Pokemon Go. Poke balls. Pokemon fluff pillows. Pokemon base set shadowless booster box 1st edition PSA 10- hold up. Let's Rewind a bit.
In the 1980s in Japan, Satoshi Tajiri started the whirlwind of a financial powerhouse now called Pokemon. It was officially a comic, and grew into a TV show, a game, nay, multiple games, and the infamous Pokemon cards. But why is it the highest grossing franchise ever? EVER!? The likes of Hello Kitty, Star Wars and the Marvel Cinematic Universe pale in comparison to the excitement on the faces of collectors and the vigor of their investment portfolio, when they break a PSA 10 Charizard. Let's at least try and comprehend the fundamental psychology and economics of this franchise.
The vast majority of the financial system around Pokemon works on some fundamental principles, exemplified by Pokemon Cards. Considering the former, the principle is clear as day. It is a rare commodity built on hype. A rare commodity is termed as one which is less in supply but intensively in demand, but unlike traditionally rare items like gold, it does not seem to follow the same rules. Gold is an actual physical commodity, but if you really think about it, is dictated by aggregate market supply and demand processes because it has actual economic uses. Pokemon cards on the other hand are pieces of Cardboard which happen to be limited in quantity, made even more selective by the intricate details of graphics and holograms and countless other blanks of information that the collector community desperately wants filled. But the psychology behind the collection is hype.
Hype is the phenomenon used by brands like Supreme to make their commodities' demand expand and inflate by controlling the amount of the commodity in circulation. Supreme sells bricks (for gods sake), hammers, bolt cutters apart from fashion items, by producing them in limited quantities, which makes hipsters buy them even more. But unlike supreme, Pokemon hype is also built on the success and dynamic nature of the franchise itself. If a new Pokegame goes viral, the rare cards go up in value. If, for instance, a massive public figure like Logan Paul draws attention to the collection, the cards go even further up in value. Thus, these goods are known as Veblen Goods as they are rare and do not follow the Law of Demand, that is, their demand does not decrease with an increase in their price, but rather increases in a confusing juxtaposition.
This is the basics. If you dive deeper, it becomes imperative that entire markets develop behind such rarity and hype. Hipster salesmen stand hours in line for buying as much as they can from the latest supreme drop to sell on their own website, establishing an off the base second market. Similarly Pokemon Cards inflate in value as hype develops, inviting more eyes to the franchise, more people in the business of collection and more hype which further, inflates the value of the cards in a self reinforcing cycle. That only goes to show a business model and a niche based on rarity and exclusivity of commodities to drive sales and prices in contradiction to common sense and the principles of market, the same foundation which NFTs or Non Fungible Tokens are built on. More on that coming soon.
The matter of fact is that at the base of it all is a passionate, humane and inviting community that shares the essence of childhood and innocence preserved in small cardboard pieces, which also serve as valuable investments and assets to the firm. As long as Pokemon can unite a large group of people and reconvene them with the lost sense of innocence of their childhood and its sheer excitement, I guess it is safe to say that Pokemon is going to the moon. So you might as well buy some cards and get cracking for a hologram, because it could very well make you a millionaire.