Collectors Universe continued its buying spree, announcing Wednesday morning that it had bought video game grader, Wata Games.
The acquisition comes two weeks after the parent company of PSA, the industry leader in grading cards and autographs, finalized a deal to bring Goldin Auctions under its umbrella. Terms were not disclosed.
The company will move from its Denver offices into PSA’s headquarters in California, but will keep its name and branding.
The bet on Wata comes at a time when Collectors Universe is hoping to get a jump on building up its business in grading other forms of collectibles.
Wata was founded in 2017 by 25-year-old Deniz Kahn, who started collecting old video games and noticed the need for a company to grade the cartridges, boxes and seals in the event they were never open. In 2018, Wata was grading a handful of games.
Not only does Wata bet on the nostalgia of kids who played particularly Atari and Nintendo games, who are now 35 to 50, but the adoption of video game collecting as an asset class took flight thanks to its impressive thick cases that securely allow a collector to display the game standing up on a desk.
The business got more sophisticated in the fall of 2019, when Ryan Sabga, whose company Canyon Drive built the cases, signed on as CEO. The company has never released financials nor population reports, but from eBay auctions alone its apparent that the company has graded thousands and thousands of games.
Adoption by collectors was helped along by Dallas-based Heritage Auctions auctioning off video games beginning in 2019. Wata helped the auction house understand values, which in turn informed the marketplace. Soon, graded games — notably the Super Mario Bros. franchise — hit the $100,000 mark.
In July of last year, a Super Mario Bros. sealed and graded a 9.4 on a 10 point scale sold at Heritage for $114,000. In April of this year, a Super Mario Bros. game sold for $660,000. And last week, a Super Mario Bros. game sold for $1.56 million. As the category grew, Heritage moved video game sales from the back pages of its comic book auctions to its own separate sales.
Some believe Wata’s value comes in the fact they are one of the few graders who have become experts in the authenticity of seals — whether wrapping of a game is natively authentic or was post wrapped. This comes at a time when the seal on potentially new asset classes, including first generation tech like iPhones, music and perhaps VHS tapes, makes or breaks its value.
But Collectors Universe chairman Nat Turner says the intention of the acquisition is a bet on graded video games.
“Video games were a significant part of people’s lives, so it makes sense that it has become a collectible category,” Turner told The Action Network. “Especially as those who played these games now have disposable income.”
Greater affirmation of the category being real came earlier this month when Blackstone’s acquisition of Collector’s Universe competitor CGC came with the announcement that their first post-buy expansion into a category would in fact be video games. Goldin Auctions as well plans to include video games in its auction later this summer.
Turner said video games naturally lend themselves to grading because of the complexities that Wata has recognized. Not only do games have many printings, but they have many versions and dates of release.
One of the mysteries of the business going forward will be population reports, which collectors have become used to looking at to judge value. When Collectors Universe grades items, they add a disclosure on their website as to how many of a particular item they have graded.
While sources say Wata has kept the data, it has not put forth population reports. Sabga has previously said he believes the category is in its early stages and posting population reports would not be additive, at least at this time, to the collecting community.
