Game Planet

GAME PLANET: STORE BASED GAMING ZONE

Presented by: Hassan Mahmood

Executive Summary:

• Game Planet aims to become the leader in the game zone industry of Pakistan

• Prime location - Hafeez Center, Gulberg, Lahore

• Will be positioned as a social environment• Variety of services• Products for sale, customer support,

tournaments, etc.

Outline:

Chapter 1: Game PlanetChapter 2: Market ResearchChapter 3: Operational PlanChapter 4: Financial Plan

Chapter 1:

Game Planet

General Company Description:

• Vision:– To set a new benchmark of excellence in the gaming

industry of Pakistan– Give gamers a way to test their skill by competing

against others and to meet others who share a passion for gaming

• Mission:– To provide gamers with a unique atmosphere to

develop their talents for gaming – Our gamers represent Pakistan in the World Cyber

Games

Project Profile:• Objective – To open store based Gaming Zone at

Lahore• Offer complete package of LAN gaming facilities

for gamers• Provide video game retail store and customers

service• The main features of the project – latest technology, a clean environment, outstanding

sitting arrangements, refreshments and other basic entertainment facilities

Industrial Overview:

• Overview:• LAN gaming

industry increasing rapidly– Technological

advancements– Video game

industry is falling behind

• Pakistan Gaming Zone Industry Structure:– Boom in the IT sector– Increased internet penetration– Awareness in youth– Less development in outdoor

sports and other entertainment media

– Broadband service providers in Pakistan

Industry Analysis:

Threat of Substitute productsIntensity of Competitive RivalryThreat of new entrantsPotential Barriers of Growth

SWOT Analysis:Strengths

Easily accessible location Snacks and drinks Large seating capacity Most popular games Low prices Latest computers Discount packages Generator available for back-up

Weaknesses Single branch in Lahore Separate rooms not available for

tournaments New staff without a lot of experience

Opportunities New attraction Introduction of newer games Expansion of branches Product and services expansion Marketing to gain more customers

Threats Closeness of competitor Difficult to attract loyal customers Various substitutes available Rapid changes in technology

Key Success Factors in the Industry:

LocationMarketingProductsTrained PersonnelUp-to-date EquipmentQuality Services

Business Plan:

• To develop business plan these points must be taken into consideration:– Customer Segmentation– Product Innovation– Pricing Strategy

• Other points– Required equipment, financial

information and marketing plan

Chapter 2:

Market Research

Research Objectives:

To determine demographics of customers for the gaming zone

To analyze interest level in our company To study the features of gaming zones

which are most important for customers To study customer preferences with

respect to PC gaming To determine how likely and how often

our service will be used by customers

Sampling:• Target population– Residents of Lahore, Pakistan

• Sampling unit– Sampling unit is the individual consumer

• Sample size– 120 consumers; We distributed the questionnaire to

respondents who were aware of gaming zones • Sampling method– Sample was selected by using the convenience

sampling method

Questionnaire:

• Consisted of 13 questions total– First four questions were about

customer demographics – The next questions judged the interest of

the respondents in the business– Remaining questions asked about the

features that were important to the respondents in terms of gaming

• Hope to get an idea of consumers’ interests

Results: Questions 1 – 4:

• Demographics:–Gender, age, education, income

• Gender – 90% of respondents were male• Age – 71% between ages of 20 to 35• Education – 33% completed graduation and

57% completed masters• Income – 44% of respondents make between

Rs. 15,000 to Rs. 25,000 per month

Results: Questions 5 and 6:

• Q. 5: Overall interest in product

• Q. 6: Who would you take with you to use such a product?

Results: Question 7:

Importance of Factors for Gaming

Zone

“Very important + important” “Neutral”

“Somewhat important + Not at

all important”

Brand Image 20% 53% 27%

Quality 94% 6% 0%

Features/Offerings 71% 14% 15%

Customer Support 92% 8% 0%

Price 85% 0% 13%

Convenience 78% 19% 3%


Features Important for Gaming

“Very important + important”

“Neutral”“Somewhat

important + Not at all important”

Graphics 96% 4% 0%

Sound Quality 92% 6% 3%

Monitor/Display 93% 4% 3%

Processor 85% 11% 5%

Game Being Played 85% 11% 5%


•27% interested in action games•24% interested in multi-player games•22% interested in strategy games

Results: Questions 10 and 11:

• Q. 10: How probable is it that you would use a service like ours in the future?

• Q. 11: How often do you think you would use this service?


•50% would like to hear about the business through the internet•20% would like to hear about it through a colleague or friend


• 34% are very likely to recommend our business to others• 46% are

moderately likely to recommend our business to others

Analysis of Results:

• Demographics• 90% males make up majority of gamers• 20-35, younger age group• College or univerity students - have a good

knowledge of computers and technology• Income Rs. 15,000 to Rs. 25,000 per month - have

money to spend on leisure activities• Interest level in gaming zones is high• Popular place for hangout with friends

Analysis of Results:

• Most important features for gaming zones• Quality, Customer Support, Price• Bring quality service to customers at low prices

• Most important features for gaming• Graphics, Monitor/Display, Sound Quality• Use latest technology to attract gamers

• Promote business through the internet• New attraction for gamers

Target Market:Demographics:

AgeGenderIncomeOccupationEducation

20-35 as market segmentMaleRs.15,000 - 25,000College and University studentsGraduate and Masters

Psychographics:

Social ClassLife-Style

Personality

Middle and Upper classSocial, Well-rounded, Food Lover, Have money to spend on entertainmentExtrovert

Marketing Mix: Products:

25 computers for LAN gamingNew variety of PC gamesConsole games (X-Box, PSP III, PSP

II)Gaming gars & equipmentGaming tournamentsInternet facilityClothing (Game t-shirts, etc.)

Marketing Mix: Services:

Refreshment services (fast food, soft drinks, etc.)

Customer support servicesOnsite internet ordersHardware and software live

demonstrationsAnnual Game FunctionsNew game release discount Customer Appreciation DaysDisc RepairWi-Fi access

Marketing Mix: Price:

• Pricing Objectives:–Profit Minimization–Sales Maximization–Gain Market Share

• Competitive Pricing Strategies:–Penetration Pricing–Price-Undercutting

Marketing Mix: Place:

• 44% felt that convenience was an important factor to attract them to the gaming zone

• Hafeez Center, Gulburg, Lahore– Visible to the constant flow of traffic

travelling from main road– Easy access from the surrounding

schools, colleges and universities – Spacious parking arrangement

Marketing Mix: Promotion:

• Consumer Demographics– Develop products for target market

• Advertising strategy– Promotion through media– Grass root marketing– Local business partnerships

• Promotional BudgetOne year (5 in x 5 in) color advertising banners Rs. 200,000/

1,000 business cards Rs. 1,000/ 70-100 t-shirts Rs. 25,000/

Flyers and posters Rs. 24,000/26 weeks Radio Advertisement Rs. 70,000/

Gaming Events Rs. 80,000/Budget Total: Rs. 400,000/

Chapter 3:

Operational Plan

Project Requirements: Appropriate space Human Resources Game Stations Computers Support Equipment Air Conditioners Telephone/fax An Electric Generator Basic Utilities Budget for Equipment: Rs. 2,266,000

Human Resources:

• HRM team will consists of 10 employees– 2 accountants managers – Will have control

over the major business functions in both aspects: the retail store and the gaming zone

– 2 network administrators, 2 office boy, 2Guards,2 Sweepers.

• Other employees– Skilled employees will be given preference– Unskilled employees will receive training

HRM Task Duties:

• Networking Administrators:– Keep an eye on LAN Gaming

Affairs– Maintain Networking

through PCs– Installing Software and

Games• Office Boys:– To serve the Staff and

Gamers– Education: Matriculation

• Sweepers:– For cleaning the

area– Experience: None

required• Guards:– For security

reasons – Age: 30 +– Retired Army

Men

Chapter 4:

Financial Plan

Finances:• The total project cost for setting up

this gaming zone is estimated at Rs. 119,116,000

• The project is financed through 50% debt and 50% equity (Assumed)

• The project NPV is around Rs. 6,674,858

• Payback period is one year

Working of Long-Term Debt:

Working of Long-Term Debt

Installments Interest Principle Amount Cash Price

59,558,000

21,440,880 9,529,280 11,911,600 (11,911,600)

47,646,400

19,535,024 7,623,424 11,911,600 (11,911,600)

35,734,800

17,629,168 5,717,568 11,911,600 (11,911,600)

23,823,200

15,723,312 3,811,712 11,911,600 (11,911,600)

11,911,600

13,817,456 1,905,856 11,911,600 (11,911,600)

0

Space, Infrastructure and Utilities Requirements:

Space Requirement

Description Area Required Estimated Cost (Rs.)

Gaming Zone Space

3,000 sq. ft. 40,000,000

Total 40,000,000

Utilities Expenses

Electricity Expense 200,000*12=2,400,000

Gas Expense 50,000

Diesel Expense 1,000,000

Water Expense 12,000

Infrastructure Requirement Rs. 15,000,000

Project Economics:

Project Economics

Description Project

IRR 19%

Payback Period Period (Yrs)

4 year

Net Present Value (NPV) 6,674,858

Project Financing

Description Percentage Amount in Rs.

Equity Financing 50% 59,558,000

Debt Financing 50% 59,558,000

Total 119,116,000

Financial Assumptions:

Project Life (Years)

5

Debt 50%

Interest rate on long-term debt

16%

Interest on cash in bank

10%

Debt tenure (Years)

5

Debt payments per year

1

Minimum Cash Balance

1,000,000

Travelling expense (% Rise per year)

5%

Communication expense (% Rise per year)

10%

Freight charges (% Rise per year)

10%

Promotional expense (% Rise per year)

5%

Insurance expense (% of cost of machinery/vehicle)

5%

Depreciation Expense

Building 5%

Machinery and Equipment

10%

Furniture and Fixture 10%

Vehicles 20%

Economy and Operating Assumptions:

Economy Assumptions

Electricity growth rate 15%

Diesel expense growth rate 10%

Wage growth rate 10%

Machine maintenance growth rate 5%

Office vehicles price growth rate 10%

Hardware price growth rate 10%

Transportation/Travelling expense growth rate 10%

Insurance rate 5%

Machine maintenance expense (% of machine cost) 2%

Operating Assumptions

Days operational per year 300

Hours per shift 12

Capacity growth rate 10%

Shifts operational per day 2

Depreciation Expense:

Depreciation Expense Year 1 Year 2 Year 3 Year 4 Year 5

Building5% 15,000,000 750,000 750,000 750,000 750,000 750,000

Machinery, Furniture and Fixture 10% 2,166,000 216,600 216,600 216,600 216,600 216,600

Vehicles 20% 1,500,000 300,000 300,000 300,000 300,000 300,000

Total 18,666,000 1,266,600 1,266,600 1,266,600 1,266,600 1,266,600

Gaming Sales:

Peak time:6:00pm to 6:00 am

Off time:6:00 am to 6:00 pm

No. of PCs in Use

Hours Spent

Price per Hour

Revenue(Rs.)

Peak Time

25 12 70 21,000

Off Time

15 12 70 12,600

12,096,000

Average Daily Sales

Sales of Gaming Consoles

50,000

Sales of DVD and software

2,000

Sales of Gaming PCs

40,000

Sales of Gaming Laptops

80,000

Sales of Gaming Accessories

15,000

Sales of Gaming Clothes

3,000

Per day Revenue

Average per year revenue

Total Revenue 223,600 67,080,000

Income Statement:% Rise Year 1 Year 2 Year 3 Year 4 Year 5

Revenues10% 67,080,000 73,788,000 81,166,800 89,283,480 98,211,828

Less Costs

Total Costs61,116,600 67,131,000 73,760,100 81,067,818 89,124,855

NPBT 5,963,400 6,657,000 7,406,700 8,215,662 9,086,973

Add : interest Income

1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

zardari tax 21% 1,462,314 1,607,970 1,765,407 1,935,289 2,118,264

Net Profit After Tax

5,501,086 6,049,030 6,641,293 7,280,373 7,968,709

Projected Balance Sheet: Assets:

Assets

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Total Current Assets

60,300,000 60,250,000 65,200,000 70,650,000 76,650,000 83,255,000

Total Fixed Assets

58,766,000 56,816,000 56,066,000 55,316,000 54,566,000 53,816,000

Total Intangible Assets

50,000 40,000 30,000 20,000 10,000 0

Total Assets

119,116,000 117,106,000 121,296,000 125,986,000 131,226,000 137,071,000

Projected Balance Sheet: Liabilities & Shareholders' Equity

Liabilities and Shareholders’ EquityYear 0 Year 1 Year 2 Year 3 Year 4 Year 5

Total Current Liabilities

0 0 0 0 0 0

Long-term Liabilities

Long term debt (Project Loan)

59,558,000 47,646,400 35,734,800 23,823,200 11,911,600 0

Shareholders' EquityPaid-up capital 59,558,000 59,558,000 59,558,000 59,558,000 59,558,000 59,558,000

Retained earnings

0 9,901,600 26,003,200 42,604,800 59,756,400 77,513,000

Total Equity 59,558,000 69,459,600 85,561,200 102,162,800 119,314,400 137,071,000

TOTAL CAPITAL AND LIABILITIES

119,116,000 117,106,000 121,296,000 125,986,000 131,226,000 137,071,000

Cash Flow Statement:

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5Operating activities

Net profit - 5,501,086 6,049,030 6,641,293 7,280,373 7,968,709Add: depreciation expense - 1,266,600 1,266,600 1,266,600 1,266,600 1,266,600Advance insurance premium (300,000) -250,000 -200,000 -150,000 -100,000 -50,000Other liabilities - Cash provided by operations (300,000) 6,517,686 7,115,630 7,757,893 8,446,973 9,185,309

Cash Flow Statement:Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

Financing activities

Change in long term debt

59,558,000 11,911,600 11,911,600 11,911,600 11,911,600 11,911,600

Equity 59,558,000 - - - - -

Cash flow from financing activities

119,116,000 11,911,600 11,911,600 11,911,600 11,911,600 11,911,600

Investing activities

Capital expenditure

108,816,000 0 0 0 0 0

Cash flow from investing activities

(108,816,000) 0 0 0 0 0

NET CASH 10,000,000 18,429,286 19,027,230 19,669,493 20,358,573 21,096,909

Conclusion: Total project cost estimated at Rs. 119,116,000 The project is financed through 50% debt and 50% equity

(Assumed) The project NPV is around Rs. 6,674,858, and a payback

period of one year Believe there is chance of success for gaming zone

Goal is to become a leader in the online gaming industry of Pakistan Bring innovative products and services to customers

Have established target market of Lahore and found prime location

Game Planet is a justified business venture that will yield returns in the long-run

Any Questions?

Enjoy Gaming at Game Planet Gaming Zone

Hafeez Center, Gulberg, LahoreInfo: + 92 – 333-4948186

ThanK YoU FoR Not Booing or

Throwing Tomatoes