Highlights (Executive Summary)

 

This feasibility study is developed for a start up idea of gaming café Middlesex street which targets university students which aim to satisfy the need of playing games with high speed internet on heavy equipments and where there will be opportunity to play using the group dynamics idea. From primary research, it is found that majority of students are in interest of this café and they have shown excitement for this. PEST analysis also highlights that there are both favorable and unfavorable conditions. Brexit is proving problematic while business will get benefit from tax relief policies. There exists competition in the market and it will be handled successfully through critical success factors. At the end, financial projections are provided.

 

1.The Business Opportunity

1.1.Market gap

 

The recent research reveals that high speed infrastructure and new network technology is attracting more developers towards the huge demand that exists for multiplayer network based games (Ukie 2017). Due to such developments in this industry, a unique opportunity has emerged in the market which can be capitalized. This is fact that the speed of Internet is highly dependent on the infrastructure which is used which tells that the fastest network for gaming could be accessed through a local area network only. With fastest speed of Internet, smoother and faster gaming experience, which is demanded by, all gamers could be ensured. Moreover, it is also found that heavy equipment (both hardware and software) are expensive hence they could not be purchased by all gamers (Pay 2017). It is also found from recent research that gamers want an exciting environment where they could play in form of groups and compete with each other. Gamers look for experience where their friends are in same physical place and instead of artificial intelligence they want gaming with their own friends (Tsai, Tsai and Lin 2015).

1.2.Description of product/service

 

Therefore, FunPlex Gaming Café will be introduced in the market to provide the exciting environment to gamers where they can compete with their friends. This gaming café will be targeting the need of more interactive environment for gamers hence they will also be able to enjoy the camaraderie which is not possible through games at home. More importantly, FunPlex Gaming Café will enable the gamers to enjoy exciting games without buying the expensive hardware and software which are necessary for high quality gaming experience. One concept of psychology i.e. group dynamics says that group based games enhances the challenge factor. The sense of achievement and satisfaction along with camaraderie which is offered through group based games cannot be achieved through any other way. Hence, the group dynamic based business model of FunPlex Gaming Café will be exploited.

1.3. Micro Market

 

The primary research is conducted on 50 students of Coventry University to investigate the potential demand of the services offered by this business.

 

 

From primary research, it is revealed that currently targeted market i.e. students of university are excited about this experience.

Globally, there exists audience of 2.6 billion which plays video games. It is expected that the global market of gaming will grow from $101 billion in 2016 to $128.5 billion till the end of 2020 (Ukie 2017). This gaming café will be opened up in Middlesex Street near Coventry University, London, UK. The secondary research analysis shows that video game industry in UK has a long history. In UK, there are more than 2175 game companies which are having different scale and size. In 2017, UK is declared as fifth largest video game market and there are approximately 32.4million gamers in UK (Kirkpatrick 2017). The related industries and sectors i.e. game related toys, movies and soundtracks, books, movies and game based events has also benefited from this growth trend in UK. Overall, the gaming industry has recorded exponential growth having value of £4.33 billion. It is forecasted that by 2021, gaming market in UK will spur to £5.2 billion and the growth rate is of 6.7 percent (Philander, Abarbanel and Repetti 2015).

2.- Macro Market

2.1.Pest Analysis

2.1.1.Political

 

The gaming industry is subject to all government rules and regulations. The laws of taxation, employment and safety are equally applicable to this industry as these are applicable to any other industry. However, one positive aspect is that there is 2% decrease of corporate tax for this industry. One of the significant political aspects is that Brexit has recently taken place which is becoming the reason of uncertainty and lack of open access to the brightest talent from Europe. Due to Brexit, many talented employees have refused to resettle in the UK (Webber 2017).

2.1.2.Economic

 

The economy is influenced with the global recession and UK’s unemployment figures are increasing but nevertheless overall, the economy is having a favorable position with GDP of 2.619 trillion USD, inflation of 2.6% in 2017. There is increased tendency of investment from private enterprises due to favorable economic conditions (Office for National Statistics 2017). One of the most favorable economic aspects is about availability of Video Games Tax Relief since 2014, hence, this business can also claim for this.

2.1.3.Technology

 

The technological infrastructure is well developed in UK, hence, it will not be a problem to develop this café. Due to availability of advanced technology, fast internet access is also available to general public; hence, this might be a threat for business as this will attract lesser consumers towards the café. However, one of the favorable aspects is that despite availability of downloadable content, not all content can be downloaded free of cost (Feijoo et al 2012).

2.1.4.Social

 

The analysis shows that there is strong emphasis on maximizing leisure time. Due to this change in lifestyle, there are more gamers who look for exciting experience. However, the negative aspects like negative health influences of games along with the video game violence will also be of consideration for this café. One favorable aspect is that UK higher education is supporting the gaming industry by offering game courses; hence, there will be availability of highly qualified workforce which is needed for this café (Chen and Hwang 2017).

3.Macro Industry

3.1.Competitors

 

This café will be opened up in Middlesex Street, Near Coventry University, London. The following are the businesses located in nearby area which will be main competitors of this business.

Source: Google Maps (2017)

3.1.1.Direct competitors

 

All those businesses offering gaming experience are the direct competitors.

• Loading bar: offers funky video games along with freshly prepared cocktails
• Draughts: brick lined bar and café in a railway arch and also have a huge library of board games
• Escape Internet and Gaming: Provides both internet and gaming services at cheap prices
• War-boar games Ltd: Hobby store having variety of games and also sales games
• Meltdown London:  A bar which is made for electronic gamers, having heavy consoles and big screens
• The Four Quarters: It is a no-frill bar which offers retro arcade games along with US style grill menu
• Namco Funscape: It is an amusement centre and offers various kinds of virtual reality based games.
• The Library Pot: It is a café for gaming but it is specifically for kids as it is quite casual and cozy.

	Reasonable Price	Quality experience	High Customer Service	Heavy expensive equipment	Why customers chose
Draughts – Board Game Café	?	?		?	Variety of games
Loading Bar	?		?		Service
Escape Internet and Gaming	?	?			Cheap prices
War-boar games ltd		?	?		Variety of games
Meltdown London		?	?	?	Heavy equipment and big screens
The Four Quarters		?			Unique games
Namco Funscape		?		?	Virtual reality experience
The Library Pot	?		?		Casual and cozy environment

3.1.2.Indirect competitors

 

The internet café are indirect competitors of this business.

• Net House: It is a modern day internet café which also provides photocopy, printing and computer services
• Biz Internet Café in Central London: Offers high speed internet service facility

	Reasonable Price (average)	Quality experience	High Customer Service	Heavy expensive equipment	Why customers chose
Net house	?		?		Variety of games
Biz Internet Café in Central London	?		?	?	High speed of internet

 

3.1.3.Substitution analysis

 

All those firms selling games are substitutes. 

• Retro Game Base: It is a video game store from where gamers can purchase software of games.
• CeX: It is an electronic store sells CDs and DVDs of video games along with digital devices.
• Orcs Nest: Another game store offering games’ software, CDs and DVDs.

	Reasonable Price (average)	Quality experience	High Customer Service	Heavy expensive equipment	Why customers chose
Net house	?		?		Variety of games
Biz Internet Café in Central London	?		?	?	High speed of internet
Retro Game Base	?				Variety of games
Cex	?		?		Variety of games
Orcs Nest	?		?		Prices

 

3.1.4.Porters Five Forces Analysis

 

As per findings of Thomson (2014), flowing are key findings.

• There are also other competitors offering similar services. The rivalry among these competitors is of high intensity.

• There is low threat of new entrants as this business is based on heavy investment on its infrastructure.
• There is high threat of substitute products. The stores which sell video games in forms of software, CDs and DVDs are the substitutes. Indirect competitors i.e. internet café are also substitutes.
• Despite availability of substitutes, the experience provided by FunPlex is unique hence customers do not have high level of bargaining power. They possess medium bargaining power.
• The suppliers of games are of critical importance and there are not many suppliers which exist in the market. So their bargaining power is higher.

4.Micro Industry

4.1.Critical success factors

 

Critical success factors
High speed internet	This gaming café will have high speed internet.
Heavy equipment	The heavy equipment will be traded from trustworthy suppliers.
Licensed games	High quality games will be purchased from official traders.
Group dynamic based experience	There will be facility to purchase experience in form of multi-players.
Theme based experience	The gaming experience will be based on certain games of themes like war based games.

 

4.2.7P’s

4.2.1.Product

 

The product which will be offered by FunPlex Gaming Café is experience to play exciting games. There will be availability of high quality computers and consoles which will capture programming expertise along with the high quality of presentation which is only possible on high end machines that are specialized in special sound components and graphics along with few other hardware which are important prerequisites of high quality gaming experience. Moreover, the group experience will be offered to gamers who will make gaming more enjoyable.

4.2.2.Price

 

This business will set the market competitive pricing strategy. It will charge the average price which is charged in the market.

4.2.3.Place

 

This café will deliver the services through its facility. The customers will have to visit the premises of this café for getting the services. The location of this business will be Middlesex Street near Coventry University, London, U.K.

4.2.4.Promotion

 

As per suggestion of Armstrong et al., (2015), it will advertise this business through visiting nearby universities. Awareness sessions will be arranged in various universities’ cafeteria. Likewise, posters and banners will be posted in the nearby universities and shopping malls. This gaming café will also use social media marketing.

4.2.5.Physical evidence

 

The objective of this business is to enhance the experience of gamers. Therefore, the whole premises will be divided into different sections and each section will have themes as per different games. Each section will be dedicated to gamers of certain games. The walls, seats, roofs and other things will denote certain theme in each section (Rust and Huang 2014).

4.2.6.Processes

 

4.2.7.People

 

There will be one manager and one administrator. Manager will do all managerial tasks while all administrative tasks will be handled by administrator. There will be 5 staff employees who will be guiding the gamers as per themes of the game and they will also be handling technical stuff of each game.

 

 

 

5.Financials

 

The following statements are made as per suggestion of Ross (2002).

5.1.Break even calculations

 

5.2.Cash flow statement

 

The below-given table presents profit and loss figures for this café.

6.Recommendations

 

On the basis of above discussion, it can be concluded that the business idea of FunPlex Gaming Café is quite feasible and it can work successfully in the market. Therefore, it is recommended that it should be introduced in the market by start of 2018. In the rest of days of 2017, necessary business planning should be completed and it should be launched in 2018.

7.Reflections

 

This exercise of undertaking the feasibility study for this new idea has proved quite helpful for me. I have learned many new things from this exercise. The use of primary and secondary research has enabled to compile an effective report.

 

 

 

References

 

Armstrong, G., Kotler, P., Harker, M. and Brennan, R. (2015) Marketing: an introduction. Pearson Education.

Chen, C.H. and Hwang, G.J. (2017) ‘Effects of the Team Competition-Based Ubiquitous Gaming Approach on Students' Interactive Patterns, Collective Efficacy and Awareness of Collaboration and Communication.’ Journal of Educational Technology & Society, 20(1), 87.

Feijoo, C., Gómez-Barroso, J.L., Aguado, J.M. and Ramos, S. (2012) ‘Mobile gaming: Industry challenges and policy implications.’ Telecommunications Policy, 36(3), 212-221.

Google Map, (2017) Gaming cafe near Coventry university London, Available from: https://www.google.com.pk/search?dcr=0&q=gaming+cafe+near+coventry+university+london&npsic=0&rflfq=1&rlha=0&rllag=51538323,-116583,3386&tbm=lcl&ved=0ahUKEwjf6IaT7ZzWAhUGuY8KHaIxDgQQtgMIKA&tbs=lrf:!2m1!1e2!2m1!1e3!3sIAE,lf:1,lf_ui:10&rldoc=1#rlfi=hd:;si:;mv:!1m3!1d214222.07489278083!2d-0.08741124218749974!3d51.455654525692275!3m2!1i946!2i517!4f13.1 [11 September 2017]

Kirkpatrick, G (2017) ‘How gaming became sexist: a study of UK gaming magazines 1981–1995.’ Media, Culture & Society, 39(4), 453-468.

Office for National Statistics (2017) UK consumer price inflation: July 2017, [online], Available from: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest [11 September 2017]

Pay, A (2017) Why is the UK gaming industry growing so fast?, [Online], Available from: http://www.telegraph.co.uk/connect/small-business/driving-growth/uk-gaming-industry-growing-so-fast/ [11 September 2017]

Philander, K.S., Abarbanel, B.L. and Repetti, T (2015) ‘Consumer spending in the gaming industry: evidence of complementary demand in casino and online venues.’ International Gambling Studies, 15(2), 256-272.

Ross, S.A., Westerfield, R., Jaffe, J.F. and Roberts, G.S (2002) Corporate finance (Vol. 7). New York: McGraw-Hill/Irwin.

Rust, R.T. and Huang, M.H. eds (2014) Handbook of service marketing research. Edward Elgar Publishing.

Thomson, J (2014) Research Guides. Video Gaming Industry (MBA/CMA National Case Competition 2014). Find Articles, Business News, Reports.

Tsai, F.H., Tsai, C.C. and Lin, K.Y (2015) ‘The evaluation of different gaming modes and feedback types on game-based formative assessment in an online learning environment’. Computers & Education, 81, 259-269.

Ukie (2017) The games industry in numbers, Available from: https://ukie.org.uk/research [11 September 2017]

Webber, J.E (2017) UK games industry: 40% of companies considering relocating after Brexit, [Online], Available at: https://www.theguardian.com/technology/2017/mar/30/uk-games-companies-leaving-brexit-vote-eu-workers [11 September 2017]