Attack of the LEGO Clones

Remakes, clones, variants, redo’s, copies, call them what you will but they play a big part in the savvy investors thinking. Especially in the most beloved Star Wars theme. There is almost always a remake or two, or more, in every new wave of Star Wars themed Lego sets that are released these days. In fact it has become one of the common criticisms of the theme across many Internet fan sites and discussion forums.

So what impact do remakes really have on secondary market prices, both on the old set(s) and on the newly introduced one? Is it always a negative impact? And can we predict what sets may be remade in the future?

First we need to look at what sets have had remakes, what is the scope of the issue here? Well if you put the search term “X-Wing” into Brickpicker or another Lego set database you’ll get 12 results of sets with X-Wing in the name. That is a huge amount of sets based around one type of ship. For the scope of this article I’m only going to be looking at full sized models i.e. I will exclude mini-builds, polybags, and the planet series. Information on those could be an article on their own and I want to examine what the effects of remakes are for the larger sets that are more commonly used as investments. Small polybag sized sets aren’t really going to influence a large scale model that much. I’ll also be excluding any set bundles like 65145 as there is insufficient data on those.

Here is a chart showing all the Star Wars remakes I could find:

This shows there are 36 different combinations of remakes, far more than I would have thought. 20 subjects have a twin, 10 belong to a group of three, 4 groupings of four sets, the mighty Millennium Falcon has 5 incarnations, and the X-Wing has a staggering 7 different versions! Hopefully I’ve captured them all, but there may be one or two I’ve missed (sometimes it can be hard to spot a remake if the names aren’t similar). There are also a few grey areas around what exactly should be considered a remake, for example I’ve excluded the 4501 Mos Eisley Cantina from the Landspeeder numbers even though it has a Landspeeder just because I think the focus of the set is wider than that vehicle. There’s also the R2-D2 Technic set with the new UCS model, but I feel they are so different they should be separate.

OK, so how do these remakes affect the secondary market prices of sets? Well it can be a little hard to determine, especially as we don’t have perfect and complete information available. Ideally, we would be able to go back right to a sets’ release date and view monthly current prices all the way. We can’t though. What we do have is the CAGR of each set over it’s time since release as well as rates of return for the last 24 months, 12 months, 6 months, and 1 month, which are based on the current market price changes over those periods according to Brickpicker data sourced from Ebay US. (Data from other Ebay regions have recently been added but will take time to build historical information).

Examining the return rates of sets that have had a remake vs those that have not may provide us some insight into how a remake may affect values. Using 24 month and 12 month rates of return are probably our best option as we don’t have to go back to the release date of a set. Using those measures is also more relevant to current investment trends. Likewise, comparing the return rates of sets that were for example released in 2004 and then 2007 is difficult as we can’t really examine the impact of the 2007 set on the 2004 set. So what I have decided to do is look at all the sets that have had a recently released (within the last 2 years) remake.

Taking all our Star Wars sets released from 2011 and prior that have had a remake in either 2012 or 2013 we have 22 sets across 11 different subjects (vehicle or set types)(also excluded the advent calendar). Looking up all 22 sets and getting their respective 1 year return rates from the awesome Brickpicker tables, we can calculate an average of -8.69% return across them all. That is quite a drop! I then looked up all the rest of the Star Wars sets that have no remakes at all, so have only had 1 set made on that particular subject. There are 138 of these sets and their average 1 year return rate is -1.62%. That means that in the last year their secondary market price on Ebay US has shrunk by an average of -1.62%. (As an aside I was surprised by these negative 1 year return rates, I had to check my data a few times but it was correct. This is a curious result, what is causing it? Possibly Star Wars Lego fans moving into the LOTR theme is one theory I thought of, but looking into that would be a whole other article!).

I also took all the sets released in 2010 or prior and looked at their 2 year return rates (the total percentage gain you would have if you bought the set 2 years ago at the market price and sold it at the market price now). There are 31 different sets across 17 different subjects that have had a remake in 2011 or later. For these 31 sets the average 2 year return rate is 1.81%. Not a great result for 2 years storage time. For comparison, looking at the Star Wars sets that have not had any remakes at all, found 128 sets and their average 2 year return rate was 13.35%.

These results can perhaps be visualized a little better in the chart below:

As you can see, this analysis has provided solid evidence that remakes or clones negatively affects the secondary market price growth of the original or earlier released versions.

Let’s look at some specific examples that should help to illustrate this issue.

The above graph shows prices for the two V-Wing sets. 7915 was released in 2011 and has stopped the price growth in the older 6205 set for a period of time. Looking at raw prices is interesting, but we can examine this effect more closely by taking the growth rate of the set price from period to period i.e. the rate of change from one period to the next in the market price. Lets look at that for the V-Wing sets:

This shows that once the newer 7915 set was released there was a dramatic drop in the growth rate of the older 6205 set. This was alongside the traditional negative growth for 7915 that we see in a new retail set as people take advantage of regular store discounts to obtain the set below retail prices. Both sets then track each other back to more normal positive growth rates in the period from 6 months ago to last month, before both taking a bit of a dip in the most recent price results.

Notes on the above, and subsequent, graphs:

• Care should be taken when interpreting the graphs in that the X-Axis (horizontal time period) is not linear. i.e. it does not follow regular intervals. Yearly growth rates are presented up until the “6 months ago” point at which time the gap we are measuring is actually 6 months, then to the “last month” point where the gap is only 5 months, and finally the “current” point which is only 1 month of growth between our current market price and what it was 1 month ago. Often the shorter gaps will have lower growth numbers or tend to be closer to zero, that makes sense as growth over a whole year is often greater (either positive or negative) than just a month.
• Given the above issue, it is important to note that the purpose of the graphs is to compare between sets, and not necessarily to look at the growth trend for any one set. (If you want to look at one set go to the Brickpicker page for that set and look at the excellent graphs and tables available there).
• We only have data for the retail price, the 2 years ago, 1 year, 6 months, 1 month, and current prices. Therefore, for older sets, to predict what the price was between the sets’ release year and 2 years ago it was necessary to take the retail price and the 2 years ago price and then average out the price movement across the intervening years. This is almost definitely not accurate, but it is the best we can do unless we take a guess at how a set may dip after release to then rise at EOL, but that will be different for every set. I have shown that difference in the X-Wing graph later on.
• Data was taken from the May-13 release of Brickpicker data that was for the period ending Apr-13

Lets have another look at another clear example. What better than the aptly named Clone Turbo Tank. Two great sets, 7261 released in 2005 followed by 8098 in 2010, both of similar size and design.

Again, the original set has strong price growth before the release of the remake curtails and depresses it. Looking at the percentage growth period to period it becomes even more apparent:

The new set comes in and it’s greatly received and immediately shows growth while its predecessor plummets before returning to a more normal growth.

Here is a more another interesting example. Looking at just the 2 most recently released Y-Wing sets. The 8037 released in 2009 and the new 9495 released last year:

Because the 8037 set was released in 2009 and most likely was available for perhaps 18-24 months on retail shelves we get a nice view of the dip in price to 2011 for our first available price measuring point. The set goes EOL and immediately jumps 25% only then to have the 9495 come along and take the wind out of its growth sales.

How about when the newly released set is a better model? Perhaps a good example is the recent 9492 TIE Fighter which is an improvement over the old 7263 model.

The old 7263 enjoys moderate growth until the new improved 9492 is released, whereby it drops sharply. The 9492 drops initially as well, providing a text book example of heavy retail discounting affecting the Ebay price. Both sets then recover a little and their growth rates track almost identical patterns. I had expected a bit more of a drop for the old model here though as I think that the new one without the blue colors is so much better, but perhaps I’m a little biased and the general public don’t share that view.

Another good example of an upgraded set is the Imperial shuttle. The recently released and newly retired 10212 UCS Imperial Shuttle has had an impact on the prior 7264 Imperial Inspection that was also a very nice set.

7264 saw very healthy growth through to 2012. The release of the new UCS set appears to have taken a little while to have impacted unlike some of the immediate impacts we have seen before. This may be due to the 10212 being released in the later part of 2010 and not having many discounts for a while. But 6 months ago as retail discounts for it occurred and rumours of its imminent retiring circulated, the increase in demand pushed down our 7264 set and it is perhaps not yet recovered as the 10212 takes off after recent EOL.

OK, lets get a little more complex and check out some examples of multiple releases. The Millennium Falcon has had 5 different decent sized sets released over time. It’s an iconic part of the Star Wars universe and obviously very popular, so The Lego Group have released new version fairly regularly. Also, unlike the X-Wing it is a unique ship i.e. there is only one Millennium Falcon, while the X-Wing is a class of ships with a few different variations. The raw price graph is dominated by the juggernaut that is 10179 the UCS set, so lets just look at the growth percentages:

Things look a bit messy, even after not including the 7190 set from 2000, but upon closer examination you can see the effects each new remake has had on the prior versions. The orange shaded area highlights the most interesting point for which we have good data. This is where the most recent set, 7965, was released in 2011 and shows the subsequent drop in all the sets price growth in 2012. That is for all except the phenomenal 10179, it seems this UCS behemoth is impervious to the power of the clones!

The X-Wing is an even more complex situation, with 7 large sets across history including the recently released 10240 UCS version and another one, 9493, still on retail shelves. Impacts on the very early versions are hard to examine so let’s look at the four most recent sets:

There is a lot of information contained in the above chart. Firstly, I’ve included a dotted path for 6212 which I think gives a possibly more accurate view of what the trend for this set would have been in the past. As I’ve already stated, we only have the retail price and the 2011 price as markers to go by, so drawing a straight growth line between them is the most consistent thing we can do. But there would most likely have been a drop after retail release reflecting discounting, before recovering and moving into high positive growth after EOL. The size and timing of the dip and recovery will differ between sets a bit though.

Second, the blue shaded area shows us that when 9493 was released there was an associated drop in price growth for the existing 6212 and 4502 sets. Thirdly, when the 10240 was released last month there was a sharp drop in that next most recent 9493 set and a slightly smaller one for the old 4502. But the 6212 has recovered a little and this shows it may come back to a more normal growth trajectory. It will be interesting to see how this plays out in future months as the new 10240 UCS set continues at retail and the 9493 goes EOL at some stage. It would also be interesting to look at the effects on the other UCS X-Wing 7191 set once we have more time periods.

In summary I think the evidence is very clear that remakes do indeed affect the secondary market price of the older versions. The magnitude of that impact is perhaps hard to tell at an individual case level as there are other contributing factors such as:

• The age gap between the remakes
• Is the set very similar in size and retail price as the original – probably increases the impact
• Is the set an improvement on the older model?
• Retail discounting of the new set
• UCS sets possibly immune, or at least far less influenced?
• Is the theme itself, or the Lego market in general, on the decline, or experiencing a soft spot in growth?

On average though it would appear that that remakes effect values by lowering growth by around 6 to 7 percentage points per year for a couple of years before recovering to more steady, but lower, growth paths. Over time we will have more data that should help us judge the materiality of the suppression of longer term growth.

Future Clones?

Can we use our knowledge of past remakes to perhaps predict what sets that Lego may decide to do a remake of in the future? This would help us make investing decisions either by avoiding possible remake sets or by not holding them for too long.

The Star Wars theme is quite mature, there are limited options available for new ships, vehicles or settings on which to base a Lego set on. There are a few, but they tend to be from more obscure parts of the Star Wars universe and don’t have the wide appeal that well known iconic subjects do. The saving grace may be the new Star Wars movies being made by Disney, which should open up a lot more possibilities, both for new set subjects and for remakes of old ones that make a new movie appearance.

Also it would seem that the very iconic ships such as the X-Wing, Millennium Falcon, and to a lesser degree the other “Wing” type fighters, Slave I, Walkers, and Shuttles all seem destined to have regular remakes. I’d be hesitant to hold onto any of those models that weren’t a UCS one for any long length of time.

Of the currently remade models presented in the first table we can look for sets that have been remade before but the latest version is now getting a bit old. The AT-ST, Snowspeeder, Jedi Starfighter, and TIE Interceptor are all candidates for a possible new model.

Looking into the other Star Wars sets that have not had a remake may throw up some possibilities. I have gone through 136 sets in this category and here are a few likely candidates in my opinion:

• C-3P0
• Cloud City
• Darth Vader
• Gungan Patrol
• Mos Eisley Cantina
• MTT
• Rogue Shadow
• Sandcrawler
• Stormtrooper
• TIE Bomber
• TIE Crawler
• TIE Advanced
• Trade Federation AAT

No doubt I’ve missed a few and Lego are never that predictable when it comes to future releases, but I think there exists a decent possibility that we’ll see sets based around some of those subjects again.

Remakes occur for a reason. The Lego Group puts a lot of time into deciding new sets and bases a large part of those decisions off previous sales demand. Remakes are usually done on popular subject material and therefore have higher demand, leading to higher demand on the secondary market. Set subjects of only one model are usually more obscure and have less general appeal, so should in theory have less demand. A classic case of supply and demand at work. Higher demand leads to higher supply, which suppresses prices in the secondary market. Imagine if there was only one X-Wing model ever released, the secondary price for that would be astronomical!

So in conclusion, beware of those clones! Wise investment decisions should be based around as much knowledge as possible, and the knowledge that a new set is about to come out based on a subject that is the same as one you have stashed away in the form of an earlier version, means you should seriously consider liquidising your investment pronto. Don’t get hit by an attack of the clones!