Business Plan | Waves E-Gaming

2016 - 2020
Executive Summary

The Business

Waves E-Gaming (www.wavesE-gaming.ca) is a start-up Network Game Centre/Esports Arena - a

fun, social gaming environment that caters specifically to PC gaming enthusiasts to offer a fun,
social gaming environment where they can enjoy playing new and exciting games without having
to purchase the equipment or software required for a high-quality gaming experience.

The business is founded by Mr. Ahmad Aljamal and Ms. Laura Eichhorn, who are both members of
the popular game “League of Legends” (LoL) gaming community at York University in Toronto.
Ahmad and Laura are both very familiar with gaming and bring a high level of understanding of the
needs and wants of this target market. They are connected to an immediate customer base of
1,400 gamers and strong campus connections through various leadership roles as students at York
University.

Waves E-Gaming’s primary goal is to provide its customers with a fun, unique and unparalleled
gaming experience. Waves E-Gaming will have room for up to 50 users at a time, where customers
will be charged a competitive hourly rate. The business is to be located just across from York
University at 4205 Keele Street in North York Toronto, Ontario.

The Market

The global video game industry has surpassed Hollywood to become the fourth biggest
entertainment market in the world and Personal Computer (PC) games are a global phenomenon
which are growing each year. The global game software market is forecasted to surpass $100
billion by 2019, fueled by PC, which will be the single largest platform at $36 billion. This
represents an increase of 35% from the $28 billion generated in 2015. PC is played by 62% of the
most frequent gamers, making it the most popular gaming device. Esports – or live gaming
competitions – have also become incredibly popular in recent years where over 32 million people
watched the “League of Legends”’ 2015 championship, which is almost double the number of
people who watched the NBA finals. This creates increased demand for (a) expensive, high quality
equipment for better game play and (b) social competitive play between teams and friends. Both of
which Waves E-Gaming provides.

There are 53,000 students that attend York University and almost 200,000 people living within a
5km radius of the business’ proposed location. Assuming 54-70% of students of York University are
gamers (Pew market research), this translates into an immediate student target market size of
between 28,000- 37,000 students. Founders Ahmad and Laura are already connected to a potential
early customer base of 1,400 enthusiastic gamers through the campus gaming community, which
represent early potential sales for the start-up business.

Financial Considerations

The business is seeking $300,000 in funding to finance start-up costs, where the most significant
capital equipment item is the computer consoles, costing a total of $150,000. In return the
business is conservatively projected to generate revenues of $604,500, $906,750 and $1,209,000
in Years 1-3 of operations respectively.

2017 2018 2019

Revenue $604,500 $906,750 $1,209,000
Gross Profit $432,218 $648,326 $864,435
Net Income $181,168 $355,276 $513,885

This target is seen as attainable through Mr. Al Jamal’s (a) 4 years’ NGC gaming experience
organizing large gaming tournaments, (b) ability to gain early sales with base of enthusiastic
gamers and (c) intimate knowledge of the target market’s wants and needs. Being the area’s only
gaming centre within 10km of York University this will provide the business with a significant
competitive advantage as a first to market entrant. This business plan will discuss the tactics and
strategies to generate the revenues as stated, and the implementation to successfully become a
profitable niche gaming centre business in the North York Toronto market.
Table of Contents
1.0 BUSINESS OF THE COMPANY ............................................................................................................................ 2
1.1 BUSINESS SUMMARY & HISTORY .......................................................................................................................................... 2
1.2 INDUSTRY OVERVIEW ............................................................................................................................................................. 4
1.3 CURRENT SITUATION OF THE COMPANY ............................................................................................................................ 9
1.4 GOALS AND OBJECTIVES ......................................................................................................................................................... 9
1.5 KEY SUCCESS FACTORS ........................................................................................................................................................... 9
1.6 STRUCTURE OF THE COMPANY .......................................................................................................................................... 11
1.7 IMPLEMENTATION SCHEDULE ............................................................................................................................................ 11
2.0 SERVICE DESCRIPTION ..................................................................................................................................... 12
2.1 DETAILED DESCRIPTION OF SERVICE ............................................................................................................................... 12
2.2 CUSTOMER BENEFITS PROVIDED BY PRODUCT .............................................................................................................. 14
3.0 MARKET ................................................................................................................................................................. 15
3.1 TARGET MARKET PROFILE ................................................................................................................................................. 15
3.2 TOTAL MARKET SIZE ........................................................................................................................................................... 18
3.3 TRENDS................................................................................................................................................................................... 18
3.4 ESTIMATED COMPANY SALES ............................................................................................................................................. 19
3.5 RULES OF PURCHASE ........................................................................................................................................................... 20
4.0 COMPETITION ...................................................................................................................................................... 21
4.1 DIRECT COMPETITORS ......................................................................................................................................................... 21
4.2 COMPETITIVE EDGE.............................................................................................................................................................. 23
5.0 MARKETING ..........................................................................................................................................................24
5.1 POSITIONING .......................................................................................................................................................................... 24
5.2 SALES STRATEGY & TACTICS .............................................................................................................................................. 24
5.3 PRICING STRATEGY............................................................................................................................................................... 25
6.0 MANAGEMENT TEAM......................................................................................................................................... 26
6.1 OWNER BIOGRAPHY ............................................................................................................................................................. 26
6.2 OWNERSHIP ........................................................................................................................................................................... 26
7.0 OPERATIONS.........................................................................................................................................................27
7.1 LOCATION ............................................................................................................................................................................... 27
7.2 CAPITAL EQUIPMENT REQUIREMENTS ............................................................................................................................. 29
7.3 LABOUR REQUIREMENTS ..................................................................................................................................................... 29
7.4 SOURCES OF SUPPLY ............................................................................................................................................................ 30
8.0 KEY RISKS .............................................................................................................................................................. 30
8.1 DESCRIPTION OF KEY RISKS ............................................................................................................................................... 30
9.0 FINANCIALS ...........................................................................................................................................................31
9.1 TYPE AND AMOUNT REQUIRED.......................................................................................................................................... 31
9.2 PRO FORMA INCOME STATEMENT ..................................................................................................................................... 32
9.3 PRO FORMA CASH FLOW STATEMENTS ............................................................................................................................ 33
9.4 PRO FORMA BALANCE SHEET ............................................................................................................................................. 36
9.5 ASSUMPTIONS TO FINANCIALS ........................................................................................................................................... 37
1.0 Business Of The Company

1.1 Business Summary & History

Waves E-Gaming (www.wavesE-gaming.ca) is a start-up Network Game Centre/E-Sport Arena
(NGC) that will cater specifically to PC gaming enthusiasts to offer a fun, social gaming
environment where gamers can enjoy playing new and exciting games, without having to purchase
the equipment or software required for a high-quality gaming experience.

With team play gaming on the rise, coupled with rapid advancement of technology, the average
home computer consoles and Wi-Fi connections are unable to truly capture the programming
quality and presentation of today’s popular games. Rather, game play ends up being
disappointingly choppy as well as anti-social. Waves E-Gaming will provide its patrons with a fun,
safe and competitive atmosphere for gamers, with room up to 50 users at a given time, to play
top-of-the line equipment for top quality play. The result? Higher quality play than can be found at
home, coupled with a fun, social, team-centered play environment.

NGC’s represent a profitable business model with more and more popping up in large cities around
the world each year. Yet no centre currently exists within 10 kilometres of York University. Waves
E-Gaming will be located right next to the university to serve its 53,000-student base, 1,400
“League of Legends” campus gaming community, and local residents alike.

Figure 1 - A sample NGC gaming experience

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Figure 2 - Proposed layout of Waves E-Gaming seating up to 50 gamers

Figure 3 - Proposed snack bar and game area layout

The business is founded by Mr. Ahmad Aljamal and Ms. Laura Eichhorn, who are both members of
the “League of Legends” (LoL) gaming community at York University in Toronto. The business
concept for Waves E-Gaming comes from Mr. Jamal’s 4 years industry experience organizing large
successful gaming tournaments in Abu Dhabi in his home country United Arab Emirates (UAE). As
active gamers themselves, Ahmad and Laura have both seen the massive adoption and growing
demand of team gaming play, and a lack of quality NGC centres around Toronto to meet this
demand.

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Waves E-Gaming – An NGC for York University’s Strong Gaming Community
Ahmad and Laura are both very familiar with gaming and bring a high level of understanding of the
needs and wants of this target market. They also are connected to an immediate customer base of
1,400 gamers and strong campus connections through various leadership roles as students.

The business will be strategically located at a shopping plaza right next to York University at 4205
Keele St., offering maximum convenience for its 53,000 students. Many of these students make up
the demographic of enthusiastic, regular gamers and there is a strong active gaming community on
campus that Ahmad and Laura are well connected with. Waves E-Gaming aims to provide a quality
game play experience at a price point attractive for this target audience.

1.2 Industry Overview

PC Gaming Industry: 35% Growth to Reach $36 billion by 2019

The global video game industry has surpassed Hollywood to become the fourth biggest
entertainment market in the world and Personal Computer (PC) games are a global phenomenon
that are far bigger than most people think - and growing. PC gaming is particularly popular in Asia,
particularly South Korea where they are so popular that the government passed a law restricting
the hours kids could play games, and runs PSAs warning about the dangers of video game
addiction1.

Contrary to the amount of attention generally paid to mobile games, total annual revenues from
the PC gaming market exceeds mobile ($32 billion vs. 25 billion). The top PC game titles are
League of Legends ($1.6 billion), CrossFire ($1.11 billion), and Dungeon Fighter Online ($1.05
billion). Part of the current momentum behind Dota 2 can be attributed to its growing popularity as
a competitive game and Valve's genius in crowdsourcing prize pools2.

Forward Looking: 35% Projected Growth

According to DFC Intelligence the games market is projected to lean much more heavily in favor of
the PC in the next few years. The global game software market is forecasted to surpass $100
billion by 2019, fueled by PC, which will be the single largest platform at $36 billion. This
represents an increase of 35% from the $28 billion generated in 2015 1. PC is the top device that
62% of the most frequent gamers use to play games3.

1
PC to dominate $100bn games market in 2019 - DFC by James Brightman, Mar. 14, 2016.
http://www.gamesindustry.biz/articles/2016-03-14-pc-to-dominate-usd100bn-games-market-in-2019-dfc
2
PC trumps mobile, console in booming $61bn digital games market by Joost van Dreunen, Jan. 26, 2016.
http://www.gamesindustry.biz/articles/2016-01-26-pc-trumps-mobile-console-in-booming-usd61bn-digital-
games-market
3
2015 Sales, Demographics and Usage Data - Essential Facts About the Computer and Video Game Industry
by Entertainment Software Association (ESA), 2015. http://www.theesa.com/wp-
content/uploads/2015/04/ESA-Essential-Facts-2015.pdf
4
Hardware a Major Industry Driver
A major driver of industry growth is not just software but hardware. The emergence of eSports and
virtual reality is driving consumers to buy high end PC systems to not only play games, but watch
others playing games4. Waves E-Gaming will meet this trend by offers its patrons access to fast,
quality gaming equipment that they demand.

4
PC to dominate $100bn games market in 2019 - DFC by James Brightman, Mar. 14, 2016.
http://www.gamesindustry.biz/articles/2016-03-14-pc-to-dominate-usd100bn-games-market-in-2019-dfc
5
Canadian Video Game Industry: 31% Growth 5

Canada is one of the fastest-growing hotbeds for game development, and on a per capita basis is
the largest gaming industry in the world. The industry is being fueled by investment - Ubisoft
Montreal, for example, recently announced an $8 million investment over the next five years in a
new CODEX program to train the next generation of game creators.

31% Industry Growth From 2013-2015

Canada’s video game industry generated $3 billion in 2015, representing a staggering 31% year-
over-year increase since 2013. Over this same two-year period the number of active video game
studios in Canada have increased by 43% to 472 video game studios that employ 20,400 people.

 The industry creates 20,400 full-time jobs in Canada, up 24% since 2013.
 There are 472 active studios in Canada. 143 new studios have opened since 2013.
 Industry projected to create 1,377 new high-paying creative and technical jobs in 2016-
2017.

Shift From Mobile Game Development to PC and Mac Projects

The latest ESAC market research report showed that after years of hectic growth mobile game
development is slowing; where 85% of companies reported working on mobile games in 2013, only
70% were working on them in 2015. Companies working on PC and Mac projects, meanwhile, are
up a handful of points to 70%.

Management believes this is a reflection of (a) overloaded app store titles and (b) growing
popularity in PC gaming tournaments, participation and overall gameplay.

Growing Profitability of “Esports” & Live Gaming Events6

PC Games are growing in popularity and make money from live events. Live gaming competitions
(“Esports”) have become very large; over 32 million people watched the League of Legends
championship in 2015, which is almost double the number of people who watched the NBA finals.

Summary of Esports’ Growing Popularity 7

 67 million players worldwide compete playing “League of Legends” each month in the team-
based multiplayer game.
 The Esports economy is projected to generate over $465 million in 2017.
 In terms of audience, the number of Esports enthusiasts is expected to jump from 89
million in 2014 to 145 million in 2017.

5
Essential Facts About the Canadian Video Game Industry (Report) by Entertainment Software Association of
Canada (ESAC), 2015. http://theesa.ca/resources/essential-facts/
6
Worlds 2015 Viewership by LoLesports.com, Dec. 10, 2015.
http://www.lolesports.com/en_US/articles/worlds-2015-viewership
7
The Esports Economy Will Generate At Least $465 Million In 2017 by NewZoo, Feb. 16, 2015.
https://newzoo.com/insights/articles/esports-economy-will-generate-least-465-million-2017/
6
  Currently the number of global Esports enthusiasts compares to mid-tier traditional sports
(swimming and ice hockey). By 2017, the number of Esports fans is expected to match that
of American football.

Figure 4 - A photo from the live 2015 "League of Legends" Esport event, which exceeded more views than
the NBA playoffs that the same year.

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Commercial Viability of the Business
Video game enthusiasts spend money on gaming, where there exists a commercial need within the
industry to keep customers happy with ever-better graphics requiring ever-higher processor speeds.
In the US gamers spend over $5 billion on hardware alone, representing 22.7% of total games
industry consumer spending8.

8
2015 Sales, Demographics and Usage Data - Essential Facts About the Computer and Video Game Industry
by Entertainment Software Association (ESA), 2015. http://www.theesa.com/wp-
content/uploads/2015/04/ESA-Essential-Facts-2015.pdf
8
In an industry where gaming enthusiasts spend on games, equipment and accessories,
management sees a strong opportunity for a Network Game Centre which offers access to the
latest, fastest hardware, minus the costs required to invest in buying the equipment themselves.

1.3 Current Situation Of The Company

Management is currently in the process of solidifying its location at 4205 Keele Street as well as
finalizing suppliers. The company is seeking $300,000 required to finance equipment, interior décor,
and other necessary start-up expenses to open Waves E-Gaming.

1.4 Goals And Objectives

Our main goal is to provide customers with a fun, unique and unparalleled gaming experience.

Goals
 To become the local area’s primary destination for enthusiastic gamers.
 To provide patrons with a fun, competitive and interactive gaming environment “giving
gamers the respect they deserve.”
 To open a profitable business that creates new job opportunities for local residents and
value to all shareholders.

Objectives
 To generate sales of $604,500, $906,750 in Years 1-2 of operations respectively.
 To increase the number of gamer patrons by at least 50% from Year 1-2 and 33% from
Years 2-3 through superior equipment, popular tournaments and word-of-mouth referrals.
 To generate 70% brand awareness in York University Heights/Northwood Park (and
surrounding communities) target audience by the end of Year 1.

1.5 Key Success Factors

Management identifies the key factors to the success of Waves E-Gaming as follows: immediate
customer base, strong management, excellent location, high customer retention, effective
marketing and successfully meeting funding requirements during the game centre’s start-up stage.

1. Immediate Customer Base

Management identifies its strongest key success factor as its access to an immediate customer
base of 1,400 enthusiastic gamers. As students, Ahmad and Laura are members of the York
University’s League of Legends (LoL) gaming community with access to the campus’ 1,400
members.

The team also has good connections with gamers around the local GTA area after hosting a large
gaming competition at York University, with 40 teams registered with 5 gamers per team. As a
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member of New-Collage, Ahmad has access to over 2,000 students and 12 colleges. He is a
member of a closed group held by York University LoL players, which contains almost 800
members. These communities can be reached via Facebook or Twitter at any time to generate
awareness and early customers for Waves E-Gaming upon opening month.

2. Strong Management – Prior NGC and Gaming Organizing Events Experience

Waves E-Gaming’s success lies in its strong management. In addition to past business experience
working within his family’s business, Mr. Aljamal has 4 years experience in the gaming industry,
with direct experience at a NGC gaming centre and organizing large gaming events in both Dubai
and Canada during this time. As mentioned, both Ahmad and Laura are current members of
League of Legends community at York University, and have spent the past 12 months developing
relationships with large gaming sponsor representatives. Laura is a business student and is the
current Marketing Director of the Undergraduate Psychology Student Association of York University
and has previous business experience working in a kitchen management role, supervising staff and
overseeing product quality control.

The combination of the management team’s (a) past direct industry experience, (b) extensive
knowledge of the gaming industry and the target customer’s needs and wants, and (c) existing
gaming network and customer base in place makes Mr. Al Jamal and Ms. Eichhorn the ideal
managers to head this start-up business.

3. Excellent Location
A central, convenient location with high visibility and easy access for the customer is a key success
factor for any gaming centre. Waves E-Gaming intends to meet this factor with a convenient,
central plaza shopping location next to York University. This will allow the centre to take advantage
of the owner’s York University gaming network and gain high visibility in its early startup months,
while providing easy access for enthusiastic gamers living in Toronto.

4. High Customer Retention Rate

The social element of playing with others lies at the core of the gaming community. Over half
(56%) of the most frequent gamers spend an average of 5 hours per week playing with others,
where most of these games (42%) are played with friends9. Therefore repeat business is a crucial
ingredient for a gaming centre’s commercial success. With high customer loyalty and repeat visits,
Waves E-Gaming stands to maximize its marketing dollars, build a strong local community at the
centre and build a strong gaming brand within the Toronto gaming community.

This will be accomplished by:

a) Hiring the right personnel with high gaming knowledge and experience, and provide
ongoing training to ensure the customer consistently receives the equipment and service
they want.

9
2015 Sales, Demographics and Usage Data - Essential Facts About the Computer and Video Game Industry
by Entertainment Software Association (ESA), 2015. http://www.theesa.com/wp-
content/uploads/2015/04/ESA-Essential-Facts-2015.pdf
10
 b) Offering high quality gaming equipment and fun, competitive tournaments at an excellent
cost.
c) Warm, friendly and respectful customer interactions – all done to ensure each customer
leaves the centre feeling highly satisfied after each visit.

5. Effective Marketing
A key success factor for Waves E-Gaming is effective marketing campaigns that (a) successfully
reaches and attracts the company’s target audience of gaming enthusiasts living in the area, and
(b) achieves sufficient first trial customers in the local market in order to build an early client base
and generate word-of-mouth marketing. This factor also includes executing well-organized events.

6. Equipment & Supplies

Management identifies that the gaming centre must have the right equipment, products and
supplies in order to enter the market as a competitive gaming centre. This includes proper PC
computers, software, accessories, seating and fast high speed internet for a gaming experience far
superior to what the typical gamer could create at home – all within an environment that offers an
inviting, professional look.

7. Financing - Cash Flow Requirements Are Met

Due to the cost requirements of start-up expenses, the business’ success will require the ability to
gain sufficient funds to finance these costs.

1.6 Structure Of The Company

Waves E-Gaming is currently a sole proprietorship business and will be structured as a corporation
upon receiving funding. 95% of shares will be owned by Mr. Ahmad Al Jamal and 5% of remaining
shares owned by Ms. Laura Eichhorn. Management is open to subject ownership to change based
on investment opportunities.

1.7 Implementation Schedule

 Purchase all capital equipment: by August 1, 2016
 Staff hired: During the month of August 2016
 Target opening date: September 1, 2016

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2.0 Service Description

2.1 Detailed Description Of Service

With the emergence of new network technology and high speed infrastructure worldwide,
increasingly game developers are realizing the large potential demand for multiplayer network-
based games and increasingly are investing in the development of this customer segment (versus
individual game play).

This creates a high demand from video game enthusiasts: for ever-better graphics requiring ever-
higher processor speeds and complex computer graphics that are only found in high-priced PC
computer hardware. It also increases demand for fast Internet speed, which plays a vital role in
smoother game-play with no jerkiness or delays commonly found with normal Wi-Fi Internet
connections. This combination of expensive hardware and Wi-Fi connection is something the typical
gamer is either unwilling or unable to pay for.

The high growth in multiplayer network-based games also creates a growing demand for the
creation of teams, playing with others and the enjoyment of playing in a safe supporting
environment amongst friends and other fellow gaming enthusiasts.

Enter Waves E-Gaming.

Premium Gaming PC Consoles, Fast Internet Connection & Ideal Gaming Environment

Waves E-Gaming will provide an exciting environment in which people can play games
competitively against each other at an affordable hourly
fee (between $3.00-5.00). The challenge of going up
against one's friends in the same place is a far more
enjoyable experience than playing against the computer
or against an anonymous player on the Internet.

Waves E-Gaming provides the ideal environment for (a)

fast Internet connectivity and maximum game play
quality and (b) fun, social live play amongst friends and
the environment to meet new gamers and join a new
gaming community near York University.

Tournaments
Waves E-Gaming will host multiple, ongoing tournaments, pitting the top players and teams against
one another with exciting prize winnings.

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Products Sold

Food & Beverages

The business will provide a large array of snacks, soda and candy for its patrons.

Gaming Accessories
In addition to food and beverage sold on the premises, Waves E-Gaming will sell gaming products
such as specialized gaming mice, keyboards and headsets.

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Product Segmentation

Management projects that PC console rental will make up the largest source of sales at 40%,
followed by food and drinks (35%), tournaments (20%) and accessories sold (5%).

Product Segmentation
Accessories, 5%

PC Console
Usage, 40%
Food &
Beverage, 35%

Tournaments,
20%

2.2 Customer Benefits Provided By Product

1. Quality Game Play – Fast, smooth game play with no jerkiness.

2. Social Needs Met – Patrons can play with their friends, join a new gaming community and
hangout with other fellow gamers.

3. Tournament and Competition – The addictive and challenging nature of gaming is that
it provides players with intense and satisfying team play and competition against other
players. Waves E-Gaming provides the environment to enjoy this.

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