Joel Belfer makes his SC Daily debut with this edition of Mint Condition, his newsletter focused on the business side of the hobby.
We don’t talk about the trading card game (“TCG”) piece of the collectibles industry (think Magic, Yu-Gi-Oh!, or Pokémon), but when the lines begin to blur between the players in the TCG and sports card spaces, it feels warranted to discuss. TCGplayer is a tech-focused platform for the collectibles industry, and as its name suggests, it has historically been focused on the TCG sector. TCGplayer develops “applications, data management tools, and technologies like robotics automation” that are supporting the next wave of innovation in collectibles. For example, it runs an e-commerce platform, helps card shops and others manage their own e-commerce platforms, and operates its own Authentication Center to support order fulfillment and inventory solutions. Earlier this year, it indicated sellers would be able to add sports cards to its robust gaming card platform.
That came on the heels of the June 2021 announcement that TCGplayer had obtained a $35 million funding round led by Vista Credit Partners. In the press release, it stated that the company will use the funding to support “continued rapid growth and upcoming expansion into multiple new hobby collectible categories including sports cards and comic books.”
Fast forward a year and TCGplayer took a big step forward aligned with its growth strategy — the company is acquiring ChannelFireball and BinderPOS, two leading players in the TCG and sports card industries. ChannelFireball is a content provider and events coordinator for the TCG industry, supporting the community with professional content and hosting competitive tournaments around the globe. BinderPOS is an inventory management and point-of-sale solution for hobby stores. Interestingly, ChannelFireball and BinderPOS merged in 2020 to become “CFB Group” and 2 years later, TCGplayer is snatching them both up. As the company states, “the transaction will accelerate TCGplayer’s vertical expansion strategy, taking the Company beyond its core trading card game business and into new hobby collectible categories like comic books and sports cards.”
While TCGplayer might not be a household name in the sports card community today, its latest acquisitions will help change this narrative as it seeks to further work with and support the sports card community.
What are some key takeaways from TCGplayer’s recent move? Let’s discuss…
Mint Condition’s Take:
Operating from a position of strength
At a time when companies across all industries are preparing for an economic downturn, conserving cash, and focusing on their core business, the latest move by TCGplayer indicates that it is operating from a position of strength and continuing to execute on its growth strategy. This is a dynamic that shouldn’t be understated.
A tremendous number of startups and younger companies are being told by their investors to hunker down, focus on cutting costs, and postpone major investments as the concern of a recession increases. That would seem like the logical, safe thing to do when there is so much uncertainty in today’s economy. However, for companies that (1) are well-capitalized / have significant cash at their disposal, (2) can benefit from diversifying its business (TCG —> sports cards), and (3) have the belief that they are operating in an industry that will be recession-resistant (or at least weather the storm better than other industries), continuing to innovate and actually accelerating growth plans can pay major dividends. The fact that TCGplayer is making these acquisitions shows me that the company is operating from a strong position and is well-positioned to weather whatever the economy does in the near- and medium-terms, not something that every company in today’s world can say.
Card shop innovation — an oxymoron or reality?
One of TCGplayer’s goals in its core business and also with its acquisition is to bring innovation, automation, and technology to a part of the hobby — local card shops — that have probably been generally slower to adopt these types of solutions and kept more manual in its operations than other parts of the hobby. Business management software for all types of industries is a huge trend today — these types of companies are solving for how can software help businesses run more efficiently, accelerate revenue growth, and be more profitable, all while freeing up owners’ time for more important work. I love that TCGplayer is focusing on this space for shops in both the TCG and sports card space. The toughest part from my perspective in continuing to scale growth with this solution is convincing hobby shop owners of the benefits of transitioning away from legacy, manual solutions to more tech-driven solutions like these.
The benefits are clear but for hobby shop owners that have been successful for the last 20 – 30 years, buying into change can be really difficult. Especially in the today’s hobby with Fanatics now involved, it behooves card shops to stay on the forefront of technology in order to be as nimble as possible. Convincing owners of this is easier said than done.
How TCGplayer fits in the sports card hobby
It is interesting to take a step back and think about the hobby ecosystem and where TCGplayer fits in. TCGplayer is following a similar playbook to that of companies like Collectors and Beckett, who are branching out from their core businesses to provide further value and touch other parts of the hobby. Collectors and Beckett don’t just authenticate and grade items — they also dabble in activities like maintaining vaults, operating marketplaces, and curating research. Their goal is to offer a full suite of solutions and become a one-stop-shop for collectors — in their mind, this is how revenue generated from consumers can be maximized. In a similar fashion, TCGplayer is aiming to do the same for hobby shops and collectors alike.
The company started as a marketplace in 2008 and has branched out, including with its recent acquisitions, into inventory management for card shops, content for collectors, and more. The innovation ahead for TCGplayer is vast and with a deep bench of talent, including a Chief Innovation Officer and multiple individuals focused on strategy and business development, the company isn’t slowing down any time soon.