Business Plan-game Pad

Business Plan for Game Café

Introduction Purpose

The purpose of this report is to present a business plan for opening a game café in Dhaka. This report will analyze what the market, what the competition is doing, and how our game café’s services will fulfill the market needs. It also contains a breakdown of the start-up budgeting and sales projections for the first two years.

Methodology

Primary sources: • • • •

First-hand experience as a customer Investigation of three game cafes and their services A survey conducted among a random pool of gamers Interviews of managers of game cafes

Secondary sources was limited to online sources

Scope The scope of the project is limited to the multiplayer gaming scene in Dhaka

Limitations • •

We chose our survey respondents randomly from game cafes. However, the number is too small and may inaccurately reflect the whole market. Reluctance of managers to give out financial information of their game cafes.

Assumptions The following assumptions were taken during the writing of this report

• •

Legal costs will remain steady Rent will rise 10% every year

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Business Plan for Game Café

The Modern World of Gaming It all started with a yellow ball. That yellow ball ran around a maze munching dots while being chased by other multicolored balls. With such a simple concept, “Pac-man” became so popular that it not only sparked a new entertainment revolution that is video-games, but also created a multi-billion dollar industry that today rivals entertainment giants such as Hollywood and the global music industry.

In September 2007, the game ‘Halo 3’ made US $170 million on its very first day of release, a new record for the entertainment industry. No movie, music album or book (not even Harry Potter) has ever made as much launch-day sales as Halo 3 did.

The reasons behind the success of the gaming industry With technology developing at an ever faster pace, games continue to push the barriers of what “virtual realism” is defined as. Gone are the days of the simple yellow dot – games today have deep, immersing stories and life-like graphics and sounds. Yet reasons behind the success and continuous growth of video-games is simpler than the elaborate storylines and graphics: it is the ability to play these amazing games with each other.

Two types of games: single-player and multi-player

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Business Plan for Game Café

Single-player games simply have a story-mode in which players have to progress through a plot while encountering computer-controlled foes. Multi-player gaming is playing against human opponents, where the situation is defined only by the actions of the gamers themselves. As a result, the gameplay becomes even more interactive, and the challenges are always unique. As the old adage says: it’s a whole new ball game.

It is easy to see the attraction in multiplayer gaming. Human opponents are far more intelligent and hence more fun to play against. The gaming experience

becomes even more enjoyable when we play against friends and family, because racing at bottleneck speeds or waging a virtual war against friends never gets old! In short, multiplayer gaming has transformed gaming into much more than a single-player affair. It is now a social pastime which brings people together to have a great time.

Setting up multiplayer games with other people Multiplayer games are usually played in two ways: 1. Globally – through an Internet connection 2. Locally – by connecting

several PC’s in vicinity through a LAN

connection

In the second option, several PC’s are connected together to allow users to play the same game against each other. Playing locally is less expensive and usually

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Business Plan for Game Café

more fun, since players play in the same room, leading to an exceptional gaming experience.

Game cafes – a hub for multiplayer gaming Multiplayer gaming therefore, either requires an extremely fast Internet connection (which Dhaka does not have) or an connecting several PC’s together in a home. There is another option – playing in a game cafe. The setup can be as simple as a room, consisting of several computers connected through Local Area Network (LAN) using network cables, where people can play multiplayer games against each other.

A typical game cafe may have around 12 to 30 computers, depending on the popularity of gaming in that area. Game cafes are popular in many countries, including US, Brazil, Korea, Singapore and even India. The game cafe phenomenon is just catching up in Bangladesh as shown by the rising number of game cafes.

Gamepad – a company summary Gamepad, which will be located in Dhanmondi, will offer an accessible and beginner-friendly environment for multiplayer gaming. It will provide the latest multiplayer games in a cosy and relaxing environment, as well as offer other, innovative services such as tutorials for beginners and a membership system.

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Business Plan for Game Café

Mission of Gamepad The entertainment scene in Dhaka is rather bleak. There are only a few entertainment centers for people to go to, such as pool clubs, bowling centers, and a single Cineplex. Game cafes are relatively unknown since most are of them illegally set up and hence cannot advertise themselves properly.

Gamepad’s mission is two-fold: (a) become the leading brand among game cafes, and (b) draw game cafes into the mainstream entertainment scene.

Objectives and goals Gamepad’s objectives for the first three years of operation include: •

Creating a unique, posh and comfortable atmosphere for gaming that will not only be inviting to power gamers, but attractive and friendly enough for beginners as well.

•

Expanding its services by adding more computers and offering new services to keep its customers coming back for more

•

Creating a social community which will bring people from diverse backgrounds together into a common forum

To achieve these objectives, Gamepad must fulfill the following goals: •

Break-even within the first six months

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Business Plan for Game Café

•

Attract a large pool of customers

Features of Gamepad: Gamepad will provide a host of exciting features which will differentiate it from the rest of the competition. These features are: •

24 high performance gaming computers that will allow players to experience the full thrill of the latest and greatest games.

•

A cozy, friendly atmosphere in which gamers can kick back and relax while they play.

•

Snacks and cold refreshments that can be enjoyed while playing.

•

A host of discounts and value-added extras for Gamepad members.

•

Regular tournaments in which gamers will get to challenge others and showcase their skills... and win some prize money in the process.

•

Gaming-related merchandise such as T-shirts and posters

•

Gamepad’s very own website, containing online rankings, forums, and updates on the gaming world

Technical Support Gamepad has reached a contractual agreement with Pulser Computer Network, a computer hardware supplier, to provide computers with the latest hardware to Gamepad. The terms of the contract are listed below:

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Business Plan for Game Café

•

Every two years, Gamepad will replace the computers with newer ones bought from Pulser Computers. In return, Pulser will exchange the old computers for 40 percent of their cost.

•

Pulser Computers will provide a technician for a monthly fee of Tk. 500 per computer. The technician will fix any computer problems and replace damaged parts for free.

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Business Plan for Game Café

Market Analysis In order to mesh effectively with the gaming culture in Dhaka, Gamepad must know its customers first. An analysis of the market will prove invaluable for two reasons. First, it will allow Gamepad to recognize opportunities in the market. Second, and more importantly, it will highlight the needs of customers, allowing Gamepad to shape its services to meet them.

To analyze the market’s needs correctly, a survey was conducted among over 50 players. This section summarizes some of the important findings.

Deciding location For any business, it is important to know where the majority of the market lies to ensure that it is located favorably for most of its customers. Since virtually all of Gamepad’s prospective customers are students, the best set up location would be in the proximity of multiple educational institutes. These institutes, however, are not evenly distributed around Dhaka city. For example, the major private universities are situated mainly in Banani, while schools are primarily located in Dhanmondi. It was therefore very important to assess the general academic levels of the gamers. The academic levels of the gamers who participated in the survey are represented in the pie chart on the next page:

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Business Plan for Game Café

Class 8 and below 8%

O-Level/SSC 22%

University 40%

Fig. 1: Customer Fig. 1: Customer fragmentation by fragmentation by academic level academic level

A-Level/HSC 30%

Respondents were further asked where their educational institutes were. The results are illustrated in the following graph:

Dhanmondi

56%

Banani

33%

Other

11%

0

10

20

30

40

50

60

Fig. 2: Customer segmentation by location of school

The charts show that: •

62% of the respondents study in school. University students are the second largest group (40%)

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Business Plan for Game Café

•

56% of the institutes are located in Dhanmondi.

In addition, around 60% of the survey responses favored Dhanmondi as the preferred location for the next major game café.

These findings suggest that Dhanmondi would be a very good location for Gamepad, since most of the schools are located there, as well many residences. Banani is also a strong candidate, since a large portion of the university students (who are able to spend more money than school students) are located in that area.

Female gamers The gaming world has always been considered to be a male-dominated playground. Girls are seldom taken seriously as gamers in the general gaming community. In 2005, however, the Entertainment Software Association (ESA) revealed a startling statistic: 43% of all gamers are female. Furthermore, the most recent world rankings have revealed a female gamer to be the number three gamer in the world. Clearly, female gamers have caught up with their male counterparts in the gaming arena, and can no longer be taken lightly. The simple fact of the matter is that females comprise half of the total population – and so it would only be folly to ignore them. Yet sadly in Bangladesh, this is just the case. Females who go to multiplayer game café’s are virtually non-existent. In fact, surveys revealed that of the current customers of all the existing game cafés, zero are female. It would appear that the currently existing game café’s have completely overlooked girls as prospective gamers – to their own loss.

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Business Plan for Game Café

It is not as though Bangladeshi girls do not play games. After conducting several interviews, it was completely clear that many girls play games regularly – but just certain types of games (e.g. the Sims), and just at home. Why exactly girls do not play at multiplayer game café’s is not a big mystery either. The overcrowded, noisy and dingy environment that the existing game café’s have is hardly suitable for the fairer sex. Furthermore, there are cultural and traditional barriers – many parents have anti-gaming misconceptions which prevent them from allowing their daughters to go to game café’s. It would be a major breakthrough for Gamepad if it could break this norm and start drawing female customers towards multiplayer gaming – hence tapping into a hugely promising market.

Some of the other findings of the market analysis are: 1. The survey showed that nearly 50% of the gamers have been playing in café’s for 2 years or more. This suggests that the majority of the players are those who are already dedicated gamers. Thus Gamepad should try to develop strategies which can attract completely new users. 2. Gamepad’s market has very diverse needs. Some take gaming very seriously, while others play for relaxing and having fun with friends. Different gamers prefer different types of games. 3. 53% of the respondents said that they usually play 3-5 hours at one sitting. This is useful information since it allows reasonable estimates of revenues to be made.

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Business Plan for Game Café

4. The majority of gamers said that they usually prefer to go to one game café that they consider to be the best and that is most convenient to them. 5. Although currently pool is more popular, the growing popularity of multiplayer gaming in Dhaka is a sure winner and will ensure a consistent market for Gamepad.

Takeaways from Market Analysis •

The best location for setting up Gamepad appears to be in Dhanmondi, but the prospects in Banani should also be looked into before a final decision is made.

•

There is a huge pool of potential customers waiting to be introduced to the world of multiplayer gaming – both male and female. Gamepad needs to ensure that it tries its best to tap into these promising market segments.

•

Since the general trend is that gamers have a clear favorite game café which they stick to, Gamepad would have to prove itself superior through the quality of service in order to “steal” away power users from their preferred café’s and convert them into Gamepads dedicated customer base. Hence, Gamepad must also focus strategies on attracting the power users.

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Business Plan for Game Café

Competition analysis There are around 10 to 15 games in Dhaka city. Of these, 5 game cafes are considered ‘major’ competitors since they were established at least 3 years ago; the rest are smaller game cafes which have sprung up relatively recently. The major cafes enjoy some advantages over other game cafes in that: •

They are frequented by a larger pool of gamers since they were the first game cafes in the city

•

They have an average of 25 computers, almost double the number in the new cafes

The services in three cafes – two major, and one small – were studied. The table below summarizes the results: Table 1: Competitor analysis Name of cafe

Blizzard

Gaming Zone

Xtreme

Established in

2004

2005

2006

Location

Dhanmondi

Uttara

Banani

Customers mainly

School

from...

university

university

No. of computers

28

25

12

Latest PC hardware

No

No

Yes

Latest games

No

No

Yes

Tournaments

No

Yes

No

Refreshments

No

No

No

& School

& University

Some additional findings from the competitor analysis are

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Business Plan for Game Café

1. None of the competing game café’s are legal. 2. None of them have any female customers, nor are they putting any effort to fix the situation. 3. 90% of the survey respondents consider the existing game café’s services have plenty of room for improvement.

Takeaways from Competitor analysis •

Existing café’s ignore a huge portion of the potential gaming market and focus mainly on the market they already have. If Gamepad were to succeed in capturing the yet untapped market segment, it would gain a huge edge over its competitors.

•

Virtually none of the current game café’s have the latest computers. This means that they are not able to give their customers access to the newest, “hot” games.

•

Since none of the game café’s are legal, they try to maintain a low profile. Ergo they are not able to advertise as broadly as Gamepad will be able to.

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Business Plan for Game Café

SWOT Analysis The SWOT analysis will highlight Gamepad’s strengths and the opportunities it can take to achieve its objectives. It will also examine weaknesses that it must address as well as potential threats.

Strengths •

Top-quality computers: Only in Gamepad will gamers be able to play the latest and greatest games on high-performance machines.

•

Expertise: Gamepad’s services will be designed by experienced gamers with considerable first-hand knowledge about game cafes, and therefore will be able to assess the needs of the gaming community properly.

•

Location: Gamepad will be situated near major high-schools, colleges, and residential areas

•

Advertising: Unlike its competitors, Gamepad will operate legally, and therefore will be able to advertise extensively.

Weaknesses •

Restricted number of computers: Due to limitations in startup funds and space, Gamepad will start with a fewer number of computers than its competitiors

•

Features such as the food court may not be very well developed initially.

Oppurtunities •

Potential customers: There are many people who currently do not play games, but need only be introduced to multiplayer gaming in order for them to become regular gamers.

•

Female gamers: Female gamers are completely ignored by the existing game cafes. Gamepad will attempt to bring these female gamers into the mainstream

•

Upgrading computers: Gamepad will be able to upgrade its

Threats •

Low popularity: Compared to pool or bowling, computer gaming is not such a popular entertainment pastime in Dhaka. Therefore it will be harder to attract new players.

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Business Plan for Game Café

computers every two years, thanks to its contract with Pulser Computers.

Strategy and Implementation The last two sections discussed the current state of the market and competition situation. Based on those analyses a number of strategies have been developed, which can be divided in to four categories: 1. Selecting a favorable location 2. Entering the market 3. Attracting beginners 4. Brining in power gamers and building customer loyalty

Strategy 1: From

the

market

Selecting a favorable location analysis,

two

prospective

locations

were

determined:

Dhanmondi and Banani. an independent investigation was carried out to analyze the two locations. The findings show that Dhanmondi is a better place for starting Gamepad, while Banani is a good prospect for future expansion. Table 2: Location comparison Dhanmondi

Banani

Closer to major high-school, colleges, and

Closer to major private universities

residential areas Lower rent

Higher rent

Closer to competition

Competition is lower

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Business Plan for Game Café Greater accessibility by both rickshaw and bus

Strategy 2:

Entering the market

Gamepad will implement the following strategies in order to build consumer awareness and demand. 1. Pricing strategy – On the first two months of operations, customers will play at a discounted rate of Tk. 20 instead of Tk. 25 an hour. 2. Advertising – Gamepad will budget Tk. 300,000 for promotional efforts. Coupons (for a free hour of play-time) will be distributed in nearby schools and mosques. Gamepad also will post advertisements in the popular Daily Star magazines ‘The Rising Star’ and ‘Star Campus’ to build awareness among students in particular.

Strategy 3:

Attracting beginners and female gamers

Gamepad’s third strategy focuses on creating an opportunity for novices and female gamers to play comfortably in a game café. Gamepad will achieve this by the following methods:

1. Helpful employees: Gamepad will be staffed by friendly, knowledgeable employees focused on serving the customer's needs. 2. Tutorials: Gamepad will offer half-hour tutorials for only Tk. 10 only. These user-friendly sessions will help beginners familiarize themselves with the multiplayer games.

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Business Plan for Game Café

3. Fresh, inviting atmosphere: Gamepad will sport a bright and clean outlook with soothing wall tones, adequate lighting and a spacious playroom. 4. Casual games: Gamepad will introduce a huge variety of casual multiplayer games ranging from Sims Online to the extremely popular Zuma.

Strategy 4:

Attracting

hardcore

gamers

and

building

customer loyalty The following steps have been designed to attract power gamers: 1. The latest games – Gamers can play the most advanced games in our cutting-edge computer systems. 2. Membership – For an annual fee, gamers can become Gamepad members and gain numerous benefits including the first hour free, discounts on merchandise, and preference in tournaments and waiting lists 3. Special price packages – Besides the normal rate of Tk. 25 an hour, Gamepad will offer other price packages such as membership discounts and day-passes 4. Tournaments – Gamepad will quarterly tournaments, offering attractive rewards for the most skilled players 5. Merchandise – Gamepad will sell gaming merchandise including game discs, t-shirts, posters

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Business Plan for Game Café

6. Website: In Gamepad’s website (www.gamepad.weebly.com), gamers will be able to look up basicinformation on Gamepad, discuss about their favorite games in forums, find tips and tricks, and stay updated on the latest gaming events.

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Business Plan for Game Café

Financial analysis Startup costs Gamepad’s initial startup cost can be estimated to be just under Taka 23 lakhs. This break down is shown in the table below: Table 3: Startup costs Quantity

Unit Price (Tk)

Total Price (Tk)

24

52000

1248000

PC for office use

1

35000

35000

Online UPS

1

320000

320000

LAN set-up

1

40000

40000

PC tables

4

4000

16000

Office desk

1

10000

10000

25

3000

75000

Waiting Sofa's

3

18000

54000

Air Conditioner - 1.5 ton Split

2

54000

108000

Refrigerator

1

12000

12000

Renovation - Carpeting

30000

30000

Renovation - Painting

15000

15000

Renovation - Miscellaneous

30000

30000

300000

300000

3000

3000

Item High quality Gaming PC's

PC swivel chairs

Advertising expense Trade License

Total

Tk. 22,96,000

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Business Plan for Game Café

Monthly Expenses The following table projects the monthly expenses that will be incurred:

Table 4

Monthly Expenses

Rent

22000

Utilities Expense

14000

Salary Expense

20000

Maintenance - PC's

12000

Miscellaneous Expense

6000

Total Monthly Expense

74000

Estimated revenue by month for first 6 months Table 5 Estimated revenue by month for first 6 months Month Average hours per day per PC

1st

2nd

3rd

4th

5th

6th

3

4

4

5

5.5

6

43200

57600

72000

90000

99000

108000

Revenue No. of hours X 24 PC's X 25 tk/hour X 30 days (20 tk/hour for first 2 months)

The table above shows the projected revenue distribution for the first 6 months of operation. The findings of this table have been combined with the monthly expenses to construct the graph shown on the next page. This graph estimates the amount of time required for the business to break even.

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Business Plan for Game Café

Fig. 3: Estimated profits for first 6 months 40000

20000 10000 0

Cash flow (in Takas)

30000

34000 25000 16000

1st month

2nd month

-10000

3rd month -2000

4th month

5th month

6th month

-16400

-20000 -30000 -30800 -40000

As can be seen above, Gamepad is projected to break even in the 4th month of operation – which fulfils the initial goal which was to break even within 6 months.

Projected Profit and Loss Statements Finally, the table on the next page attempts to illustrate the projected profit and loss statements for Gamepad’s first two years of operation, classified semi annually

The table shows that the total income after taxes per year is approximately Taka 2.5 lakhs in the first year, and 6.25 lakhs in the second year. Further extrapolations (not shown) estimate this profit to be over Taka 7 and 8 lakhs in the third and fourth years respectively.

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Business Plan for Game Café

Table 6: Projected Profit and Loss Statements Period (every 6 months)

1

2

3

4

4.35

6.58

7.5

8.25

469800

710600

810000

891000

444000

444000

488400

488400

25800

266600

321600

402600

Add: Estimated profit from sale of food and drinks Add: Estimated profit from sale of merchandise Add: Estimated profit from tournaments

6200

9400

10800

11800

1500

1800

1800

1800

4000

10000

12000

15000

Deduct: Estimated advertising costs for the period

-15000

-25000

-20000

-20000

Net semi annual profit

22500

262800

326200

411200

Net Annual profit

1st year:

285300

2nd year:

737400

10%

-28500

15%

110600

Average hours per day per PC x 24 PC's x 25 tk/hour x 180 days

Expenses:

Monthly expenses x 6

Semi-annual gross margin

Deduct tax:

Total Income

256700

626800

The financial analysis shows that the business is definitely a profitable one. Provided that the initial investment of approximately Taka 23 lakh can be met, Gamepad is definitely worthwhile investing in.

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