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
University
22%
40%

Fig. 1: Customer
Fig. 1: Customer
fragmentation by
A-Level/HSC fragmentation by
30% academic level
academic level

Respondents were further asked where their educational institutes were. The

results are illustrated in the following graph:

Dhanmondi 56%

Banani 33%

Other 11%
Fig. 2: Customer
segmentation by
0 10 20 30 40 50 60
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 & School & University

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

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 Weaknesses

• Top-quality computers: Only in • Restricted number of

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.
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.

• 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.

Oppurtunities Threats

• Potential customers: There are • Low popularity: Compared to pool

many people who currently do not
play games, but need only be
introduced to multiplayer gaming in
order for them to become regular
gamers.
or bowling, computer gaming is not
such a popular entertainment
pastime in Dhaka. Therefore it will
be harder to attract new players.

• 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

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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: Selecting a favorable location

From the market 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 play-

room.

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

Unit Price Total Price

Item Quantity (Tk) (Tk)
High quality Gaming PC's 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

PC swivel chairs 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

Advertising expense 300000 300000

Trade License 3000 3000

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 1st 2nd 3rd 4th 5th 6th

Average hours per day per PC 3 4 4 5 5.5 6

Revenue
No. of hours X 24 PC's X 25 tk/hour X 30
days (20 tk/hour for first 2 months) 43200 57600 72000 90000 99000 108000

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
34000

30000
Cash flow (in Takas)

25000

20000 16000

10000

1st month 2nd month 3rd month 4th month 5th month 6th month
-2000
-10000

-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

Average hours per day per PC 4.35 6.58 7.5 8.25

x 24 PC's x 25 tk/hour x 180 days 469800 710600 810000 891000

Expenses:

Monthly expenses x 6 444000 444000 488400 488400

Semi-annual gross margin 25800 266600 321600 402600

Add: Estimated profit from sale of food 6200 9400 10800 11800
and drinks
Add: Estimated profit from sale of 1500 1800 1800 1800
merchandise
Add: Estimated profit from tournaments 4000 10000 12000 15000

Deduct: Estimated advertising costs for -15000 -25000 -20000 -20000

the period

Net semi annual profit 22500 262800 326200 411200

Net Annual profit 1st 285300 2nd year: 737400

year:

Deduct tax: 10% -28500 15% 110600

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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