The Pokémon Company Profits From Poor Quality Control

In the modern era, every Pokémon card represents a single drop in a sea of duplicates. With the Pokémon company printing 9 billion cards a year or more since 2021, there is a truly unprecedented stock of every new card.

These huge numbers reveal themselves in the population reports, where total graded examples of modern cards have surpassed all kinds of expectations. Cards like:

1. Moonbreon, with 25,700+ PSA graded copies,

2. Charizard ex SIR from Scarlet & Violet 151 with 73,500+ copies, and

3. Pikachu with Grey Felt Hat, with 92,700+ graded copies

Given these populations of otherwise scarce and valuable cards, rarity, when given a traditional definition, simply doesn’t hold: none of these cards are truly rare.

So, collectors compensate.

They “invent” new classifications to simulate rarity:

1. Higher condition rankings (black labels),

2. Sequential grading certificate numbers,

3. Obscure printing “errors” (that should really be seen as nothing more than manufacturers defects),

4. Etc.

These features vary in their legitimacy (I like Black Label graded cards, for example), but, as the X user @JustJack_21 expressed in a response to one of my posts: “people chasing modern cards need more of a chase… with everything so abundant”.

When the market is dominated by abundance, collectors will find something to chase.

And what makes this situation worse is that, in many ways, the Pokémon Company International is happy to support this. For them: it’s profitable.

The Scarlet & Violet era introduced us to several chase cards that were part of the relatively common Illustration Rare rarity. Cards like the Magikarp Illustration Rare from Paldea Evolved or the Eevee Illustration Rare from Twilight Masquerade.

Don’t get me wrong: these are awesome cards. But with pull rates of about 1 in 13 packs, there are a lot of copies of Illustration Rare cards out there. As a result, the number of graded examples is actually quite high: the Magikarp Illustration Rare currently has 19,000+ PSA graded examples, for example.

The thing is, SV era Illustration Rare cards are now infamous for their poor quality control and high rate of defects. As a result, PSA 10 grades can be quite rare. And when a one of these hard-to-grade Illustration Rare cards turns out to be one of the more popular examples… the prices accelerate quickly.

Case in point: the Magikarp Illustration Rare is currently valued at $2,500 according to the COLLECTR app in a PSA 10 condition.

But, here’s why a high price for this card is justified: of the 19,117 graded Magikarp Illustration Rare cards, only 3,542 have achieved the coveted PSA 10 grade. That’s only 19 percent, or 1 in 5 of all cards submitted for grading.

Compare this to the Moonbreon, with 25,739 graded examples of which 18,491 are PSA 10: 72% of all submitted copies. Despite the hight rate of PSA 10 grades, the Moonbreon still has a market price of $3,770.

There is nothing wrong with this market dynamic: condition rarity is important, and a card with a particularly low PSA 10 supply should fetch a premium.

But, what’s concerning is the misaligned incentives this creates between The Pokémon Company International and Pokémon collectors, especially newer collectors. Because, when one of these hard-to-grade cards from modern sets establishes itself as a chase card, a couple things tend to happen:

1. The hard-to-find PSA 10 examples set a new expectation of what the card is worth, even though the market price only applies to the scarce PSA 10 examples.

2. The potential for these cards to hit PSA 10 puts a huge premium on the raw copies as well.

3. All of these higher prices drive more demand, and justify higher prices, for all the sealed product where these cards may be pulled.

4. The Pokémon Company sells way more products.

In the end: poor quality control creating hard-to-grade cards fuels speculative market buying, and is very profitable for The Pokémon Company themselves.

But, I’m not convinced this is what’s best for the average collector.

The reason? On the Japanese side of the business, we see the opposite scenario. Japanese Pokémon cards have built a well-earned reputation for their excellent quality control and high print quality.

Using that same Magikarp, the Japanese version has an even larger 46,659 graded examples at PSA alone.

And the PSA 10 grades? 42,944 examples. 92% of all submitted copies.

But the abundance of Japanese PSA 10 Magikarp has led to a market price of only $246.

In the end, collectibles markets are driven by scarcity, and there’s no question that the English PSA 10 Magikarp is more scarce than the Japanese version.

So, the uncomfortable truth is this: The Pokémon Company International profits from poor quality control.

Every Illustration Rare that grades poorly creates condition rarity. That rarity drives speculation. Speculation drives demand. Demand drives profits.

Japan proves this isn't necessary: 92% PSA 10 rates, excellent quality, and a persistent strong market.

English collectors could have this too.

As usual,

Thanks so much for reading the TCG Buyers Club newsletter. My name’s Grey, I buy cardboard, and I’m on a mission to make collecting and investing in Pokémon simple.

Cheers 🍻

P.S. I have started to edit another video, so it should go live within the next week! In it, I do a deep dive into what was my failed investment in Amazing Rare cards. The data is interesting and there’s a lot to learn from it. I’m looking forward to sharing it soon!