Are Sealed VHS Tapes the Next Alternative Asset Class?
Photo by Jens Büttner/picture alliance via Getty Images.
The COVID era has been marked by the rise of new alternative asset classes.
As interest rates on savings accounts at banks have been infinitesimal and human interaction has been limited, collectors have gravitated to more fun ways to grow their money.
Cards and memorabilia were joined by NFTs, with Cryptopunks and Bored Apes seeing outrageous returns for early adopters who cashed in.
And more recently, sealed nostalgic items, namely video games, have started to take off. Best-in-class games, graded by video game grader WATA, have sold for hundreds of thousands of dollars. The cream of the crop is hitting the million dollar mark or more.
So what's next? Is it a new NFT animal or could it be another piece of the past?
Kohl Hitt is banking on it being the latter.
His family business has always created items that are by the checkout line at big box stores like Walmart, but he recently focused on creating a company to grade old VHS tapes.
Hitt has tens of thousands he has saved, which serves as a reference guide to what is being graded, and his wealth of knowledge makes it ideal for him to go into the business. Hitt's company, VHSDNA, has just started grading tapes, the second company to do so.
Competitor IGS recently announced a two-week pause in submissions through Sept. 13 to catch up on volume and hire more employees.
eBay sales of coveted first release movie VHS tapes show the increased interest. Months ago, a collector could get a sealed first release version of an iconic movie for $100. Now that movie might be $1,000 or more.
"I think it makes sense because they're smaller movie posters," said Hitt, whose VHSDNA is offering to grade and encapsulate a VHS tape for $98 for a month guaranteed turnaround, $138 for a collector to get it back in a week.
VHS tapes seem to make sense from a collectability standpoint because, like video games, they were meant to be opened and played and therefore the scarcity factor is there.
So what does Hitt expect to get hot?
First versions of 'Star Wars', 'E.T.', 'Karate Kid', 'Rambo' and 'Back to the Future', to name a few.
IGS has three box grades and three seal grades. Hitt's system is more simple. There's only one number on his lucite boxes, which contain one aggregate score of the sleeve conditions, flaps, gloss and seal. On the back of the card, Hitt adds some fun facts about the contents of tape and a recap of the conditions.
If there's one thing that will stop the spread of VHS tapes as a collectible, it might be complexity. First press tapes don't say 'first press' on it and education is necessary. But second generation video game collectors were able to get comfortable with knowing the variants to make educated decisions.
First press tapes often can be noticed by making sure the copyright on the tape is within a year or two of when the movie came out. The most common sealed 'Ferris Bueller's Day Off' tape, for example, is from 1992, but the first press is from 1986, the year the movie came out.
And with spending and making money, education becomes an incentive. There are 14 versions of 'Star Wars', Hitt notes, from 1984 to 1992. Buying the wrong version could be the difference between a tape worth $500 and one worth $15,000.
With controversy swirling over video game insiders at WATA getting their games graded, Hitt wants to assure the public that grading his own games and selling them is not in the offing.
"You will never see anything I own for sale," Hitt said.
Hitt also says he doesn't think scarcity of iconic sealed movies will ever be ruined by some big find.
"I'm 85-to-90 percent sure that we've seen what is out there," Hitt said. "It's not like you are going to see huge storage finds of sealed first-edition tapes pop up."
Last month, an early version of a sealed 'Star Wars' sold for $12,000. This week, a 'Star Wars: Return of the Jedi' sold for $7,026. For old VHS tapes, the numbers seem eye popping, but for those in the market who believe in it, it's just the beginning.
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