Mage is the first mobile Marketplace for Magic: The Gathering, the largest trading card game in the world with 35M players. The Mage App uses computer vision and machine learning to scan, recognize and price every single card.Consumer Mobile Marketplace
You may have noticed, but we live in a time in which people increasingly love to collect, sell and buy objects from the past. I’m not speaking about antiques such as old paintings or sculptures here, but about collectibles: objects that are only a couple of years or decades old and that you’ve probably seen or used in your youth such as vinyl records, retro video games, comic books, playing cards (such as Magic the Gathering), toys etc.
There’s always been people who like to collect stuff (think of badge or stamp collectors), but thanks to the internet and to our “culture of nostalgia”, more and more people are collecting an increasing number of objects. What’s interesting is that when a specific category of collectible picks up, a whole economy around it emerges with its resellers, speculators, marketplaces... that go beyond the pure pleasure of collecting. These objects become investment assets.
Take vinyl records, which according to this FT article “Ten years ago you could have invested in a record portfolio, so to speak, which will probably have tripled in value since then” or Lego which according to this Bloomberg article “Collecting Lego returned more than large stocks, bonds and gold in the three decades ending in 2015”. Same if you had kept your old Magic cards or a pair of Air Jordan from the early nineties.
This trend is definitely growing (collectibles as investment assets), and if traditionally many transactions happened on eBay, there’s now a rise of small verticalized marketplaces that address the specific needs of each community.
In that perspective, I find Mage super interesting.
👍First of all, for those who might not know, Magic the Gathering is the number one collectible card game in the world. Since its birth in 1993, more than 18 000 cards have been edited and a big secondary market, where players and collectors trade cards, has emerged. There’s even a field called MtG Finance which covers the mathematical models used to analyze the growth of cards' worth and predict their market value.
🤔When it comes to the app Mage, the number one concern that most people will raise is the market size. Is the market big or is it a niche? To answer this question, let’s look at some numbers:
👍The product is in still in Beta, but I tested it a bit, and the ability to scan your cards and see market info on the fly (market price…) is really fun.
🤔What is the moat for such marketplace? More than the quality of the product, the key success factor is liquidity (a.k.a how easy it is for a user to sell and buy cards). I don’t see a clear product lock-in, first because people will go where liquidity is the best and not where the product is the best. Second, a seller can sell his cards on several platforms at the same time (no switching cost). Finally, their 10% cut is also a lever that competition can use (start a race to lower and lower transaction fee).
🤔Since the startup has shared some numbers, let’s play around unit economics.
From a “share of total players” perspective it looks reasonable. However if you take into account churn and the fact that current Mage customers are probably “hardcore players” ( 2%, or 700K players, cannot spend 120$/month on Magic cards, otherwise the secondary market would be worth more than a billion dollar), the unit economics look different:
Conclusion on unit economics. First of all many of these numbers here are estimations, and I also took some “shortcuts”. What’s important to understand the economic model, which is based on hunting flies/mice: if the company wants to scale, it will need to be a super efficient acquisition machine (requires virality or super strong word of mouth) combined with a low CAC on a rather "small" market.
🤔A quick word on the rise of pure online players such as Hearthstone, which threatens MtG offline model as well as third-party marketplaces.