Abstract
The paper provides a discussion of start-up costs related to the Game Zone business. The answer to the question regarding sources of revenues and the profit model related to Game Zone is also presented in the paper. The possible success of the business is discussed with reference to the market analysis and examination of potential customers’ profiles.
Introduction
Game Zone is a newly developed business in the industries of video games and retailing. The purpose of this paper is to answer the questions regarding start-up costs for Game Zone and sources of revenues. The paper also answers the question about the reasons to expect the business’s success.
The Estimated Start-Up Costs
In order to open the Game Zone shop, the first investment in the project should be around $50,000-$65,000. The significant part of expenses ($5,000 per month) is associated with renting a shop with several halls that should be located in the central district of the city. This location can guarantee that many potential customers can visit the shop daily. Video games for Game Zone will be purchased in small companies that focus on launching innovative products.
The estimated costs are $10,000. To promote potential bestsellers, it is necessary to equip some room in halls and allow gamers to test a new product in the Game Zone shop (Burgess & Spinks, 2014). The costs associated with buying equipment, consoles, and computers are $10,000-$12,000. The employee costs will be minimal because only three employees will work in the shop during the first months. Much attention should be paid to organizing the first competition for gamers and the associated advertising in order to attract potential customers.
Revenue Sources and Profit Potential
The business sources of revenues are associated with the proposition of competitive prices and admission fees for participants of the club and competitions. In addition, the focus is on payments provided by small companies that are expected to pay for promoting their products in the Game Zone shop as games that are tested and played in special halls of the shop. Developers of video games will be interested in this type of advertising (Marchand & Hennig-Thurau, 2013). The expected profits are rather high, and it is possible to predict that revenues will exceed start-up costs after the first six months of work.
Reasons for Developing Successful Business
Game Zone will be a successful business because it is oriented to the target audience of gamers who represent a specific subculture, and the shop will provide customers with the unique experience of playing new games, competing, and interacting in the atmosphere of a club for gamers. While referring to the personal experience of working in the video game industry, as well as the experience of a gamer, it is possible to state that persons are interested not only in testing new products but also in observing how other people play.
The Game Zone shop provides gamers with many opportunities to satisfy their interests in video gaming: they can buy games to play at home, participate in testing games, interact with other gamers in the club, participate in competitions, and observe other people playing. According to Borowiecki and Prieto-Rodriguez (2015), these activities are important for the life of any gamer. Davidovici-Nora (2014) also states that social interactions based on similar interests can influence the purchasing behavior of gamers.
In spite of the fact that such giants in the market as GameStop and Nintendo shops can be viewed as more attractive to customers, the emphasis on additional services proposed in Game Zone shops will draw the attention of potential buyers (Rayna & Striukova, 2014). Therefore, although there are strong competitors in the market, Game Zone can become a successful business-oriented to gamers’ interests. As a result, it is possible to expect high profits.
References
Borowiecki, K. J., & Prieto-Rodriguez, J. (2015). Video games playing: A substitute for cultural consumptions? Journal of Cultural Economics, 39(3), 239-258.
Burgess, J., & Spinks, W. (2014). An examination of the four factors of brand resonance and their theoretical application to video games. The Journal of New Business Ideas & Trends, 12(2), 37-45.
Davidovici-Nora, M. (2014). Paid and free digital business models innovations in the video game industry. Digiworld Economic Journal, 94(1), 83-89.
Marchand, A., & Hennig-Thurau, T. (2013). Value creation in the video game industry: Industry economics, consumer benefits, and research opportunities. Journal of Interactive Marketing, 27(3), 141-157.
Rayna, T., & Striukova, L. (2014). Few to many: Change of business model paradigm in the video game industry. Digiworld Economic Journal, 94(1), 61-69.