Article originally published on LinkedIn. Daniel Camilo is a gaming business developer and consultant based in Shenzhen, China
Interest in rare and/or valuable games is at an all-time high, with two money-breaking records hitting us in fast succession recently. After a copy of The Legend of Zelda (NES) selling for $870.000, and just a few days later one of Super Mario 64 for $1.5M, it's now anyone's guess how high can these numbers get for videogame collectibles.
For both cases, the games that went up for auction were encased in jewel cases, with a grading number on top. The company responsible for supplying the grading and cases is WATA Games (which was just bought by PSA's parent company, another even bigger grading company for collectibles). It has become sort of an unwritten rule in the gaming collector's community that if a game wants to be considered for auction or a high-valued sale, it must be graded by WATA. Is that a good thing?
Imagine having the Mona Lisa displayed at the Louvre inside a jewel case with a big 9.8 sticker on top of it.
What is WATA Games?
WATA Games is, essentially, a private for-profit company composed of self-proclaimed game-grading experts and gaming enthusiasts. To be clear, I trust the people involved in the company are indeed passionate about the gaming industry, gaming preservation, and can professionally assess the quality of a game copy. That is not my issue, at all. However, we're still talking about a company mostly composed by enthusiasts and fans of videogames and collectibles.
Throughout the years WATA has established itself as the biggest (sole?) authority in grading (scoring/ranking) games from private collectors. Meaning, if you have a game you think might be worth something (because it's old, rare, or any other particular reason), you can send your game(s) to WATA and, if it meets the requirements, they will grade and encase it and send it back for you. All at a cost.
Why is WATA a Racket?
I understand that calling it a racket (as in racketeering) is a very strong accusation and strong word. And while I admit using the term might be a bit hyperbolic in tone, I do think it is adequate in this case.
If you have a rare game and hope to sell it on eBay, having it encased and graded by WATA will almost assure you'll be able to sell it at a higher price than a similar copy that is not. By grading the game through WATA, you are effectively adding value to the game, at a cost. In essence, WATA (inadvertently, arguably) created this "scheme" where a solution was created for a problem that didn't exist before WATA came along: want to sell a rare valuable Game? Better have it graded by WATA, or it won't be as valuable, and many won't even acknowledge its authenticity. Don't want to pay WATA to grade your game? Well, good luck finding an alternative.
WATA effectively created a monopoly for game gradings, and market dynamics for game collectors are evolving in such a way that WATA has established itself as the de facto authority in the matter, and those who for whatever reason don't want to engage with the company are left in the cold.
Costs, Limited Access, and Regional Discrimination
I mentioned costs are involved when having games graded by WATA. I won't specify numbers, as costs depend on what and how much you're grading exactly, where you're located, and more. They exist however, and can be substantial, as in hundreds of dollars and upwards, possibly. And that is for people living in the USA (where the company is based), and Canada. If elsewhere, WATA's services become even more costly. We're talking about shipping costs (to send, and then have the graded games returned) and for the grading itself, at least. These costs are totally legitimate, and I don't question them for what they are, coming from a privately owned company doing business. As mentioned before however, WATA has become and taken this place as an authority, so the way they set prices for their services, and the reach/accessibility of their services does impact the market for game collectibles.
If someone interested in having a game graded resides outside of North America and/or has a game from another region that doesn't meet NTSC size standards, that can be a problem. According to WATA own support contact, "Please be aware that while we can certify many foreign games, we cannot certify those that are odd sizes or different sizes than standard NTSC games we offer grading for.". This automatically excludes a lot of potentially rare games that could be of great interest to collectors. Not only because games for different systems from different regions can vary in size, there's also an endless amount of special editions out there that wouldn't meet the criteria from WATA for certification.
Costs for shipping outside of the US and Canada will also be, one can assume, generally higher. Considering that WATA privileges NTSC standards for certified games, and extra costs for those outside of North America, immediately a geographical divide is raised that will position game collectors from the USA and Canada in a privileged position to auction their titles at higher prices. Obviously, gaming is global, and some of the most interesting private collections exist all over the planet. One can only imagine how many incredible and rich collections must exist in Japan alone, not to mention any other territory really. I am a collector myself living in China, and a huge portion of my games are from different Asian markets.
Again, all these costs and criteria imposed by WATA are not a problem in itself, and I don't fault the company for them. The issue is, as I insisted already, that WATA has become the authority for grading and certify games. It has a monopoly on the subject. Plus, the auction house responsible for these recent record-breaking sales mentioned earlier (Heritage Auctions), mostly auctions videogames rated and certified by WATA! This is where, in my opinion, things really get murky and, arguably, conflicts of interest start to rise.
Game Certification and Grading Actually Hurts The Product
Having made my previous points as clear as I could for now, I now enter into a more subjective and personal point of view. Games being locked inside a plastic box with a little number score on top of them looks absolutely awful, and ruins their artistic value as collectibles!
Imagine having the Mona Lisa displayed at the Louvre inside a jewel case with a big 9.8 sticker on top of it. It would be comical. But this is what is being done to these games with certifications and gradings made by WATA. I think it's horrible, and I would hate having to give that treatment to any of the valuable games I treasure from my collection. If I ever want to sell one at an auction, however, I might be left with no choice but to do that. And that is why this all thing stinks and feels like a racket to me.
What is the Alternative?
I'm frankly not sure. It would be difficult to create an independent (but somehow regulated) global authority to at least certify the authenticity of games. I would expect big auction houses would be able to do this by themselves, but by doing so, a whole lot of different (and similar) issues would arise.
Honestly, I'm not sure what the alternative to the current situation would be, but I'm afraid that we're fast-forwarding into a situation where not too far in the future WATA might be applying all sorts of arbitrary prices for their services and any collector who wants to sell a game in a big auction would be "hostage" to their demands and criteria.