him to the fickleness of the markets. While disappointed, surveying his depleted empire
he is able to mount a 13 year old's optimism that 'life is life'.
TALKING IT OVER AND THINKING IT THROUGH
1.
Why do you think the bottom dropped out the Pokemon market so quickly?
2.
What could Nintendo do to increase the popularity and value of Pokemon?
3.
What lessons can marketers learn from Pokemon when designing strategies specifically
for those aged under 15?
THINKING ABOUT THE FUTURE!
Form a discussion group of family and friends. Select one toy that is currently 'in' and one that you
believe will be the 'next big thing'. Justify both selections. Discuss what makes a toy 'in'. Chart the
progress of your selected 'next big thing' over the next year - do you wish you had bought stock in
the company when you made your initial selection?
DIGGING DEEPER!
Board games like Monopoly, Scrabble and Clue and dolls like Barbie have been around since the
mid twentieth century yet continue to exhibit strong sales today. Use adoption and diffusion
theory and the product life cycle to explain the longevity of these toys. What lessons can
marketers learn from their example?
SOURCE: 'Pokemon market crashes holds lessons for young traders', The New York Times,
January 20, 2001
Jan Charbonneau