Business Plan for a Game Concept: Fundraising
- Fundraising
Build the business case for a game prototype or concept to be presented to a possible investor, publisher or partner. The objective of the business plan is to think through the various steps that make up the process of developing and launching a game. Your final deliverable should contain the following components: competitive landscape, cost structure, distribution strategy, marketing and revenue potential.
Executive Summary
In this paper, I will be presenting my game concept or in other words, a business plan in order to receive funding from potential investors. The game I will be pitching is called, “Win to Shop”. This game will be launched in 2022 and will target two major markets i.e. the mobile game and the coupon market.
According to Statista, by 2020 the revenues generated by mobile gaming are expected to reach upto $55,315 M worldwide. The annual growth rate of the revenues is also expected to increase by 1.8%. In addition, it is said that China will be able to earn the highest revenues from mobile gaming which will be $21,251M.(Mobile Games — worldwide | Statista Market Forecast, 2020) Due to this reason, “Win to Shop” will be launched in China in its starting year(s).
A detailed analysis will be provided of the competitive landscape, market, cost structure, and distribution strategy. Moreover, as part of my business plan, I will also be conducting an examination of the marketing mix and revenue potential of the “Win to Shop” game. “Win to Shop” game’s marketing mix (4Ps) which will support the position of the game as one of the strongest in the industry and the revenue potential section will show that in the four years the revenue will be $25M which will go up from $1.5M from the year 1.
Competitive Landscape
Overview of “Win to Shop” Game
“Win to Shop ‘’ is a game that will connect the coupon market with the gaming app market. A coupon is a “document which can be presented to the retailer to gain some kind of financial benefit in the form of a discount on any product. Customers can get the coupons redeemed at the specific retail outlets to avail relevant discounts and rebates in shopping”. (Role of Coupons in Retail Marketing, 2020). Gaming applications have become more important in the gaming market because “the gaming industry has undergone a seismic shift in the last 5 years. With the rise of the iPhone and other mobile devices, mobile gaming apps have started to drastically outsell their console game counterparts. This trend shows no signs of slowing down anytime soon” (Mobile App Games — the Future of Gaming? 2020).
The game will be available for download through the Apple app store and the Android play store. As a start, this game will be introduced for playing only in China. However, later it will be rolled out for playing in other countries as well.
The game will begin by asking the player involved to choose a brand for which they want to play. Once the brand has been chosen, the game can be started. For example, if a person chooses a sports brand then they can play a sports game. If they decide to choose a beauty brand, then they can play a fashion game. Once the player starts playing the game, any points that they accumulate during the game will be converted to a coupon. This will be added to the “Win to Shop” wallet present inside the gaming application. The player can use the coupons accumulated later to make purchases. The game has both single and multiplayer modes in it.
Revenue would be earned through the game requiring a subscription fee when it would be first downloaded. In addition, there will be ad-hoc coins available to purchase to get certain items to go to the next level. Later in-app advertisements would also be initiated to increase the revenues. Finally, when the app has gained a foothold in the market revenues would also be earned through brands who will pay a fixed fee for listing themselves in the game. There will also be a variable fee, which will be paid by the brand when a coupon would be issued to the customer upon winning a game.
This “Win to Shop” game is of great value to individuals because of its unique in-game linkage with coupons. Coupons can help individuals earn discounts at their favorite stores, allowing them to buy products at a lower price than the market selling price. As a result, individuals are given an exciting opportunity to win something at no cost. Individuals can collect coupons by playing games, however, they will have no risk of losing anything. This will make this game one of its kind and will allow it to penetrate the gaming market.
Goals and objectives for launching “Win to Shop” Game
One of the major goals for launching this game is to tap into the unexplored, yet high potential gaming app market involving linking coupons with gaming applications. This would allow the gaming app to become viral and a market leader in the future. Initially, this game would be released in one country i.e. China, and would only target the smartphone using the audience as it would be available only on the ioS and android play store. However, the plan is that after one year it would be released in multiple countries and on ioS as well. In the longer term, the plan is to introduce this game on Facebook in the next 5 years.
Initially, an investment of $100,000 is required to build the game and market it to potential customers. According to GoldenCasinoNews, it is expected that “China may generate 40% of the global mobile games revenues in 2020 at a value of $21 billion” (Mobile game revenues to hit $21 billion in China this year, 2020). From the above, it can be seen that the mobile gaming industry in China is a billion-dollar industry therefore, the “Win to Shop” game hopes to eventually acquire sales of $3M and a profit of $1.5M by year 2. This has been analyzed in the further revenue potential section below.
Target Market
The target market will include both companies who will be providing us with these electronic vouchers and smartphones using customers who would want to purchase these coupons.
In the modern era, coupons have become widely searched by buyers in order to find the best value for their money when they shop online. It is stated by eMarketer estimates that in 2018 “134.0 million mobile users in the US will use a mobile coupon. That’s an 8.0% increase from 2017”. The above shows that electronic coupons have become a hotspot for mobile users and will help in forming a niche market for businesses. People forming a part of this sector would want to procure digital coupons available through online platforms such as gaming apps and websites and will be covered by our “Win to Shop” Game.
In addition, as noted above the target audience will also be companies who will be listed as brands from which coupons will be given. The above scenario will result in both the players (buyers) and the companies (sellers) to be connected in a unique way.
Importance of Mobile app Games
Mobile games have become widely popular all over the world. This is because nowadays, people have more and more access to mobile phones. Focusing on China for example where we plan to initially launch our game, we note in the data published by Statista for the country that both the revenue from and the users playing the mobile is very high.
Analyzing Figure 1 above, we note that the revenue from Mobile Games in China has risen steeply. From 2017–2020 we have seen an increase of 43% in revenues from mobile games, showing their rising potential. It is believed, however, that from 2022 to 2025 the revenue increase from mobile games will taper off to 1.6% and by 2025 become fairly stable at $23.6 billion. The positive prospect of the revenues in the gaming market in the next 2 years (an expected increase of 9.1% over 2 years) shows that launching an investment right now would be very profitable. It would also allow the game to get a strong foothold in the Chinese market before it becomes completely saturated by 2025.
According to Figure 2 above, in China, the number of users has widely increased from 2017 until 2020 (37% increase). The trend is expected to continue over the next five years but from 2022 the rate of increase is expected to decrease (1.6% expected increase from 2022–2025). As expected, the pattern for an increase in revenue shown in the previous chart aligns with the increase in users and shows the potential of investing in the gaming market right now (8.3% expected increase in users in the next 2 years).
According to Figure 3 above, it can be seen that China is the largest country in the world in terms of earning revenues from mobile games ($21.3bn), followed by the United States ($10.7bn). This makes China one of the most effective markets to launch mobile games.
The data above proves that an investment in mobile games in China is a very wise decision because of the attractive market with increasing potential.
Competitors
The market for gaming apps is very attractive but the “Win to Shop” game would need to face many challenges in terms of competitors. Due to the big number of competitors already operating in the market including Tencent Games, NetEase Games, FunPlus, etc, it is important to launch a game that will be different from the ones sold previously in the market. The game proposed is considered to be attractive because in the past there have been very few game apps that have the characteristics of uniquely linking buyers with sellers. For instance, the “Win to Shop” game has features of obtaining coupons, choosing your favorite brand and choosing the game of your favorite category to play, etc. This would distinguish it from its competitors. It can hence be said that this game will be able to form its position in the market by penetrating into the already saturated market.
Cost Structure
In the beginning the cost structure will be simple. This will be because before the game is launched only 4 major people will be involved in the process. One person would be required for the concept, one for the development of the game and the other two will be required for the game design and marketing of the game respectively. However, once the game is launched then the team would need to increase in size because operations would move to a larger scale. For instance, more people would be needed to be added to the team to bring innovations to the game and to compete with the existing gaming companies and the new entrants. Also, as the users of the game expand additional brands would be added hence individuals would be required to manage the relevant communications with stakeholders. Technical support teams and finance functions may also need to be added in order to track customer complaints and profits of the company. Therefore, we expect that in the second year costs incurred would increase as the company would need to hire a sales manager, designer, communication manager, technologist, accountant, and marketing manager. The increase in costs would depend on sales and productivity. The company will try and leverage cross-departmental efficiency by ensuring the people working in one department would be available to work in other departments depending on the workload. This will help to manage costs appropriately.
There will be some other costs incurred as well. For example, the cost of paying for the marketing campaigns, events fee, copyright fees, celebrity promotion fee, android development license, iOS Facebook launching fee, rent fee, etc.
Distribution strategy
The primary distribution strategy will be a mobile application and later Facebook once the app gets launched there. Both of these channels will help to promote awareness, increasing users, and growing sales in the first year of the launch of the game. The secondary distribution strategy will be through the creation of a website called wintoshop.com. As noted earlier, the game will be initially available through the play store but will later expand the download for iPad, MacBook, and iPhone users.
Marketing
Below I will be analyzing the marketing mix of the “Win to Shop” Game.
Product
“Win to Shop” will be a competitive game that will fulfill the needs of its players. This game will be appealing because users would get a sense of reward immediately through the procurement of coupons when they win a game. In addition, the game will have an option of sharing their achievement, either in the form of coupons or through status updates on Facebook with their family and friends. The game would be built so both the player and the company can benefit from it. In addition, this game will help in the providence of the appropriate coupons which the users can use to get the products of their liking from their favorite brands.
Price
The game will require a download from the store on the mobile phone and from there while downloading the user would need to pay for the game’s subscription. Initially, for the first year, the subscription would last for one year and would need to be renewed after one year. However, after one year each subscription could be purchased for a time period of six months. In addition, there will be certain “hints” given in the game and certain “objects” that can be purchased only. These hints and objects would help the player to reach the next level and hence, earn more coupons. Moreover, in the first year we do not plan to do advertising through the application but after one year in-app advertisements would also be initiated to increase the revenues. Finally, as discussed earlier there will be an element of fixed and variable fees to pay by the brand. The amount of this variable fee will depend on the value of the voucher issued and the brand for which it is issued.
Place
This game will be available on android phones, apple phones, MacBook, tablet, and iPads and will initially launch in China, before expanding globally. In addition, there will be a website launched as well which would be used by customers to get an idea of the gameplay.
Promotion
The promotion of the game would be done by the publisher through Facebook. The usage of Facebook would help in promoting the game and improving communication between the publisher, players, and brands.
Another strategy to promote the game is SEO and advertisements on different platforms such as Instagram and google ads etc. This strategy would incur costs but would help in attracting new and potential customers interested in this category. In addition, regular emails will be sent to existing customers in order to build strong relationships between the stakeholders.
Finally, for the launch of the game, a big party would be hosted in various big cities of China. Media coverage would also be given to the party. Here both new and traditional media correspondents would come. In addition, local and international celebrities and bloggers would also be invited who would help in the promotion of the game by being the first users. They would then post their experiences on their social media accounts and websites, attracting more users.
Revenue potential
Below, is the table showing the 4-year map of the “Win to Shop” Game. It shows the sales, expenses, and profits which will be earned by the publisher over 4 years. As seen through the table the revenue potential has during the years has increased from an initial investment of $100,000 to $1.5M in the second year, $7M in year 3, and finally increasing more than threefold to $25M.
This target of $25M revenue is achievable through a number of ways such as unique products, excellent marketing plans, and finally, because of the increased growth of mobile gaming. Thus, making “Win to Shop” a lucrative game to invest in.
Conclusion
As it can be seen above ,“Win to Shop” is a very competitive game which will lead to tapping into the unexplored, yet high potential gaming app market involving linking coupons with gaming applications. This will prove to be very beneficial because it will be targeting a huge market of potential customers who own mobile phones and are interested in shopping through coupons as well as linking the sellers with the buyers. In addition, through its unique characteristics and distribution channels it will also be able to build its place in the already saturated market. Also, from its marketing mix (4P’s) it can be seen that its product, price, place and promotion strategies will also prove to be very beneficial for the revenue of the game. As a result, all of these factors will help in contributing to the high profit of as high as $1.5M in the second year of business with only $(100,000) expenses in the first year and hence, leading to the success of the business.
Bibliography
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Managementstudyguide.com. 2020. Role Of Coupons In Retail Marketing. [online] Available at: <https://www.managementstudyguide.com/role-of-coupons--in-retail-marketing.htm> [Accessed 30 November 2020].
QuartSoft. 2020. Mobile App Games — The Future Of Gaming?. [online] Available at: <https://quartsoft.com/blog/201406/mobile-app-games-future-of-gaming> [Accessed 30 November 2020].
Statista. 2020. Mobile Games — China | Statista Market Forecast. [online] Available at: <https://www.statista.com/outlook/211/117/mobile-games/china> [Accessed 30 November 2020].
Statista. 2020. Mobile Games — Worldwide | Statista Market Forecast. [online] Available at: <https://www.statista.com/outlook/211/100/mobile-games/worldwide> [Accessed 6 December 2020].
