EXECUTIVE SUMMARY

1.1 PURPOSE

The purpose of this report is to present a business plan for opening a game café in
Chennai in the areas like OMR Road, T-Nagar, Adayar, Anna Nagar, KK Nagar.

This plan 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.

1.2 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

1.3 SCOPE

The scope of the project is limited to the multiplayer gaming scene in Chennai.

1.4 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.

1
1.5 ASSUMPTIONS

The following assumptions were taken during the writing of this report

• Legal costs will remain steady

• Rent will rise 10% every year

2
 INDUSTRY PROFILE

2.1 THE MODERN WORLD OF GAMING

It all started with a small guy. That small guy ran grazed around the walls in a room
while being surrounded by fires and other enemies. With such a simple concept, “DAVE”
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

In November 2007, the game ‘Halo - 3’ made a very high profit 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.

2.2 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 small guy –
games today having deep, immersing stories and life-like graphics and sounds. Yet reasons
behind the success and continuous growth of video-games are simpler than the elaborate
storylines and graphics: it is the ability to play these amazing games with each other.

2.3 TWO TYPES OF GAMES: SINGLE-PLAYER AND MULTI-PLAYER

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 game play becomes
even more interactive, and the challenges are always unique. As the old adage says: it’s an
old in a 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.

3
2.4 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 more fun, since
players play in the same room, leading to an exceptional gaming experience.

2.5 GAME CAFES – A HUB FOR MULTIPLAYER GAMING

Multiplayer gaming therefore, either requires an extremely fast Internet connection or

a 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.

2.6 GAMERS HUB – A COMPANY SUMMARY

Gamer’s hub, which will be located in Chennai-T.Nagar, will offer an accessible and
beginner-friendly environment for multiplayer gaming. It will provide the latest multiplayer
games in a cozy and relaxing environment, as well as offer other, innovative services such as
tutorials for beginners and a membership system.

2.7 MISSION OF GAMERS HUB

Gamer’s hub’s mission is two-fold:

 Become the leading brand among game cafes,

 Draw game cafes into the mainstream entertainment scene.

4
2.8 OBJECTIVES AND GOALS

Gamer’s hub’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, Gamers hub must fulfill the following goals:

• Break-even within the first six months

• Attract a large pool of customers

2.9 FEATURES OF GAMERS HUB:

Gamer’s hub 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 Gamers hub 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

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

5
2.10 TECHNICAL SUPPORT

Gamer’s hub has reached a contractual agreement with Modern Computers Network, a
computer hardware supplier, to provide computers with the latest hardware to Gamers hub.
The terms of the contract are listed below:

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

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

6
 MARKET ANALYSIS

In order to mesh effectively with the gaming culture in Chennai, Gamers hub must
know its customers first. An analysis of the market will prove invaluable for two reasons.
First, it will allow Gamers hub to recognize opportunities in the market. Second, and more
importantly, it will highlight the needs of customers, allowing Gamers hub 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.

3.1 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 Gamers
hub’s prospective customers are students, the best set up location would be in the proximity
of multiple educational institutes. These institutes, however, are evenly distributed around
Chennai city. For example, the major private universities are situated mainly in OMR road,
while schools are primarily located in the inner area of Chennai. In area like T-Nagar where
people come for shopping, they have to carry their kids along with them, but the kids will be
having no interest in them. So by keeping Gamers hub in T-Nagar, we hope of earning a good
profit when the kids come to play during the shopping of their parents.

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:

7
 Class 8 and below
8%

SSC
University
22%
40%

Fig. 1: Customer
Fig. 1: Customer
HSC fragmentation by
fragmentation by
30% academic level
academic level

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

OMR ROAD 56%

Inner Areas In CHENNAI

33%

Fig. 2: Customer
segmentation by
location
Other 11%

0 10 20 30 40 50 60

8
The charts show that:

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

• 56% of the institutes are located in OMR ROAD.

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

These findings suggest that OMR ROAD would be a very good location for Gamers
hub, since most of the schools are located there, as well many residences. T-Nagar, Adayar,
etc are 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.

3.2 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 India, 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 is female. It would appear that the
currently existing game café’s have completely overlooked girls as prospective gamers – to
their own loss.

It is not as though India 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 Barbie), 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.

9
 It would be a major breakthrough for Gamers hub if it could break this norm and start
drawing female customers towards multiplayer gaming – hence tapping into a hugely
promising market.

3.3 SOME OF THE OTHER FINDINGS OF THE MARKET ANALYSIS ARE:

 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 Gamers hub should try to develop strategies which can attract
completely new users.

 Gamer’s hub’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.

 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.

 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.

 Although currently Billiards is more popular, the growing popularity of multiplayer

gaming in Chennai is a sure winner and will ensure a consistent market for Gamers
hub.

3.4 TAKEAWAYS FROM MARKET ANALYSIS

 The best location for setting up Gamers hub appears to be in OMR ROAD, but the
prospects in T-Nagar, Adayar 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. Gamer’s hub 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, Gamers hub 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

10
 Game pads dedicated customer base. Hence, Gamers hub must also focus strategies
on attracting the power users.

3.5 COMPETITION ANALYSIS

There are around 10 to 15 games in Chennai 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 café Spark Gaming Hub Gaming Cafe Xtreme Gamers

Cafe

Established in 2005 2007 2009

Location Adayar Thiruvanmiyur T-Nagar

Customers mainly from... School & School & University

Residential areas 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

11
3.6 SOME ADDITIONAL FINDINGS FROM THE COMPETITOR ANALYSIS ARE

 None of the competing game café’s is legal.

 None of them have any female customers, nor are they putting any effort to fix the
situation.

 90% of the survey respondents consider the existing game café’s services have plenty
of room for improvement.

3.7 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 Gamers hub 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 has 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 is legal, they try to maintain a low profile. Ergo they
are not able to advertise as broadly as Gamers hub will be able to.

12
3.8 SWOT ANALYSIS

The SWOT analysis will highlight Game pad’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 Gamers • Restricted number of computers: Due

hub will gamers be able to play the latest
and greatest games on high-performance
machines.
• Expertise: Gamers hub’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.
to limitations in startup funds and space,
Gamers hub will start with a fewer
number of computers than its
competitors.
• Features such as the food court may not
be very well developed initially.

• Location: Gamers hub will be situated

near major high-schools, colleges, and
residential areas.

• Advertising: Unlike its competitors,

Gamers hub will operate legally, and
therefore will be able to advertise
extensively.

Opportunities Threats

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

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

• Female gamers: Female gamers are

completely ignored by the existing game

13
 cafes. Gamers hub will attempt to bring
these female gamers into the mainstream

• Upgrading computers: Gamers hub will

be able to upgrade its computers every
two years, thanks to its contract with
Modern Computers.

STRATEGY AND IMPLEMENTATION

14
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

4.1 STRATEGY 1: SELECTING A FAVORABLE LOCATION

From the market analysis, two prospective locations were determined: OMR ROAD , Adayar
and T-Nagar. An independent investigation was carried out to analyze these locations. The
findings show that OMR ROAD is a better place for starting Gamers hub, while the other two
places are good prospect for future expansion.

TABLE 2: LOCATION COMPARISON

OMR ROAD T-Nagar and Adayar

Closer to major high-school, colleges, and Close to residential areas, schools and
residential areas shopping centers

Moderate rent Higher rent

Closer to competition Competition is lower

Greater accessibility by both Train and bus

4.2 STRATEGY 2: ENTERING THE MARKET

15
Gamers hub 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 Rs. 20 instead of Rs. 25 an hour.

2. Advertising – Gamers hub will budget Rs. 300,000 for promotional efforts.
Coupons (for a free hour of play-time) will be distributed in nearby schools and
other places. Game pad also will post advertisements in the popular Daily
magazines and newspapers to build awareness among students in particular.

4.3 STRATEGY 3: ATTRACTING BEGINNERS AND FEMALE GAMERS

Gamers hub’s third strategy focuses on creating an opportunity for novices and female
gamers to play comfortably in a game café. Gamers hub will achieve this by the following
methods:
1. Helpful employees: Gamers hub will be staffed by friendly, knowledgeable
employees focused on serving the customer's needs.
2. Tutorials: Gamers hub will offer half-hour tutorials for only Rs. 10 only. These user-
friendly sessions will help beginners familiarize themselves with the multiplayer
games.
3. Fresh, inviting atmosphere: Gamers hub will sport a bright and clean outlook with
soothing wall tones, adequate lighting and a spacious play-room.
4. Casual games: Gamers hub will introduce a huge variety of casual multiplayer games
ranging from Sims Online to the extremely popular Barbie.

4.4 STRATEGY 4: ATTRACTING HARDCORE GAMERS AND BUILDING

CUSTOMER LOYALTY

The following steps have been designed to attract power gamers:

16
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 Gamers hub 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 RS. 25 an hour, Gamers hub will
offer other price packages such as membership discounts and day-passes

4. Tournaments – Gamers hub will host quarterly tournaments, offering attractive

rewards for the most skilled players

5. Merchandise – Gamers hub will sell gaming merchandise including game discs, t-
shirts, posters

6. Website: In Gamers hub’s website (www.Gamers hub.blogspot.com), gamers will be

able to look up basic information on Gamers hub, discuss about their favorite games
in forums, find tips and tricks, and stay updated on the latest gaming events.

17
 FINANCIAL ANALYSIS

5.1 STARTUP COSTS

Gamer’s hub’s initial startup cost can be estimated to be just under Rupees 23 lakhs. This
break down is shown in the table below:

TABLE 3: STARTUP COSTS

Unit Price Total Price

Item Quantity (Rs) (Rs)
High quality Gaming PC's 24 72000 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 45000 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 Rs. 22,96,000

18
5.2 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

5.3 ESTIMATED REVENUE BY MONTH FOR FIRST 6 MONTHS

TABLE 5

Estimated revenue by month for first 6 months ( In Rupees )

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 rs/hour for 9900
first 2 months) 43200 57600 72000 90000 0 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.

19
 FIG. 3: ESTIMATED PROFITS FOR FIRST 6 MONTHS

40000
Cash flow (in Rupees ) 34000

30000 25000

20000 16000

10000

0
1st month 2nd month 3rd month 4th month 5th month 6th month
-2000
-10000

-16400
-20000

-30000
-30800

-40000

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

5.4 PROJECTED PROFIT AND LOSS STATEMENTS

Finally, the table on the next page attempts to illustrate the projected profit and loss
statements for Gamers hub’s first two years of operation, classified semi annually

The table shows that the total income after taxes per year is approximately Rs 2.5
lakhs in the first year, and 6.25 lakhs in the second year. Further extrapolations estimate this
profit to be over Rs. 7 and 8 lakhs in the third and fourth years respectively.

20
 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 rs/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 year: 285300 2nd year: 737400

Total Income ( In Rupees ) 256700 626800

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

CONCLUSION

21
 From the financial analysis it’s clearly shown that the business will do well in the
prescribed areas in CHENNAI city among the competitors. Based on the financial report, in
two years time a high profit is shown up and in the forth coming years the hope is that there
will be more profit in this new venture.

The future plan of this project is, going to set up the GAMERS HUB in other metro
cities like MUMBAI, KOLKATTA, and DELHI. We are also trying to capture the market of
the existing competitors to us.

After establishing our step in the other cities, the plan is to organize a GAMERS HUB
CUP nationally among the various centers in the country and also after establishing in
internationally the plan is of organizing an international gaming hub cup which no one has
done till now. We hope that by organizing this, it will be a major entertainment to the people
of all the ages all over the world.

22