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Business Plan: Tara, One G!

Research Proposal · December 2019

DOI: 10.13140/RG.2.2.18436.14720

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 TM 251

Business Plan

Tara, One G!

Submitted to: Group 6

Prof. Edison Cruz Basig, Charlene U.

Dimzon, Jiero Joh D.
Flora, Auriel J.
King, Nyker Matthew C.
Recalde, Gabriel John D.
Sigua, Ronell P.
Table of Contents
Table of Contents 1
EXECUTIVE SUMMARY 5
Description of the Business Concept and the Business 5
The Opportunity and Strategy 5
The Target Market and Projections 6
The Competitive Advantages 6
The Team 6
The Offering 6
THE INDUSTRY AND THE COMPANY AND ITS PRODUCT(S) OR SERVICES 7
The Industry 7
Gaming Industry in the Philippines 8
PEST Analysis of the Gaming Industry in the Philippines 9
Political 9
Economics 11
Social (DataReportal, 2019; PSA, 2019) 12
Technological 14
Porter’s Five Forces 17
High Bargaining Power of Buyers 17
Moderate Bargaining Power of Suppliers 17
High Threat of Substitute Products 17
High Threat of New Entrants 18
Moderate Industry Rivalry 18
The Company, the Concept, and its Product 18
Entry and Growth Strategy 20
MARKET RESEARCH AND ANALYSIS 22
Customers 22
Age Group 24
Rising Demographics of Female Gamers 25
By Income 26
Gaming Behavior of Players 26
Readiness to Purchase 28
Preference on Gaming Device 28
Market Size and Trends 29
Competition and Competitive Edges 37
Steam 37
Garena 38
Arena Match 39
Estimated Market Share and Sales 40

Page 1
 Ongoing Market Evaluation 41
THE ECONOMICS OF THE BUSINESS 42
Capital Requirement 42
Gross and Operating Margins 43
Profit Potential and Durability 44
Fixed, Variable, and Semi-variable Costs 45
Months to Reach Positive Cash Flow 46
MARKETING PLAN 47
Overall Marketing Strategy 47
Pricing 51
Sales Tactics 52
Free Trial 52
Referral 52
Monetization 52
Loyalty Program 53
Advertising and Promotion 53
Digital Advertising or Internet Marketing 53
Social Media Marketing 54
Brand Awareness 55
Audience Engagement 56
Cost Efficient 56
Customer Feedback 56
Increased Web Traffic 57
Brand Recognition 57
Improved Brand Loyalty 57
Promotion through Customer Reviews 57
Transit Marketing 58
DESIGN AND DEVELOPMENT PLANS 58
MANUFACTURING AND OPERATIONS PLAN 61
Stage 1: Pilot Run 61
Social Media Marketing 62
Transit Marketing 62
Pilot Run 63
Loyalty Rewards System 63
Stage 2: Expansion and Continuous Improvement 63
Improved User Experience 64
Target Market Expansion 65
Operating Cycle 65
Geographical Location 65
Facilities and Improvements 66

Page 2
 Regulatory and Legal Issues 66
Republic Act 10173 – Data Privacy Act of 2012 66
Games and Amusement Board (n.d.) Resolution No. 2017-21 ESports license
fees and charges 66
DepEd Order 83, Series of 2003 66
CSC Resolution No. 1701077-2017 67
Copyright violation 67
MANAGEMENT TEAM 68
Organization 68
Key Management Personnel 68
Management Compensation and Ownership 69
Other Investors 69
Employment and Other Agreements and Stock Option and Bonus Plans 70
Other Shareholders, Rights, and Restrictions 70
SUSTAINABILITY AND IMPACT 71
Issues of Sustainability of the Venture 71
Impact on the Environment 72
Impact on the Community and Nation 72

OVERALL SCHEDULE 73
CRITICAL RISKS, PROBLEMS, AND ASSUMPTIONS 76
Legal Policies 76
Health Hazards 76
Application Lifecycle 77
Human Resource Risks 77
Safety 77
THE FINANCIAL PLAN 79
Actual Income Statements and Balance Sheets. Pro Forma Income Statements
79
Pro Forma Balance Sheets 81
Pro Forma Cash Flow Analysis 82
Break-Even Chart and Calculation 83
Return on Investment and Payback Period 84
Cost Control 85
PROPOSED COMPANY OFFERING 86
Desired Financing 87
Offering 87
Capitalization 87
Use of Funds 87
Investor’s Return 87

Page 3
APPENDIXES 88
REFERENCES 91

Page 4
I. EXECUTIVE SUMMARY
A. Description of the Business Concept and the
Business
With the accessibility of games on mobile devices, gaming has
evolved from a niche hobby and pastime to a global phenomenon.
Noting that almost everyone has a mobile phone today, it comes as no
surprise that the demographics of gamers are so diverse. Even more,
online games also evolved from single player, to a two-player, and then
to multiplayer sessions.

The proposed business is an online gaming platform called “Tara,

One Game!” (TOG!) wherein gamers can play a specific game with a co-
player. Just like any other gaming platforms, a gamer needs to set up
his/her account which he or she then uses to find a co-player according
to the level of expertise/skills he/she wants to challenge. A minimum fee
applies for one game session and rewards will be given to whoever wins
after the game. Match-up fees can range from P10.00 to P30.00,
depending on the game level a gamer wants to play. Because the
platform offers a 2-week trial, it would have a similar revenue-generating
method with Spotify that features ads on that period to lessen the risk of
abuse on the trial period.

B. The Opportunity and Strategy

Online games are nothing new to the market, hence, TOG! should
have a well-designed platform to attract potential gamers. As a strategy,
the platform would have a trial period of 2 weeks wherein users could
request for a maximum of 10 matches per day. After the trial period,
users would be required to pay using a third party e-payment system like
Coins.ph, PayMaya, or GCash or payment through airtime load.

LaroPH, the company that will host TOG!, aims to establish first
its brand by entering the TOG! market as a platform that enables gamers
to speedily achieve higher levels of gaming while their co-gamers are
earning a revenue. There will be loyalty, rewards, and referral programs
to encourage continuous use of the platform.

To hear the voice of customers, LaroPH will be more engaging in

social media platforms (i.e. Facebook, Twitter, etc.) to host consumer-
facing support for suggestions and comments. Moreover, the marketing
of TOG! will be designed through mediums like media advertising and
publicity (through online YouTube ads and Facebook ads) to cover a
wider audience while minimizing costs.

Page 5
 With the increasing ventures of online games in the international
market, global expansion of TOG! is seen as an opportunity after building
its brand in the Philippines.

C. The Target Market and Projections

TOG! targets customers who are of age ranging from 16 to 34
years old—possibly high school students and young professionals.
According to Statista (2019), these ranges appeared to have been very
engaged with mobile online games for which TOG! can penetrate in.
Based on the study, low to middle-income earners also play these
trends. With the increasing population of the country, so does the
gamers, as well as the industry’s potential growth.

D. The Competitive Advantages

Competition is stiff in the industry especially that there were
already established platforms in the country. However, because TOG!
is a new entrant and has seen advantages over its competitors, TOG!
will position itself on money-making opportunities for players, less
restrictions with age and other features, and an affordable match-up fee
to attract users.

E. The Team
The established LaroPH company will have a six-man team—
each has a specific role that contributes to the overall strategy of the
organization. These key management personnel include the Chief
Executive/Technology Officer (CEO/CTO), Chief Finance Officer (CFO),
Head of Human Resource, Chief Marketing Officer (CMO), Head of
Legal, and Head of R&D.

F. The Offering
Basically, the TOG! platform enables gamers to play a game of
their choice with a co-player. Corresponding fees will be applied, after
the 2-week free trial period, for every type of game match the players
will take. Loyalty schemes, rewards and referral bonus systems will be
initiated to encourage more players and patronize the platform.
Earnings can be converted good as cash which may pose a money-
making opportunity for players.

Page 6
II. THE INDUSTRY AND THE COMPANY AND
ITS PRODUCT(S) OR SERVICES
Created by breaking down sectors into more defined groupings, the term
‘industry’ refers to a specific group of companies that function in a similar
business domain (Investopedia). Hence, a company belongs to an industry
which is defined by its product and/or services.

This section aims to analyze the gaming industry’s potential in our

modern community. The knowledge collected from this analysis will help our
proposed company decide whether to enter the gaming industry and/or if it can
carve out a position in that industry that will provide it a competitive advantage.
Environmental trends such as economic trends, social trends, technological
advances, and political and regulatory changes will be recognized. This section
will also tackle the industry’s porter’s five forces model which includes threat of
substitutes, threat of new entrants, rivalry among existing firms, bargaining
power of buyers. Other than the mentioned tools, SWOT analysis will also be
defined to assess the position of the proposed company before deciding a
strategy.

A. The Industry
The gaming industry has undergone a substantial evolution since
the 1970s and has moved from a fringe activity into the mainstream. In
1971, the arcade game Computer Space was released and was followed
up by Atari Inc.’s first commercially successful video game, Pong.
Games entered the home formerly with the release of an early gaming
console called the Magnavox Odyssey. The market lost momentum in
1977 and was rejuvenated in 1978 by another successful game called
Space invaders. With this, arcade machines began to appear in
mainstream public spaces such as malls, stores and restaurants. Space
invaders went on to make $2 billion in 1982. In the late 1970s, personal
computer gaming also took off and the development of computing led to
a simultaneous advancement in gaming technology as well.
(Luenendonk, 2015).

There was a lot of evolution since then and some important

advancements were made including the use of CDs to store and
distribute software. There were also advancements in 3D graphics,
processing speeds and sophistication, the size of hardware reduced for
computers, and the size of hardware reduced significantly to herald the
advancement of mobile gaming. The industry remained unpredictable
in the 2000s as a third party game developers game and went quickly.

Page 7
Following 2010, the industry continues to develop and profit drives
technological advancement which then benefits other sectors of the
industry.

As such, the agglomeration of local game development companies and

indie developers led to the establishment of the Philippine chapter of the
International Game Developers Association (IGDA) in 2003 which paved
the way to the creation of the Game Developers Association of the
Philippines (GDAP) in 2007. IGDA Manila is the local chapter of the
IGDA which comprises game developers, students, and enthusiasts that
holds monthly meet-ups to promote collaboration and professional
growth.

1. Gaming Industry in the Philippines

Computer games are essentially software products that
can be developed in any country in the world which made the
video games development industry a recognizable segment of the
Philippines’ Creative Services industry. The country recognized
the significance of the industry and is doing everything they can
to attract game development talent and investment. Developing
a wide variety of games for different platforms such as mobile,
desktop, console, and the Web, the Philippines has one of the
most globally competitive programmers in Asia (Game
Development Plan, 2017). Roadmap 2022 projects the industry
to employ 4,055 workers, growing at a consolidated annual
growth rate (CAGR), as well as for revenues to grow annually by
13.5 percent to 51.3 million by 2022.

Looking at the previous data on the mobile games market

in the Philippines, the revenue in 2016 totaled 159 million USD
(143 million USD according to Newzoo). The estimates
suggested that revenue would grow by 8.2% percent annually
and would reach 175 million USD by 2021. In 2017, 25.7% of
Filipinos used mobile devices, and was expected to grow by
40.4% by 2021. The average revenue per user (ARPU) was seen
to be 14.97USD. Average Consumer Price Index (CPI) in the
Philippines for iOS back then was 0.46 USD and for Android was
1.28USD. The Android operating system, the Facebook social
network, the Google search engine, and the messengers
(Facebook Messenger and Viber) are dominant in the Philippines
up until now.

Based on the highest-grossing games, the most popular

genres among Filipino mobile gamers are strategy, action, and

Page 8
 RPG. Gamers have very positive associations with Western
developers. The most beloved games in this country include
Clash of Clans, Clash Royale, Pokemon GO, Hearthstone, and
others.

2. PEST Analysis of the Gaming Industry in the

Philippines
a) Political

(1) Republic Act 10173 – Data Privacy Act of 2012

With the industry’s popularity and market

size, it makes an ideal target for cybercriminals who
see it as an ideal platform for stealing user
information, invading privacy, or spreading
malicious content and malware. Online gaming
accounts invariably contain personal information
besides user’s login credentials such as the player’s
name, birthdate, address, mobile number, email
address for verification, social network ID, and even
linked credit card account. Hence, the country
recognizes RA 10173 as an act of protection for
individuals from unauthorized processing of
personal information. This requires organizations or
companies to have a data protection scheme to
make relevant data processing transparent to their
customers, and maintain the confidentiality,
integrity and availability of their data.

(2) Games and Amusement Board (n.d.) Resolution

No. 2017-21 ESports license fees and charges

GAB is a Philippine Agency mandated by law

(Presidential Decree No. 871) to supervise and
regulate Philippine professional sports. Like
basketball and boxing, the country now considers
eSports as legitimate sports. Professional eSports
players have been allowed by GAB to secure
athletic licenses since August 2017. Resolution No.
2017-21 or “Guideline Governing the Conduct of
Electronic Sports (E-Sports) in the Philippines”
outlines several guidelines and prerequisites for
obtaining licenses, as well as imposing fees and
other stipulations on tournaments held in Philippine

Page 9
 soil. Section 2 of the document defines professional
esports events as any video game competition
played between licensed pro gamers. Filipino
citizens or not, all pro gamers participating in related
activities held in the Philippines are required to
apply for a license.

Moreso, esports (or competitive video

games) is one of the new crops of esports in the
modern time. The local government has been
issuing professional licenses for players, and in fact,
the country also included this as a medal sport in
the upcoming 30th SEA Games that the Philippines
is hosting – from November 30 to December 11,
2019.

(3) Wage legislation - minimum wage and overtime

According to the National Wages and

Productivity Commission of the Department of
Labor and Employment (NWPC-DOLE), a minimum
wage earner in the Philippines receives a daily
minimum wage rate ranging from ₱270 to ₱537
depending on which area or region the worker is
employed. Based on Republic Act No. 6727 or the
Wage Rationalization Act, each region in the
Philippines has a unique minimum wage set by the
Regional Tripartite Wages and Productivity Boards.
The factors taken into consideration include the
poverty threshold, employment rate, and cost of
living specific to the region.

In turn, establishing a company in the

Philippines and having employees should abide
with the rules and regulations set by the country.
Other than RA6727, the Labor Code of the
Philippines Presidential Decree No. 442, under Art.
83, states that the normal hours of work of any
employee shall not exceed eight (8) hours a day.
Under Art. 87 (Overtime work), work may be
performed beyond eight (8) hours a day provided
that the employee is paid for overtime work, an
additional compensation equivalent to their regular
wage plus at least twenty-five percent (25%)
thereof. Work performed beyond 8 hours on a

Page 10
 holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight
hours on a holiday or rest day plus at least thirty
percent (30%) thereof.

(4) Government mandated employee benefits

All working professionals in the Philippines

should have mandatory employee benefits and
contributions. Strengthened by the provisions of the
Republic Act No. 8282 or the Social Security Law,
the country’s social insurance program comprises
the following bodies, namely, (i) Social Security
System (SSS); (ii) Home Development Mutual Fund
(HDMF) or PAGIBIG Fund; and (iii) Philippine
qHealth Insurance Corporation (PhilHealth). The
Government Service Insurance System (GSIS) is
the equivalent system of SSS for Philippine
government employees.

Both private and government employees

must contribute to the Pag-IBIG Fund and
PhilHealth. Membership is optional, however, for
self-employed persons, Overseas Filipino Workers
(OFWs), and Non-Working Spouses (NWSs).

b) Economics

(1) Republic Act No. 10963 — Train Law; Higher

disposable income

The Republic Act No. 10963 or “Tax Reform

for Acceleration and Inclusion” (TRAIN) aims to
enhance the progressivity of the tax system;
provide, in as much as possible, equitable relief to
a greater number of taxpayers and their families in
order to improve levels of disposable income and
increase economic activity; and, ensure that the
government is able to provide for the needs of those
under its jurisdiction and care through the provision
of better infrastructure, health, education, jobs, and
social protection for the people.

Among the impact of said Act on Filipinos

since January 2018 includes a higher take-home
pay for salaried workers. Unfortunately, the higher

Page 11
 the monthly household bill offsets the gains they
would receive from the newly-implemented TRAIN
law. Self-employed workers, especially in the
informal sector (i.e. farmers, fishermen, vendors,
carpenters, etc.) do not feel any equivalent benefit
as they pay no income taxes in the first place.

(2) 12% tax

Value-Added Tax (VAT) is a form of sales

tax. It is a tax on consumption levied on the sale,
barter, exchange or lease of goods or properties
and services in the Philippines and on importation
of goods into the Philippines. It is an indirect tax,
which may be shifted or passed on to the buyer,
transferee or lessee of goods, properties or
services.

In the Philippines, the sales tax rate is a tax

charged to consumers based on the purchase price
of certain goods and services. The benchmark we
use for the sales tax rate refers to the highest rate.
Revenues from the Sales Tax Rate are an important
source of income for the government of the
Philippines. The Sales Tax Rate in the Philippines
stands at 12 percent.

Any person who, in the course of trade or

business, sells, barters or exchanges goods or
properties or engages in the sale or exchange of
services shall be liable to register if (i) their gross
sales or receipts for the past twelve (12) months,
other than those that are exempt under Section 109
(A) to (U), have exceeded Three Million Pesos
(P3,000,000.00): or (ii) there are reasonable
grounds to believe that their gross sales or receipts
for the next twelve (12) months, other than those
that are exempt under Section 109 (A) to (U), will
exceed Three Million Pesos (P3,000,000.00).

c) Social (DataReportal, 2019; PSA, 2019)

(1) 108 Million Population

The population of the Philippines has been

steadily growing for many years. As of this writing,

Page 12
 the Philippine population has reached 108 million
which makes it the 13th most populated country in
the world (Worldmeters, 2019).

(2) Supply of Graduates and Human Resources

Condensed from IT-BP Roadmap 2022,

there are strong competencies in game
development for web, PC, and mobile. Part of the
roadmap is to employ over 9,000 artists in
Animation and 4,000 professionals in game
development which will later be adding 15,000
additional employees doing game support, testing
and other related activities in contact centers. There
are 530,000+ college graduates annually of which
over >100,000 in the field of IT and engineering.

(3) 71.7% of total employed persons are full-time

In January 2019, the total population 15

years old and over was estimated at 72.5 million
wherein the number of persons who were in the
labor force was reported at 43.7 million. This placed
the labor force participation rate (LFPR) at 60.2
percent, which means that six in ten of the
population aged 15 years and over were either
employed or unemployed. Full-time workers are
those who work for 40 hours or more during the
reference week while part-time workers work for
less than 40 hours. According to PSA, full-time
workers comprised 71.7 percent of the total
employed persons, and the rest, part-time (27.7%)
or with a job but not at work (0.6%).

(4) 43.2 average working hours per week

In its latest Labor Force Survey dated

January 2019, the Philippine Statistics Authority
(PSA) revealed that Filipino employees work an
average of 43.2 hours each week, a six-percent
increase from the figure in 2018. The rise in the
average was brought about by more Filipinos
saying that they were working longer hours each
week. In the PSA’s latest survey, 71.7 percent of
Filipinos said they have workweeks lasting for at

Page 13
 least 40 hours compared to 63.6 percent the year
before.

(5) 76 million Internet users

According to the 2019 Global Digital Report,

conducted by Hootsuite and We Are Social, the
Philippines ranks number one in spending the most
time on social media at 4 hours and 12 minutes. The
time spent on the internet was 10 hours and 2
minutes a day. As of January 2019, it is reported
that there are 76 million Filipinos with a median age
of 25 years old are active social media users which
is 71% penetration – the same figure applies to
internet users.

(6) 24.32 million play online games

Out of the 76 million internet users, the study

showed that 32% or about 24.32 million of them
play games streamed live via the internet
(DataReportal, 2019).

(7) 63.84 million play using mobile phones

Moreover, there were about 84% or 63.84

million internet users who preferred using mobile for
playing games.

(8) USD 119 million total annual spent via e-commerce

on video games

The country’s ecommerce market is still

relatively small despite the high penetration figures
(DataReportal, 2019). The Philippines delivers the
lowest average revenue per ecommerce user of any
country in its Digital Market Outlook (Statista, 2019).
It was reported that Filipinos spent a total of US$4.7
billion on online purchases in 2018 which includes
only US$ 119 million for video games under digital
media products.

d) Technological

(1) Google Play 2018 top app category download:

Games (Statista, 2019)

Page 14
 Mobile internet users are spoilt for choice
when it comes to the sheer variety and availability
of mobile apps. As of the third quarter of 2019,
gaming apps were the most popular app category
in the Google Play store, accounting for 14.15
percent of available apps worldwide. As of October
2019, over 96 percent of Android apps could be
downloaded without having to pay for them upfront,
although this does not preclude other mobile app
monetization strategies such as in-app advertising
and in-app purchases. The ranking of leading
Android apps in the Google Play Store worldwide
based on revenue consists mainly of gaming apps,
including the ever-popular Candy Crush Saga and
Clash of Clans.

As such, there is a wide potential for the

gaming industry to grow since most revenues from
Google Play are mainly from gaming apps.

(2) Google Play 2019 top app category spend: Games

(Wikipedia and Statista, 2019)

Other than free gaming apps, more

audiences are also interested in spending for paid
game apps. According to Statista (Figure1), the
number one gaming app worldwide based on
revenue is Candy Crush Saga.

Figure 2.1. Leading Android apps in the Google

Play Store worldwide in June 2019, by revenue

According to some sources like Wikipedia,

some of these paid games with ten million or more

Page 15
 downloads include Minecraft and Hitman: Sniper.
Other popular paide applications include Stickman
Legends, Shadow of Death, True Skate, Cut the
Rope, Fruit Ninja, Draw Something, among others.
These are a variety of puzzles, action, word,
arcade, sports, trivia, adventure, and strategy.

(3) USD 137.9 billion 2018 global games market and

projected to be USD 180.1 billion 2021 global
games market (Wijman, 2018)

This projection is an affirmation that the

mobile gaming industry is indeed growing globally.
With the increasing population and the behavior of
most Filipinos towards the use of the internet, the
country would surely be a contributor to the growing
global market. Newzoo reported that there were
about 2.3 billion gamers across the globe who spent
$137.9 billion in 2018. Moreover, Newzoo
presented forecasts that consumers will continue
spending on games which will grow the market to
$180.1 billion by 2021 (Wijman, 2018).

(4) Growing acceptance of e-payments

With the growing popularity of online

shopping, e-payment systems became a must for
online consumers — to make shopping and banking
more convenient. However, according to BSP’s
Financial Inclusion Survey, only 1.3% of Filipino
adults own electronic money accounts. Cash
remains the preferred payment mode of Filipinos.

Page 16
 Figure 2.2. Compound Annual Growth Rate of
Consumer Payments in the Philippines
(THENERVE, 2019)

According to the World Bank, however,

payments may pose an important barrier to e-
commerce growth in the Philippines as only 1 in 50
Filipinos owns a credit card (DataReportal, 2019).

3. Porter’s Five Forces

Other than PEST, this analysis looks more at a company’s
direct competitors on the five factors. It also determines the
degree to which they increase competition in the industry. Below
is a grasp on analysing the structure of an industry that influence
and shape profit potential:

a) High Bargaining Power of Buyers

(1) Buyers’ ability to substitute is high

(2) No buyer switching costs

(3) Restricted availability of information of the buyer of

other players’ metadata

(4) Price-sensitive buyers

(5) Monopoly: no other competitors available in the

market

b) Moderate Bargaining Power of Suppliers

(1) Airtime balance deduction: Telco duopoly

(2) Other payment methods: Saturated e-payment

providers

(3) Insignificant product differentiation of e-payment

providers

(4) High probability of forward integration of supplier

c) High Threat of Substitute Products

(1) No buyer switching costs

(2) Saturated free instant messaging apps

(3) In-game built-in matchups

Page 17
 d) High Threat of New Entrants

(1) Low barriers to entry

(2) Minimal regulations

(3) Lucrative money-making industry

e) Moderate Industry Rivalry

(1) Monopoly: no other competitors available in the

market

(2) Undeveloped/virgin market

By reflecting on the above analysis, it seems that the

industry in the Philippine setting is quite unattractive because
most of the forces are strong which may have a limited profit
potential. The proposed company may be advantageous against
its rivalries in the industry and bargaining power of suppliers;
however, must strive more on other forces to survive in the
industry.

4. The Company, the Concept, and its Product

LaroPH is the company name of the proposed business which will
introduce a platform called “Tara, One Game!” (TOG!) where gamers
can find co-op and versus players to play a specific game. It will be
classified into two: 1.) Real world gaming, and 2.) Virtual-world gaming.

Real-world gaming is the avenue where players ask for on-

demand matches or plays. Players, during their break-time, can connect
with other players nearby and challenge each other on the games under
the platform. Virtual gaming, on the other hand, is an avenue where
players ask for on-demand co-op matches with anyone available on the
Internet.

All match requests would cost ₱10.00 to have a match-up on

regular matches, ₱15.00 on premium matches, e.g., Boss Raids, and
₱30.00 on high-level player co-op matches.

To attract potential gamers, the platform would have a trial period

of 2 weeks which they could request for a maximum of 10 matches per
day. After the trial period, users would be required to pay using a third
party e-payment system like Coins.ph, PayMaya, or GCash or payment
through airtime load.

Page 18
 It would have a similar revenue-generating method with spotify
that features ads on its two weeks trial period to lessen the risk of abuse
on the trial period.
Below is the SWOT analysis for TOG!
Table 2.1. TOG! SWOT Analysis
STRENGTHS
● New-level mobile gaming
● Unique story mode
progression that increases
replayability value
● Interactive platform
● Can be monetized
● Freemium offerings
OPPORTUNITIES
● Growing market: High
demand
● Profit
● Easy expansion into
different genres of video
games
WEAKNESSES
● High volume of
competition in app market
● Mobile games are
restricted to more simpler
forms
● Difficult to penetrate the
most popular marketing
outlets
● Addiction on the side of
the players
● Dependent to internet
connection (connection
must be fast and reliable)
● Gamers may not be willing
to pay on upgrades
● Developers need time to
relearn as new OS, new
user interface, new
functionalities and
capabilities are coming
● Others may opt to single
players
THREATS
● Fierce competition
○ Established competitor
from every genre
○ Competitors can easily
forward integrate as
they already have a
Page 19
 ● Simple mechanics will strong brand and wide
attract casual gamers user base
● Gaming app market has ○ Offers in the gaming
the greatest share of app app growing at a fast
downloads rate
● Emerging advances in ● Security issues
technology ● Trust with third parties (i.e.
● Almost everyone from payment scheme, partner
different generation has game apps)
mobile phone ● Low rate of adoption of e-
● Philippine Government payment methods
Recognition of E-Sports
● Directly Affected by
Gaming Industry Positive
Growth Rate
● First-mover Advantages
● ASEAN member
advantage for expansion
in ASEAN countries
● Opportunities in
international market to
diversify the risk
● “Increasing openness
toward leisure”
(Greenspan, 2017)
● “Increasing dependence
on digital technologies”
(Greenspan, 2017)

B. Entry and Growth Strategy

LaroPH aims to establish its brand first by entering the TOG!
market as a platform that enables gamers to speedily achieve higher
levels of gaming while their co-gamers are earning a revenue.

Stage 2 of TOG! aims to introduce the physical sub-platform,

where users looking for interested peers are matched to play with each
other. A GPS system will be added to make sure matched players are
able to physically reach one another.

Moreover, to encourage continuous use of the system, loyalty,

rewards, and referral programs will be introduced in the platform.

Page 20
 As the business model is designed to easily expand the product
to the global community, venturing out the international market would
also be viable and easily penetrable after building the brand in the
Philippines.

Page 21
III. MARKET RESEARCH AND ANALYSIS
Mobile games are defined as gaming applications for smart devices such
as smartphones and tablets. Leading app stores like Google's Play Store and
Apple's App Store offer paid app-downloads (single purchases) and freemium
games that are free to download but normally allow in-app-purchases for
various additional contents or access time. Physical games for mobile
consoles/handhelds and free-to-play gaming apps are not included.

This section shall identify the target market for TOG! which includes high
school to college students, middle to upper class, working class, as well as
young corporates. In addition, factors such as gender, readiness to purchase,
gaming behavior, participation of a third party, and applicable regulatory and
legal issues that may prove evident to the gaming industry in the Philippines.

A. Customers
DataReportal (2019) reported that the Philippines has 76 million
Internet users, 24.32 million play online games, and 63.84 million play
using mobile phones (online or offline modes).

Backed with research from Statistica (2019), the figure below

shows an increasing pattern on the number of video game users in the
Philippines may it be through mobile games, download games or online
games.

Figure 3.1. Video Game Users in the Philippines (Statista, 2019)

Page 22
 Figure 3.2. Video Game Penetration Rate in the Philippines (Statista,
2019)

Statista (2019) reported 10.9 million who play video games and a
continuous rise in penetration rate until 2023 with preference on mobile
games.

Furthermore, Statista (2019) reported the United States as the

leading country in penetrating the video game market.

Figure 3.3. Video Game Penetration Rate: World Vs. Philippines

(Statista, 2019)

The figure below on a survey conducted by Statistica (2017) only

shows a projection on an increasing number of mobile game users in the
Philippines, hence, a potential growth in the mobile gaming industry.

Page 23
 Figure 3.4. Number of Mobile Game Users (All Correct Group, 2017)

Newzoo (2019), summarizes the demographics of global gamers

as shown in Figure 3.5.

Figure 3.5. Demographics of Global Gamers (Newzoo, 2019)

According to App Annie, a mobile market data analytics platform,
highest grossing games the most popular genres in the Philippines are
action, role-playing, and strategy such as Mobile Legends, Ragnarok M,
and MU Origin 2 (as of December 4, 2019).

1. Age Group
Looking back in 2017, there were 29.9 million gamers in
the Philippines who spent a total of USD 354 million. This made

Page 24
 the Philippines rank 29th worldwide in terms of game revenues
(The Filipino Gamer, 2017).

According to Statista (2019), the largest market share is

from the 25–34 year-old age group.

Figure 3.6. Philippine Video Game Users by Age (Statista,

2019)

The above data has been consistent since players of the

same age also dominated in 2016-2017.

Figure 3.7. User by Age Groups in the Mobile Games (All

Correct Group, 2017)

2. Rising Demographics of Female Gamers

According to Statista (2019), most gamers in the
Philippines are male comprising 64% of the market. However,
36% of female gamers is an impressive rate considering the

Page 25
 worldwide gaming proportion of women reaching only around
37%.

Figure 3.8. Philippine Video Game Users by Gender (Statista,

2019)

As stereotypical as it may seem, there are still clear

differences in the video games enjoyed by men and women. The
mobile version of PlayerUnknown’s Battlegrounds, a battle royale
shooter game, were played predominantly by male gamers, while
puzzle games such as Candy Crush attracted more of a female
audience.

3. By Income
According to Statista (2019), most video game users in the
Philippines are from the medium income and low-income group.
The proposed business model should position itself to this target
market.

Figure 3.9. Philippine Video Game Users by Income (Statista,

2019)

4. Gaming Behavior of Players

a) Individuals Spend Six Hours Each Week Playing

Page 26
 Figure 3.10. Number of Hours of Playing Games in a Day
(Finding Playmate, 2019).

37.5% of the respondents prefer to play games

online for less than an hour, followed by around 2 hours,
and around an hour -- which makes it an average of 1 hour
per day. Supported by a survey conducted by Limelight
Networks (2019), gamers spend an average of almost six
hours each week playing.

b) Gamers Often Miss Daily Activities While Playing

Gamers often become so engaged in a game they

are playing that they miss common daily activities. Out of
the 72 Filipino individuals who responded to an online
survey, 50 percent of them reported missing sleep while
playing, 15.3 percent skipped a meal, 8.3 percent skipped
work, 2.8 percent missed a shower, and 23.6 percent did
not skip daily activities just for online games.

Figure 3.11. Missed Daily Activities while Playing

(Finding Playmate, 2019).

Page 27
5. Readiness to Purchase
a) Most Gamers Prefer to Download Games

Downloading of game files has become the primary

way in acquiring them especially that it has become faster
and updates are made available online. According to
Limelight Networks (2018), 59 percent of gamers
worldwide prefer to download games rather than purchase
a physical copy, rent, or trade.

b) Free Games Are Downloaded More Than Paid Content

Globally, most gamers (85 percent) download free

games multiple times each year, with 44 percent
downloading free games at least once a month. Only 55
percent of gamers are willing to pay to download games.
Although they are downloading games many times each
year, three-quarters of gamers expressed frustration with
the download process (Limelight Networks, 2019).

6. Preference on Gaming Device

With the rapid growth of casual gaming, 66.7% of the
respondents prefer the use of mobile phones as the primary
device for gaming.

Figure 3.12. Preferred Gaming Device (Finding Playmate,

2019).

Page 28
B. Market Size and Trends
DataReportal (2019) also reported amounting to a total of 119
million USD e-commerce were annually spent on video games.

All Correct Group (2017) reported 159 million USD in revenue in

2016 (Newzoo reported 143 million USD).

Figure 3.13. Mobile Games Market Revenue (All Correct Group, 2017)
Statista (2019), an online portal that provides statistics, reported
forecasted a revenue of 146 million USD for 2019 and 171 million USD
for the succeeding year in the Philippine video games market.

Figure 3.14. Video Games Revenue in the Philippines (Statista, 2019)

Page 29
 According to Statista (2019), the largest revenue-generating
country from video games is China.

Figure 3.15. Video Games Revenue: World Vs. Philippines (Statista,

2019)
According to Newzoo (2019), the largest revenue-generating
region from the game market is Asia-Pacific.

Figure 3.16. 2019 Global Games Market Per Region (Newzoo, 2019)
Newzoo (2019) also reported that revenues are expected to
continuously rise until 2022.

Page 30
Figure 3.17. Regional Breakdown of Global Game Revenues
(Newzoo, 2019)
Newzoo (2019), summarized the game market in Table 3.1.

Table 3.1. Global Game Market Breakdown (Newzoo, 2019).

Newzoo (2019), subdivided the revenues per mobile OS.

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 Figure 3.18. Mobile Game Revenues per App Store (Newzoo, 2019)

However, Statista (2019) also noted that there will be a slow down
on revenue growth in the succeeding years for the said market in the
Philippines.

Figure 3.19. Video Games Revenue Growth in the Philippines

(Statista, 2019)
Statista (2019) reported that the Average Revenue Per User
(ARPU) is 36.9 USD.

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 Figure 3.20 Video Games ARPU in the Philippines (Statista, 2019)

All Correct Group (2017) also reported that the Average Revenue
Per User (ARPU) is 14.97 USD and the Average Cost per Install (CPI)
in the Philippines is 0.46 USD for iOS and 1.28 USD for Android.

Figure 3.21. Mobile Games Market ARPU in the Philippines (All

Correct Group, 2017)
Hose (2013) reported only 30 game development companies in
the Philippines. The top game development companies in the Philippines
are TOSE Philippines, Anino, Squeaky Wheel Studio, Funguy Studio,
Secret 6, Altitude Games, Synergy88 Digital, Ranida Games, and
Zeenoh (GoodFirms, 2019). Hose also noted that there were only 3,000
game developers.

Page 33
 Hose (2013) noted that most technical expertise is from mobile
and social games development.

Figure 3.22. Philippine Game Development Technical Expertise (Hose,

2013)
Hose (2013) noted that the majority of the Philippine game
development companies serve the foreign market.

Figure 3.23. Philippine Game Development Companies Served Market

(Hose, 2013)
Newzoo (2019) reported the following breakdown in global
esports as shown in Table 3.

Table 3.2. Global Esports Overview (Newzoo, 2019).

Page 34
 The following figures illustrate the detailed infographics of esports'
audience growth, revenue growth, as well as the revenue streams.

Figure 3.24. Esports Audience Growth (Newzoo, 2019)

Page 35
Figure 3.25. Esports Revenue Growth (Newzoo, 2019)

Figure 3.26. Esports Revenue Streams (Newzoo, 2019)

Page 36
C. Competition and Competitive Edges
As shown in the data in the previous sections, sales and revenues
in the online gaming industry demonstrated a distinct upward trend.
While there are already established platforms/companies in the industry,
customers may still want to consider TOG!’s product and services over
other platforms such as Steam, Garena, and Arena Match. Below are
the reasons why:

1. Steam
Steam Chat offers a “rich presence” feature wherein it can
display gamer status whether he/she can be tapped for a match.
As Steam is also game-agnostic, there is a high chance that they
can easily forward integrate to such a business model.

Image 3.1. Steam Chat Rich Presence Feature (Valve, n.d.)

The main value proposition TOG! have over Steam is the

money-making avenue/opportunity of players.

Through Steamworks API, a set of tools that help the game

developer to sell their game through real-time reports of sales
data and promotional features, fraud prevention features, anti-
piracy features, push notification features, and easy store listing
features. In return, this also enables the Steam client to gain real-
time updates on the game players’ activities (Valve, n.d.).

Page 37
2. Garena
As a leading advocate and organizer of eSports events in
greater Southeast Asia, Garena strengthens the game ecosystem
and increases user engagement. Through the Garena platform,
users can connect with their fellow gamers, get the latest news
and updates around the gaming community.

Garena has two platforms namely, Garena PC (Windows)

and Garena Mobile (iOS and Android). Garena PC has chat and
voice features to connect with a co-player, while Garena Mobile
has game assist, chat, and magic spin features to collaborate with
a co-player. The platform is not designed for a two-player match-
up, rather, a multiplayer like League of Legends (LOL).

Image 3.2. Platform of Garena Mobile (Garena, n.d.)

Image 3.3. Platform of Garena PC (Garena, n.d.)

Page 38
3. Arena Match

Arena Match is a skill-based esports gaming app that will

allow gamers to bet and compete in solo Skill Challenges, daily
high score leaderboards, head to head matches, and Battle
Royale modes for popular online games, such as PUBG
(PlayerUnknown’s Battlegrounds), Fortnite, Apex Legends, and
CS:GO (Counter-Strike: Global Offensive).

Image 3.4. Skill Challenge Board of Arena Match (Arena Match,

2019).

The idea of the platform is that all Skill Challenges must be

completed within 2 hours from starting the bet. To play, he/she
should choose one of Arena Match’s supported games and link
the gamers’ account(s). Once games are linked, he/she can
select the game the gamer wants to play from the Arena Match
PC App. The gamer can select a skill challenge, enter a bet
amount and place a bet. Once a bet is placed, he/she can find a
match and play. If the player wins the game, he/she wins the bet.
Arena Match offers a variety of skill challenges to bet on the
gamer’s ability to multiply his/her money to win.

Unlike Arena Match, TOG! gives chances to gamers who

are caught cheating. They can just start over the app, can play
another round of matches, and still pay the applicable gaming
fees. In TOG, age restrictions can start from 16 years old and

Page 39
 above. Moreover, Arena Match is a bit pricey which starts from
₱50.00 per match (Arena Match, 2019).

D. Estimated Market Share and Sales

According to Newzoo (2019), smartphone games generate the
largest revenue across the market amounting to 54.9 billion USD.

Figure 3.27. 2019 Global Games Market per Segment (Newzoo, 2019)

Page 40
 Figure 3.28. Segment Breakdown of Global Game Revenues
(Newzoo, 2019)
The data in Figure 3.27 holds true with Figure 3.28 claiming the
larger share of smartphones compared to other sources which
contributed to the global game revenues. The data appears that for the
upcoming years, smartphones would still be the preferred device for
online gaming which could play a large part in the industry’s market
share and sales.

E. Ongoing Market Evaluation

Web and mobile analytics will be incorporated in the platform in
order to gain insights on how the users behave in the said platform. This
will give the platform product developers a good understanding of the
user pain points.

Social media pages, such as Facebook and Twitter, will be the

consumer-facing support for suggestions and comments. This channel
will be optimized to hear the voice of the customers on how the platform
can be improved.

Page 41
IV. THE ECONOMICS OF THE BUSINESS
Economics of the Business focus on the application of various economic
principles which form parts of the assessment of the viability of the business. It
also studies the financial, organizational, market-related situations and events
that may affect the day to day operations of the Company.

It includes the analysis involving the gross and margin operations, profit
potential and its sustainability, costs relating to the operations, and break-even.

A. Capital Requirement
The initial capital requirement for the business is estimated to be
at ₱16.4 million to cover the Capital Outlay and
MiscellaneousMiscellaneous Expense of the Company for 15 months.
Furthermore, a contingency fund is being set-aside in order to provide
the funding source in case there will be changes in the estimates or
unexpected expenses will be incurred.

Table 4.1. Breakdown of the Initial Capital Requirement

Capital Amount
Outlay/MiscellaneousMiscellaneous
Expenses

Salaries and Wages ₱3,251,806.67

Payroll Expense ₱457,681.25

Rent Expense ₱480,000.00

Marketing Expense ₱6,716,000.00

Permits ₱631,058.07

Office Supplies ₱189,301.00

Equipment ₱315,596.00

Furniture and Fixture ₱56,292.00

Capitalization of Gaming Platform ₱3,855,291.19

Total Initial Capital Requirement ₱16,353,026.17

Contingency Fund (15% of the Initial ₱2,452,953.93

Capital Requirement)

Total ₱18,805,980.10

Page 42
 In case of the need for additional funding sources, the Company
will consider grants/loans from government agencies such as the
Department of Trade of Industry and the Department of Science and
Technology.

Moreover, outside investors will be considered if the Company will

pursue expansion in its operation as well as on its offering.

B. Gross and Operating Margins

Using the Net profit and other pertinent items in the Pro-forma
Income Statement, the performance measure was conducted in order to
determine the future potential of the business based on the Gross and
Operating Margins.

As defined by Investopedia (2019), Gross Margin refers to the

retained portion after deducting the costs of delivering the service.

Figure 4.1. Operating Margin

At the first year of operation, the company has a negative cash

flow, hence, the operating margin is negative. The firm will be able to
increase its operating margin in the succeeding years. Accordingly,
based on its projected operating margin, the company will have an
average operating margin of P 0.73 for every P 1.00 of the revenue.

To further show the desirability of the venture based on operating

margin, a comparison of the Company’s Operating Margin vis-à-vis an
established industry standard for the same financial ratio is made.

Page 43
 According to CSI Market, the industry standards for the online game
industry is 56%.

C. Profit Potential and Durability

As previously discussed, the estimated revenue for online video
games is 146 million USD for 2019 and 171 million USD for the
succeeding year in the Philippine market (Statista, 2019). However, the
Statista (2019) reported that there might be a slowdown in the revenue
growth from 25.7% (2019) to 7.9% (2023).

Despite the projected slowdown, the company is positive as

regards its future cash flows, especially with the implementation of a
loyalty program that provides each winning player a specified reward
which may be later converted to cash. Accordingly, the following is the
schedule of the loyalty program:

Table 4.2. Loyalty Program

Type of Subscription Breakdown of the amount to be

Match Fee per credited to the winning player
Game
Subscription 50% of the Total
Fee of the Subscription
Winning of the Losing
Player Opponent

Regular ₱10 ₱10 ₱5 ₱15

Premium ₱15 ₱15 ₱7.50 ₱17.50

High-Level ₱30 ₱30 ₱15 ₱45

The loyalty program which will be implemented upon the

introduction of the games to the market. Accordingly, the said program
is considered as the primary retention strategy in order to scale up and
maintain the profitability of the business.

Moreover, data shows that an estimated 66.7% of the players

prefer online games using smartphones. According to Statista (2019),
the current number of smartphone users in the country is at 38.01 million
and is expected to increase by 43.78 in 2021 and 46.04 in 2022.

Page 44
 According to the TechJury (March 2019), the following information
related to gaming:

1. 21% to 25% of the Android and IOS apps downloaded are

attributable to games.
2. 43% of the smartphone users play games.
3. 62% of people install a game on their phone within a week of
owning it.
4. 78% of gamers are Android users.

If we are going to follow the demand and supply law, the demand
is interestingly increasing over the years which means there is a readily
available demand opportunity for online games. However, free games
that are available on app stores are considered a risk for this opportunity.

The company is also considering expansion in the ASEAN region

to widen its market coverage. Furthermore, it is also aiming to add
additional sources of revenue through research and development of a
platform that would increase customer retention and captivity.

The Company will establish a strong strategic marketing

campaign to strengthen its brand across its target market. It will heavily
invest in digital marketing, transit advertising, and other traditional forms
of promotion.

D. Fixed, Variable, and Semi-variable Costs

Cost is an important factor and success determinants of every
business. Accordingly, it allows the management to craft the relevant
strategies which will help the business reach its established goals.

As defined by Investopedia, fixed costs refers to any costs which

are not correlated to the number of units produced by the company. This
type of cost is a result of a contractual agreement or schedules. Salaries
and wages, rent, permits, depreciation, and amortization are the fixed
cost of the business.

On the other hand, the variable cost of the company is the

rewards/incentives given to the players who won their games. According
to Investopedia (2019), variable costs are often associated with the
number of goods produced or services provided. In the case of the
company, the rewards/incentives increase as more matches are played
and vice versa.

Page 45
E. Months to Reach Positive Cash Flow
The company is expected to generate a positive cash flow on its
15th month due to the forecasted 10% share in the target market. Based
on assumption, the revenue for FY 2021 is expected to be at P 24 Million
or P 2.7 Million monthly starting the 4th to 5th month of the FY 2021.

Hereunder is the annual expected revenue of the TOG!:

Table 4.3. Forecasted Revenue

Fiscal Year Expected Revenue (Loss)
(In Million Pesos)

2020 (3.9)

2021 24.2

2022 33.6

2023 41.6

2024 52.5

Page 46
V. MARKETING PLAN
Every business, regardless of how big or small needs a marketing plan.
A Marketing Plan helps every business owner to decide how one will sell one’s
products or services to their customers. It is with the marketing plan that will
clearly explain how an organization will attain its objectives. Aside from that, a
clear marketing plan can help businesses avoid the consequences of losing out
to competitors, losing market share, gaining or retaining few customers and
missing out on opportunities (LYFE Marketing). For a new service like TOG!, a
good marketing plan can help to spread its brand name, to boost sales and to
gain and retain customers.

A. Overall Marketing Strategy

Since the objective of the platform is to connect players as they
enjoy their games, the jester or entertainer character is the most suitable
brand archetype for TOG!.

Figure 5.1. Brand Archetype Map (Map & Fire, 2019)

According to Perch (2019), the hedonists (ages 16–30) and the

sharers (ages 30–45) are the two customer segments “who are more

Page 47
likely to buy Jester archetype”. This fits well for the business’s target age
group.

Moreover, Smith (2016) describes Jesters as someone having a

fear of boredom and has a strong desire to enjoy and to belong by having
fun. Therefore, having the Jester brand image is the most suitable way
of communicating the emotions of TOG!

Factors such as buyer turnover, purchase frequency, and

forgetting rate are considered in deciding the marketing strategy of TOG!
as Kotler and Keller (2012) suggested. Mohr, Sengupta, Slater (2014)
noted that search ads are the most efficient online ads among other
kinds. Since the initial target of TOG! is online gamers, employing the
same strategy and introducing TOG! via banner ads are also expected
to produce great results.

Figure 5.2. Banner Ad (Mialki, 2018)

Media advertising and publicity (through online YouTube ads, and

Facebook ads) are also the main advertising mediums that TOG! would
be using in the market to cover a wide audience while minimizing costs
as shown in Figure 5.3.

Page 48
 Figure 5.3. Advertising and Promotion Pyramid (Mohr, Sengupta, &
Slater, 2014)

As Kerin, Hartley, and Rudelius (2015) suggested, since TOG! is

new in the market or known as the “Introduction Stage”, free samples
can be distributed to increase the awareness of the public and induce
buy-ins from the market.

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 Figure 5.4. Tailoring the Marketing Plan to Intended Adopters Across
S-Curve (Kerin, Hartley, & Rudelius, 2015)

Therefore, trial periods of the platform are used to encourage

potential customers to try the platform and experience it personally.

After the initial launch of the platform, TOG! shall employ a

loyalty program to encourage players to keep on playing using the
platform.

Kerin et al. (2015) also suggested using the same kinds of

promotion to “engage new-product trial” (trial period) and “engage repeat
purchases” (loyalty program).

Figure 5.5. Kinds of Sales Promotions and Its Objectives, Advantages,

and Disadvantages (Kevin et al., 2015)

Using these marketing strategies, Kotler and Keller (2012)

promises a cost-effective approach covering from awareness to reorder
stage of buyer readiness.

Page 50
 Figure 5.6. Cost-Effectiveness of Three Different Communication
Tools at Different Buyer-Readiness Stages (Kotler & Keller, 2012)

B. Pricing
Since students are some of the target market of TOG!, pricing
consideration is given to them since they are the players who will most
likely make time to play TOG! but will most likely be price-sensitive.
Regular matches will be priced at ₱10 per match which is a reasonable
price even for students to pay. For the target market with medium price
sensitivity to price insensitivity, Premium matches are available for ₱15
per match while High Level co-op will be priced at ₱30 per match.

The table below summarizes the amount each player will pay for
each type of match.

Table 5.1. Suggested Pricing per type of match

Penetration pricing will be the strategy that will be used by TOG!.

This strategy will provide quality gaming experience for players while
keeping the price at artificially low as possible in order to gain customers
and get a significant amount of market share. The Figure below shows
the Pricing Strategies Matrix (MarketingTeacher.com). From this figure,

Page 51
 the penetration pricing strategy best suits the objectives and target
market of TOG!

Figure 5.7. Pricing Strategies Matrix

C. Sales Tactics

1. Free Trial
The download of TOG! Is free of charge and the players
will be given a 7-day free trial. After that trial period, he will be
billed using his preferred payment option. Free trial is a way of
TOG! to give its customers a first hand experience on playing the
game and that experience should entice them to continue playing.

2. Referral
Each player will be given a referral code. A new player
invited by referral method will need to type in the referral code of
the player who invited him. Corresponding points will be given to
the referring player which he can redeem to claim prizes such as
free one regular match up to free high level co-op match
depending on the number of points he has accumulated.

3. Monetization
Every time a player wins a match, a portion of the game
match fee will be credited to his account. He can use this money
to pay for a new game as long as he has enough balance to pay

Page 52
 for the amount of the type of match he wants. Each player will
also have the choice to accumulate his earnings and can redeem
his accumulated money to real money. The minimum amount that
can be withdrawn is P1000 subject to corresponding fees.Players
have the choice of payment they want to receive their earnings
whether bank transfer, money transfer or any other available
modes of payment. Regular transaction fees imposed by the
merchants applies.

4. Loyalty Program
To encourage more customers to play in Tara One G!, Laro
PH will be introducing a Loyalty Program. This program will entice
players to keep on playing to receive the benefits of the Loyalty
Program. The winning player in every match will receive an
amount which is a portion of the match fee. The player can
accumulate his earnings which can be used to pay for his next
match. The player will also have an option to encash his earnings.

D. Advertising and Promotion

The Philippines is a brand-conscious market (Export.gov, 2019).
This is the primary reason why advertising is essential in the promotion
of goods or services to Filipino customers. Particularly for a new product
like TOG!, marketing by advertisement is a must thing to do. The
following strategy will be used to advertise and promote TOG!

1. Digital Advertising or Internet Marketing

Digital Advertising or Internet Marketing is when
businesses leverage internet technologies to deliver promotional
advertisements to consumers (Webopedia.com). About 64% of
people say that they’ve been influenced to buy something by
watching a video online (LYFE Marketing). People can be found
online so businesses should be there as well to gain and increase
brand awareness and also to gain customers.

TOG! will be using digital platforms mostly for its

advertisement and promotional campaign. Forbes Magazine
highlights the reasons why Digital Advertising becomes
successful: it's affordable, specific and easy to use. TOG! As a
newcomer to the industry can capitalize on these strengths of
digital advertising. Aside from the mentioned benefits of digital

Page 53
 advertisement, this form of marketing works best for small or
startup businesses like LaroPH because of its affordability.

The figure below shows the effectiveness of digital

marketing channels.

Figure 5.8. Rating of effectiveness of digital marketing

channels.

Primarily, social media channels will be used as described

in detail below. Aside from that, search ads will also be used.
Search advertising or paid search advertising is a technique that
places online ads in search engine results (wordstream.com).
LaroPH will tap Google to carry out the search ads for TOG!
Google currently dominates the search engine industry with 77%
market share according to netmarketshare.com. By using this
strategy, TOG! will appear in the first search results whenever a
person searches for a game over the internet.

2. Social Media Marketing

Social media is a very powerful marketing tool today.
Businesses can create a strong media presence by interacting
with customers online. According to Statista, the number of
worldwide social media users can grow up to 3.1 billion people.
With this increasing number of social media users, small
businesses can have a bigger chance of reaching a larger piece
of their target audience.

In the Philippines alone, there are about 40 million active

social media users according to a study of Online Philippines, a
digital marketing company. In the same study, 42% of marketers
say Facebook is important to their business with companies
acquired by 77% of their customers from this social media giant.

Page 54
In a similar study by The Next Web in January 2019, about 71%
of the Philippine population are active social media users.

The figure below shows an infographic of 5 of the most

well-known social media platforms in the world. These data
suggest that there is a large audience in social media which
means potential customers can be found online.

Figure 5.9. Information from 5 most well-known social media

sites

According to Wazile, also a digital marketing agency in the

Philippines, Social Media Marketing is needed in every business
in the Philippines because of the huge benefits these businesses
can gain from it.

a) Brand Awareness

Facebook ads and Youtube ads prompted by users

while using social media can catch their attention and let
them know that a particular brand exists. This is particularly
beneficial for smaller brands like TOG! This can be an
entry point for new businesses to introduce their products
or services.

Page 55
b) Audience Engagement

Engagement to social media users can have a

chance to convert that user to a customer. Customers
following your Facebook or Youtube contents can be an
indication of their interest in your brand or products.

c) Cost Efficient

The best thing with social media marketing is its

cost-efficiency. Creating a page or account in Facebook,
Youtube, Twitter or Instagram is absolutely free. If you
want to create ads for your business, you need to shell out
a portion of your budget for it. However, there is less
physical effort to exert since you can reach potential
customers in digital channels.

The graph below shows the CPM (cost per

thousand impressions) on social media. The CPM can be
as low as $2.50 which is 3x less expensive than traditional
media advertising (LYFE Marketing, 2019).

Figure 5.10. Cost per thousand impressions on social

media

d) Customer Feedback

Social media sites are some of the channels a

business can use to get timely feedback from customers.
This way, they can check their strengths and weaknesses
without the need for an extensive data gathering for
performance review or study of the business venture.

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 e) Increased Web Traffic

Linking your products official website or download

link to your social media content can increase the number
of visits to your home page.

f) Brand Recognition

At first, your brand may not be recognizable. But as

social media users see your brand more often, they tend
to be more familiar with your brand and business.

g) Improved Brand Loyalty

In a study by Texas Tech University, brands that

engage customers in social media enjoy higher brand
loyalty. By creating good content and by listening to your
customers’ feedback and creating actions to their concern,
there is a likelihood that they will be loyal to your business.

Since it is a new brand, TOG! will be marketed through

various social media channels to gain brand awareness first until
this awareness turns to brand recognition. The goal of marketing
TOG! through social media is to convert online users to TOG!
players. Social media accounts will be created for TOG! In
Facebook, Twitter, Youtube and Instagram. Information and
marketing content will be posted here to generate social media
activities through likes, shares, reactions and comments.

Once social media users become TOG! players, TOG! is

aiming to keep these active players and increase brand loyalty.
To do this, LaroPH will run paid campaigns for TOG! on Facebook
and Youtube. In parallel, TOG! Social media pages will be kept
active to entice more people from the online community to try
TOG!. The social media manager will be the person responsible
to oversee the marketing activities of TOG!

3. Promotion through Customer Reviews

Customer reviews can make or break a business. Having
positive feedback from customers gives credibility and trust in
your brand. There are customers who rely on feedback from
customers before they purchase. In fact, 72% of people say
positive reviews can persuade them to trust a local business
(Moresocialsuccesspartners.com). TOG! will also utilize the word
of mouth to market itself by generating positive reviews. An actual

Page 57
 name of a customer with their positive feedback will be shared
with online ads and social media posts to influence others to play
TOG! Aside from Google Play, the following sites will be used to
gather reviews for TOG! Players:

● Androidtapp.com
● Pcworld.com
● Androidcentral.com
● Appbrain.com

However, it is not a surprise for a business to receive

mixed reviews. It is normal for any brand to also receive negative
feedback. Though TOG! focuses on providing a jester experience
for its players, it will also practice good customer handling so as
to create an impression that customer feedback is taken seriously
and that corrective actions are being laid to address negative
reviews.

4. Transit Marketing
The first level of marketing for TOG! focuses on executing
awareness activities. Once awareness of TOG! is already there,
the next level of marketing activities to induce are those that
insinuates brand recognition. To help the TOG! brand to be more
recognizable to the public, it will be marketed through transit
marketing. Transit advertising is placed in or on modes of public
transportation or in public transportation areas. TOG! Stickers
and other print ads will be placed on public transportation like
jeepneys, taxis, UV Express, trains and tricycles. This will give
TOG! the advantage of reaching all audiences regardless of ages
and incomes. The good thing with Transit marketing
paraphernalia is that they can be easily seen and cant be ignored,
they can’t be turned off, and they attract attention
(Entrepreneur.com). By using transit marketing, there is a
likelihood that people will be influenced to try TOG! Since they
see TOG! print ads more often during their daily commute.

VI. DESIGN AND DEVELOPMENT PLANS

Table 6.1. Marketable TOG!

Development Tasks Difficulties and Solutions and

Risks Contingencies

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1. Account Creation and
Data Privacy Act
Requirements

a. Registration Module Difficulty: One- Solution: Employ

and KYC Module Time Pin sender bootstrap solution at first
then switch to partnership
after achieving larger user
base

Risk: Possible Contingency: Increase the

exploitation of switching cost of buyer by
multiple accounts requiring OTPs with
to extend trial registration and email
period validation

b. Data Privacy Risk: Non- Contingency: Add buffer

Options compliance to days to mitigate loss due
Data Privacy Act to delayed development

c. Login Module None N/A

2. Owned game register

a. Recommendation None N/A

Module

b. Register game Difficulty: Non- Solution: Employ a

metadata existent game in project-based gamer to
database research and populate
game metadata fields.

3. Player Metadata
Population

a. Recommendation None N/A

Module

b. Register Character Difficulty: Non- Solution: Employ a

Metadata existent game in project-based gamer to
database research and populate
game metadata fields.

4. Search and Match

Player

a. Request Match-up Difficulty: Solution: Conduct

Module Simultaneous performance testing
bulk requests

b. Player Acceptance None N/A

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 Module

c. Deduction of Airtime Difficulty: Telco Solution: Do an

Balance or and E-Payment environment scanning on
Electronic Payment partnership e-payment platforms
available.

d. Payment Difficulty: Telco Solution: Do an

Disbursement and E-Payment environment scanning on
Module1 partnership e-payment platforms
available.

5. Two-way Review

a. Review Module None N/A

b. Tip Module None N/A

Table 6.2. Expansion of TOG!

Development Tasks Difficulties and Solutions and
Risks Contingencies

6. Loyalty Platform

a. Tiered Rewards None N/A

Module

b. Rewards Difficulty: Telco N/A

Disbursement and E-Payment
Module partnership

7. Referral Platform

a. Refer Module None N/A

1 Player confirms a successful match-up after one minute and releases payment to the other player.

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VII. MANUFACTURING AND OPERATIONS
PLAN
LaroPH’s manufacturing and operations plan is a two-stage scheme that
aims to penetrate the target market in a strategic manner. Such stages are as
follows: (1) Pilot Run, and (2) Expansion and Continuous Improvement.

A. Stage 1: Pilot Run

Table 7.1. Stage 1 strategies of LaroPH

Duration 6 months

KPI 10-15% market share

Marketing-intensive stage that

aims to build customer base, and
Description
get possible customers familiar
with the service offering

Virtual sub-platform (STAGE 1)

TOG! Features Loyalty (STAGE 1)

Payment (STAGE 1)

Staffing Cost:

● Software developers
● Customer support
● Marketing and Sales

Marketing Cost:

● Creation of official game

Notable Costs
trailer
● Creation of ads
● Creation of early sign-up
feature (free trial)
● Creation of PUV ads
(stickers, top ads)
● Compensation for PUVs
with ads

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 STAGE 1 is a marketing-heavy phase that will last for 6 months,
with its second half coinciding with the last leg of application
development. LaroPH’s goal at this point is to create buzz for potential
customers in its virtual gaming sub-platform, Tara, One Game! (TOG!).
This will be done through a simultaneous marketing activities targeted
towards the market segment identified.

1. Social Media Marketing

LaroPh will utilize low-cost outlets to reach their preferred
audiences. Outlets are a combination of both gaming exclusive
and non-gaming exclusive social media sites, such as: Discord,
Twitch, Steam, Reddit, YouTube, Facebook, Twitter, Instagram,
Snapchat, and even LinkedIn.

Before the official launch, a trailer will be released on the

aforementioned sites aiming to get potential users acquainted
with the company and its services. Audiovisual will reflect the
platform’s main objective, which is to give quality co-op
experience to its users, along with its potential of being a money-
generating hustle to quality players. Aside from being a tool for
introducing the service, the trailer will also set the tone of TOG!’s
social media voice. This voice will act as a consistent guide for all
their succeeding advertising materials.

One of those supporting advertising materials will be the

ads. Online ads will be created and released to instill familiarity to
potential users. As mentioned above, ads will maintain the social
media voice set earlier by the trailer. And to optimize the use of
online space, as much as possible, during STAGE 1, all released
advertisements will contain active links to additional information
pages detailing engaging FAQs about the platform, and links to
early sign up pages enabling potential users to avail free trial.

2. Transit Marketing
Furthermore, in order to instill familiarity with TOG!,
LaroPH will utilize different modes of transportation circling areas
most frequented by the target market. Such modes will be PUVs
(ie. jeepneys, tricycles, UV Express, taxis) with routes along
schools, offices, and terminals to maximize the visibility of these
ads.

Payment to partner vehicle operator or owner is given

upon attachment of stickers or top ads, with contract renewable
on a monthly basis.

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 3. Pilot Run
STAGE 1 will see the pilot run of TOG!. The platform will
offer trial periods that would last for 2 weeks, with a maximum of
10 matches daily, on either sub-platform. This limit is put in place
to prevent abuse of the trial period. After the trial expires, in order
to keep playing, users will be required to pay using integrated 3rd
party e-payment systems like coins.ph, PayMaya, or GCash.

Management will assess the numbers towards the end of

STAGE 1, and decide whether TOG! is on the right track and
ready to scale up, or rethink strategies.

4. Loyalty Rewards System

In line with LaroPH’s objective to ensure quality players in
premium games, a loyalty reward system will be in place to
compensate for the effort of great players. A part of the fee will be
allocated as payment for said quality players. A rating system will
also be in place to make sure that premium-paying players are
matched with experienced ones.

B. Stage 2: Expansion and Continuous Improvement

Table 7.2. Stage 2 strategies of LaroPH

Duration 1 year

KPI KPI is a 10% increase in sales

Expansion and quality

improvement stage that aims to
Description
increase the frequency of use of
the application.

Virtual sub-platform (STAGE 1)

Loyalty (STAGE 1)
TOG! Features Payment (STAGE 1)

Physical sub-platform with GPS

(STAGE 2)

Staffing Cost:
Notable Costs
● Additional Software
developers

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 ● Additional Customer
support
● Additional Marketing and
Sales
Marketing Cost:
● Creation of official game
trailer (new sub-platform)
● Creation of ads (new sub-
platform)
● Creation of early sign-up
feature (new sub-platform)
● Creation of PUV ads
(stickers, top ads)
● Compensation for PUVs
with ads
● Organizing events to
different corporate offices
Development Cost:

● Creation of physical sub-

platform with GPS
● Integration of new games

Obtaining STAGE 1’s goals of 10-15% market share sets the road
for STAGE 2. STAGE 2 is generally a modification phase. This stage
aims to address opportunities previously unmet by the gaming industry,
while improving the experience of current users LaroPH will release its
physical sub-platform, where users looking for interested peers are
matched to play with each other. A GPS system will be added to make
sure matched players are able to physically reach one another.

1. Improved User Experience

Additional customer support will also be deployed to
ensure maximum user experience. And in order to correct these
complaints, and create new features, additional software
developers will also be added to the staff. On-demand
improvements are addressed as needed, and regular software
updates are rolled out on a 2-week sprint schedule. Finally, new
games will also be pursued to increase platform usage.

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 2. Target Market Expansion
In terms of marketing, both online and transit will still be
utilized for the promotion of LaroPH. Aside from those, the
marketing and sales team will be assigned to pool efforts into
pursuing gamers in the corporate sector (ex. BPOs, IT
companies, etc.). This will be done by hosting gaming events in
companies residing in technology hubs and IT parks.

Aside from continuous partnerships with a growing number

of virtual games, TOG!’s physical sub-platform will also be
opened for users. The sub-platform will be aimed for gamers who
enjoy meeting and playing with a community of diverse players,
well within their vicinity. This will be ensured by the additional
GPS feature that aims to help players connect with one another.

C. Operating Cycle
TOG!’s operating cycle is expected to be:

Operating Cycle = Inventory Period + Accounts Receivable Period

Since TOG! is essentially a service platform, the company’s Inventory

Period is negligible. In terms of Accounts Receivable, payment through
third party platforms are most welcome although the majority of user
payment is expected to be done using immediate cash. For the former,
a maximum of 3 days is expected.

D. Geographical Location
According to the 2019 census of the National Statistics Office
(NSO), Metro Manila boasts the bulk of the population in the Philippines,
which is around 13.7 million people. And with the agency foreseeing a
rise to 20 million by the year 2020, the dense city is the best place to
consider new service operations like LaroPH. Furthermore, as
previously mentioned, physical ads will be deployed to spaces where the
prospective demographics congregate. This means tasking the
marketing and sales team to heavily concentrate campaigns in places
like Bonifacio Global City, Makati, and the University Belt. where
students and young professionals and executives with disposable
income are populated in.

Page 65
E. Facilities and Improvements
Majority of the supply will come from the management team’s own
pockets. Although for additional capital, during its run, LaroPH will
continuously be reaching out to available investors and incubators for
any form of help, such as office space, technological assistance,
entrepreneurship assistance, etc.

F. Regulatory and Legal Issues

Although not as heavily-regulated as other industries, the venture
will still adhere to regulations that will impact its growth and
development.

1. Republic Act 10173 – Data Privacy Act of 2012

Services handling personal information are subjected
under the jurisdiction of RA 10173. According to the legislation,
information such as name, birthdate, address, mobile number,
email address, social network ID and so on are to be protected by
receiving entities such as LaroPH, which is responsible for
safeguarding them against unauthorized use.

2. Games and Amusement Board (n.d.) Resolution No.

2017-21 ESports license fees and charges
As one of LaroPH’s goals is to eventually be able to create
its own professional eSports team, this eventual activity will be
supervised under GAB’s ruling regarding licensing requirements
of putting up a roster of professional gamers.

3. DepEd Order 83, Series of 2003

As most of the players are to the younger generation,
however, there is an existing DepEd Order 83 series of 2003 or
the order “Prohibiting Students of Elementary and Secondary
Schools from Using Cellular Phones and Pagers During Class
Hours”. Said mandate prohibits the use of cellphones during
class house, hence, strict implementation to the department order
with proper discussion among the students’ parents are advised
by the teachers.

Page 66
4. CSC Resolution No. 1701077-2017
Playing mobile or online games during office hours,
especially in government offices, is considered a grave offense
under the 2017 CSC Resolution No. 1701077-2017 Rules on
Administrative Cases in the Civil Service. Government officials
and employees who may be found in violation of conduct
prejudicial to the best interest of the service for the first time will
be suspended for six months and one day up to one year. Neglect
of Duty may likewise apply if the Office concerned has no
established office rules.

5. Copyright violation
Unauthorized distribution of video games is a complex
issue in the Philippines. Despite legislation against copyright
violation, implementation and cultural factors remain an obstacle
in the country. Illegal video games contribute to the underground
economy of the country where video gaming is a popular form of
entertainment among Filipino families. The inability of many
Filipino families to afford video game software and hardware at
legitimate prices leads them to turn to unlicensed goods. The
Optical Media Board in cooperation with the police enforces
intellectual rights law in the country.

Page 67
VIII. MANAGEMENT TEAM

A. Organization
LaroPH’s management team is made up of 6 key personnel, with
each group member assuming different leadership roles and
responsibilities, focusing on the overall strategy of the organization.

B. Key Management Personnel

In its conception, LaroPH’s organization will look relatively flat,
with major decisions being limited to 6 key personnel. Below describes
the responsibilities assumed by each person.

Figure 8.1. LaroPH’s Management Team

1. CEO/CTO - will be in charge of both overall direction of LaroPH,

along with the technological needs of the organization; role also
assumes responsibility of TOG!’s Software Architect

2. CFO - will be in charge of managing LaroPH’s finances, from

planning to risk management to record keeping

3. COO/Head of HR - will be in charge of LaroPH’s day-to-day

activities, in support of the overall strategy defined by the CEO;
also assumes responsibility of HR function in ensuring a
harmonious work environment for all

4. CMO - will be in charge of marketing LaroPH’s TOG! and future

expansions; will also be in charge of pursuing and maintaining
working relationships with partner organizations

5. Head of Legal - will report directly to the CEO; will be in charge of

general legal activities and IP protection

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 6. Head of R&D - will report directly to the Software Architect; will be
in charge of the development and maintenance of LaroPH’s TOG!
and its future products and services

C. Management Compensation and Ownership

No regular monetary compensation will be given to the
management team for the first 2-3 years, although shares will be
allocated depending on LaroPH’s monthly performance. In terms of
ownership, the CEO possesses 40% of LaroPH’s proprietary rights. This
is because most of the seed money will be coming from their pocket.
CFO will be owning 30%, while both COO and CMO will get 15% each.

D. Other Investors
Supporting Organizations

Partnership

Page 69
E. Employment and Other Agreements and Stock
Option and Bonus Plans
On top of its Management Team, LaroPH will most likely employ
developers, CSR, and marketing personnel for its day-to-day operations.
Although for the first few years, regular, full-time posts will only be
available for lead roles such as lead software developer and lead CSR,
bonuses will still be given to contractual employees, depending on the
assessment of how the company will fare during those times.

F. Other Shareholders, Rights, and Restrictions

The management’s exit strategy is selling for bigger profit.
LaroPH will most likely pursue multinational buyers from the same
industry, for the knowledge they have regarding the ins and outs of the
sector. When it comes to that, the leadership team will retain their post
for a few months to a year in order to transition critical knowledge to the
replacing team. They will also use that time to either cash out or vest
their stocks, as agreed upon.

Page 70
IX. SUSTAINABILITY AND IMPACT

A. Issues of Sustainability of the Venture

In the past ten years, connotations of being a gamer changed
from being nerdy, to being cool, and now, being normal. This trend has
been aligned with how technology evolved – from being niche to
becoming a necessity of every person. The computer shop / cyber cafe
business emerged given the growing gaming business. Then, computer
shops provided a new format of entertainment – players were not playing
against artificial intelligence, they were playing with each other. This
concept was a brand new experience to the gamers back in the early
2000’s. Gaming was redefined as a social activity. Then, reliability of
personal / home internet connectivity increased. This created a market
for a new set of gamers and new kinds of games. Furthermore, the
improvements on smartphones and mobile data connectivity made one’s
gaming experience more accessible where people can play anywhere.
(The Philippine Star, 2018)

Considering the increasing technological advancements in the

gaming industry, together with the advancements in the smartphone
industry, and finally increasing reliability of internet connectivity,
LaroPH’s TOG! the business model will be sustainable and scalable. The
Philippine eSports industry has been growing over the past years.
Overall growth of eSports revenues are predicted to rise by 27% from
2018. Sponsorships and media rights contribute to this predicted growth.
In terms of the existing market segment, eSports audiences such as
enthusiasts and viewers are expected to rise by 15%. Overall, in the
Philippine set-up, the growth in the eSports community has grown.
Games have been introduced even to social media platforms. A lot of
professional gamers and celebrity streamers play video games on live
video streams.

In terms of generating revenues, aside from the current model,

additional revenues will be collected from partner gaming companies,
and other firms offering complementary products. Once the proof-of-
concept is accepted and deemed to be effective, LaroPH will be offering
its product on a global scale aiming to increase its profit margin. (Beltran,
2019)

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B. Impact on the Environment
Given the nature of the game, LaroPH’s TOG! will not add nor
reduce the carbon footprint.

C. Impact on the Community and Nation

TOG! is a pro-gamer application that supports its users by offering
both physical and virtual gaming options to the gamers. This in-turn
offers consumers convenience at their fingertips to match for either a
virtual game or a physical opponent. LaroPH aims to provide another
source of income to its players. Roughly ₱50,000 is the prize money for
tournaments. The highest-earning Filipino gamer made ₱855,000 as
they engaged in e-sporting events such as League of Legends (LOL),
DOTA, etc. Back in 2012, a total of ₱1.4 million was awarded to four
Filipino teams in an event in Malaysia. (Top 100 Highest Earnings for
Philippines, 2019) These tournaments provide income to the gamers.
(iMoney, 2014)

LaroPH, on the other hand, aims to provide employment to the

Filipino people by opening jobs that would later on usher the Philippines
into one of the top gaming communities in the world. The company aims
to provide employment to enthusiastic Filipinos that aim to nurture the
gaming community of the country. Currently, LaroPH employs a number
of market researchers, software developers, marketing associates, sales
associates, customer support, etc. Future positions may include
graphics designer, video producer and editor, events coordinator, writer
and reporter, and marketing associates.

Page 72
X. OVERALL SCHEDULE

Page 73
Page 74
Figure 10.1. Overall schedule

Page 75
XI. CRITICAL RISKS, PROBLEMS, AND
ASSUMPTIONS

A. Legal Policies
The objectives of the Data Privacy Act of 2012 are:

1. Protects the privacy of individuals;

2. Regulates the collection, use, utilization, and deletion of
personal data; and
3. Ensures that the country adheres with the international
standards for data protection through National Privacy
Commission.

LaroPH must take into consideration the different types of

personal information its users and employees have. The Legal
Department of LaroPH should be fully-aware of the rights of its data
subjects (users and employees). The company should be able to
integrate these in its terms and conditions in its offerings. The rights, as
stated in Chapter 4 of the Data Privacy Act of 2012, includes:

1. Being informed if the personal information pertaining to the data

subject will be used;
2. Being copied with the set of personal information that will be
encoded in the system;
3. Being granted reasonable access to the data subject’s personal
information;
4. Being able to dispute any inaccuracy or error in the personal
information provided;
5. Having the rights to suspend, withdraw, remove his/her personal
information; and
6. Being compensated damages due to inaccurate, or
unauthorized use of personal information.

Penalties such as imprisonment up to six years and monetary

penalty from ₱2 million to ₱6 million could be fined to the violating
company. (Republic Act 10173 – Data Privacy Act of 2012)

B. Health Hazards
Prolonged use of TOG! implies health hazards such as sitting for
long periods of time. Gamers play an average of 24-25 hours a week.
Some gamers sit for 12-hours straight on a tournament. These
conditions could lead to an increase in bad cholesterol levels. According

Page 76
 to the study Froböse, muscles degenerate leading to increase in heart
ailments due to prolonged sitting. The average heartbeat of an esports
gamer is 120 to 180 beats per minute which resembles the heartbeat of
a racing driver. Both physical and mental stress could be experienced
by a gamer with the prolonged use of the application. LaroPH should
consider these hazards in developing the application and introducing
“break time” in the algorithm of the TOG! application. (Lagunas, 2019)

C. Application Lifecycle
It is inevitable that the scope of the application development is
evolving based on the company’s market research, resources and future
projections. Therefore, change requests to the development team are
evolving. Possible outcomes of these changes might be the need to
change the development team or to shift to another development team.
Problems on transitioning the knowledge might arise. LaroPH and its
legal team should ensure that the contract with the developers state that
change requests should be accommodated and that early life support
should be provided for a period.

It is also inevitable that technology (infrastructure and software)

used to develop TOG! matures over a period of time. In turn, developed
applications may pose issues and risks in the business. To combat, the
Chief Technology Officer should be able to forecast technological
updates and changes. The CTO should be able to assess possible
options on technology upgrades for the company.

D. Human Resource Risks

Initially, LaroPH would outsource its developers from a vendor to
ensure that knowledge base is readily available. This is a risk, especially
when the deliverables of the developers are met. They may disengage
from the project after delivering its scope at a particular timeline.
Internally, the company should develop policies on absorbing third party
employees based on their performance. This way, the LaroPH could
build its internal portfolio and later on have permanent people dedicated
to the development of improvements of the application.

E. Safety
One aspect of the TOG! the application is to connect gamers so
they could play physically. This means that certain personal information
of the players and the players’ location would be made available to
different parties. This poses safety concerns on both players. Any

Page 77
negative feedback from the users will greatly harm the image of TOG!
and LaroPH. LaroPH’s strategy is to ensure proper feedback mechanism
on both player’s gaming performance and attitude should be made
available before a player could advance to another tier and enjoy their
TOG! benefits.

Page 78
XII. THE FINANCIAL PLAN
The Financial Plan of the company provides relevant information relative
to the finances, expenses, revenue streams, assets and cash flows of the
company over a certain period of time.

A. Actual Income Statements and Balance Sheets. Pro

Forma Income Statements
Table 12.1. Pro Forma Income Statement

The Company’s revenue is seen to be increasing year by year at

an average of 21%, except for the first year wherein the company
suffered a loss of ₱4 Million. The main driver for the company’s positive
revenue is the increasing number of mobile players in the country and
the reward given to the players who won their respective matches.

The revenue, however, is reduced by the rewards and incentives

given to the players who won their respective matches. The reward
system is one of the primary customer retention strategies of the
company.

Below is a comparative graph between the revenue and rewards

of the TOG:

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 Figure 12.1. Revenue Vs. Incentives/Rewards

As shown in the above comparative graph, it is noticeable that the

incentives/rewards are about ¾ of the total revenue. The reason for this
is that, for every match that the player won, he/she shall receive a refund
of his/her subscription fee plus a portion of the defeated opponent’s
subscription fee, i.e., 50%.

For the first year of the business, the company incurred expenses
totaling to an approximate of ₱4 million which is composed of expenses
related to the operation of a business such as salaries and wages, rent,
utilities, and permits. In the succeeding years, there are almost minimal
changes in the expenses except the salaries and wages account due to
the payment of additional compensation to the employees. On the other
hand, expenses related to utilities, advertising, depreciation, and
amortization in the succeeding fiscal years are projected to be on a fixed
rate or with little movements.

With the projected positive revenue and almost stable expenses

over the next five (5) years, the net income of the business is projected
to be increasing. On average, the increase is projected to be at 30%
which is driven by the primary growth drivers such as the increase in the
number of players in the mobile industry, purchasing power of the target
market, and the established reward system.

For the first year of the business, the company incurred a total of
approximately ₱4 million which is composed of expenses such as
salaries and wages, rent and utilities, and permits, among others. In the
succeeding years, there are almost minimal changes in the expenses
with movements that are attributable to the increase in salaries and
wages due to additional allowances given to the employees and

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 accounting of possible increase in the rent expense. On the other hand,
expenses related to utilities, advertising, depreciation and amortization
in the succeeding fiscal years are projected to be on a fixed rate or with
little movements.

In the preparation of the Pro-forma Income Statement, the

following information information/data were considered:

1. The target market population is roughly 13 Million.

2. Target market segment: 19 to 34 years of age, which is about
59% of the target market population.
3. Initial population of the captured market segment: 10% of 13
million
4. Subscription fee is P10.00 for regular match, P15.00 for premium
match, and P30.00 for high-level match
5. Estimated no. of matches every month: 10x
6. The estimated annual number of matches is reduced by free trials
and forgone matches.
7. Salaries and wages are adjusted yearly with the payment of other
compensation, e.g., bonus and allowances.
8. Payroll expenses are computed based on the schedule of
payment provided by SSS, PAGIBIG, PhilHealth, and BIR.
9. In the computation of depreciation and amortization, the
Company used a straight-line method.

To illustrate the changes of the equity all throughout throughout

the period of five years, a Statement of Changes in Owner’s Equity was
prepared, as follows follows:

Table 12.2. TOG! Projected Statement of Changes in Owner’s Equity

B. Pro Forma Balance Sheets

Table 12.3. TOG! Projected Statement of Financial Position

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 In the preparation of the Pro-forma Income Statement, the
following information/data were considered:

1. Assets are recorded on their historical or acquisition cost,

including cost of installation, cost of transportation, etc., and are
reduced throughout time by depreciation (tangible assets) and
amortization (intangible assets).
2. The funding requirement shall be shouldered by the founders,
hence, the Company incurred no liabilities.

C. Pro Forma Cash Flow Analysis

Table 12.4. TOG! Projected Statement of Cash Flows

Page 82
 In its first year, the cash flow from operating activities of the
Company are composed of cash and cash equivalents, and the
depreciation and amortization expense. The depreciation and
amortization account, which are added back to the cash account, were
derived using a straight-line depreciation method. Accordingly,
depreciation and amortization schedule the allocation of asset cost over
a specified period, thereby reducing its carrying value.

The first-year shows a solid cash outflow on the investment

portion of the FS due to the Company’s acquisition of various assets
including the equipment, intangibles and other necessary investing
activities that are essential to the operation of the business. However, it
may be observed that for FY 2021 to 2024, there is no movement or
amount allocated under the subject portion of the Cash flow Statement.
This is so because the company does not have any investment activities
during the said period. This does not, however, discount the possibilities
of future acquisition and investment not only on the hard and soft asset
of the company but as well on investing in other companies that the
management will deem as strategically beneficial to the business.

Since the initial capital outlay of the Company is wholly funded

using the partner’s contribution, there is no cash flow from financing
activities from FY 2020 to 2024.

D. Break-Even Chart and Calculation

Figure 12.2. Break Even Period

Table 12.5. Break-Even Information/Data

Page 83
 The Company’s break-even period for the Company is at 1.25
years. During said period, the company is expecting to fully recover the
initial cost of building the platform and other incidental expenses related
to it.

E. Return on Investment and Payback Period

Payback period refers to the period at which the initial investment
shall be covered by the cash flows expected in using a specific asset. In
the case of the Company, the payback period is estimated to be at 1 and
a half months. Hereunder is the computation:

Table 12.6. Payback Period

Particulars Cost/Figure

Initial Investment ₱3,855,291.19

Expected Annual Cash Flow (Average) ₱29,581,887.30

Payback Period 1.25 years

On the other hand, the return on investment is estimated to be at

767%, computed as follows:

Table 12.7. Return on Investment

Particulars Cost/Figure

Expected Annual Cash Flow (Average) ₱29,581,887.30

Initial Investment ₱3,855,291.19

Return on Investment 767% annually

Page 84
F. Cost Control
To effectively monitor the costs involved in the operation of the
business, the following measures will be undertaken:

1. Budget Planning and Projection

Budgeting is an important activity for the company since it

allows the allocation of the company’s resources based on
forecasted activities. According to the Accounting and Advisory
website, budgeting will help the company control its finances,
ensure that the operation will be funded, and allocate funds for
future projects. Moreover, the same website also noted the
following benefits of budgeting:

a. Compare past and present budgets which will provide the

highlights of the Company’s strengths and weaknesses.
b. Provides prioritization of projects and programs such as
the r and d activities of the Company which will impact its
cost allocation and product/service offerings.
c. Estimates revenue, plans expenditure and restricts any
spending that is not part of the plan.

2. Market Analysis

The three (3)Cs of pricing/costing are important

considerations in pricing/costing the product/service of the firm.
Cost, competitors, and customers, should be considered in order
to arrive at a competitive product that will provide a margin for the
company and at the same time is attractive to the target market.

Market analysis provides information related to the market

in terms of volume and the corresponding value, customer
segments and purchasing behavior.

3. Accounting of Changes on Key Economic Indicators and other

related information

Page 85
XIII. PROPOSED COMPANY OFFERING

A. Desired Financing
The desired financing to fund TOG! is through investment. Given
the above 700% annual ROI, TOG! offers a competitive rate for
investors. Founders will also fund the business so they can have shares
in the investment and also to take advantage of the high ROI.

The company is only considering loans and other financing

means with interest as a secondary option if the minimum capital
requirement was not meant through investment funding.

B. Offering
Laro PH offering is an online gaming platform called Tara One
Game! (TOG!). This platform enables gamers to play a game of their
choice with a co-player. Corresponding fees will be applied for every type
of game match the players will take. To allow players to experience the
TOG! platform , a 2-week trial will be given to them for free. After the trial
period, corresponding fees will be applied. Furthermore, to be more
engaging and to encourage more players to play and to keep using the
TOG! platform, loyalty, rewards and referral bonus systems will be
introduced. The earnings on these rewards systems can be used by
gamers to pay for their game match. Alternatively, they also have an
option to encash their earnings for a quick cash.

C. Capitalization
The initial requirement to run TOG! is estimated at ₱16.4 million
excluding the contingency fund. Initial capital requirements will be
funded by the TOG! founders. However, the company considers getting
loans or financial assistance for startup business from government
offices if the generated capital from the founders falls below the initial
capital requirement. Since the business also provides a big opportunity
for investors to grow their money, Laro PH will open TOG! to external
investors. Any excess amount in the capital will be used to expand the
business.

D. Use of Funds
During the first stage of the business venture, all accumulated
funds will be used to pay for the Capital Outlay and other Miscellaneous

Page 86
 expenses like the cost of developing the TOG! Platform itself, wages,
rent, marketing costs, business and other permits to operate, office
materials and supplies. However, on the second stage of the business,
funds including earnings from sales will be used for the company’s
expansion and continuous improvement.

To ensure proper utilization of funds, the Chief Financial Officer

will closely monitor the expenses and budget allotment.

E. Investor’s Return
The payback period for TOG! is estimated to be at 1 and a half
months with the given Return on Investment (ROI) estimated at about
767% annually. This is a great opportunity for investors to grow their
money considering the high ROI and small payback period. Laro PH can
utilize this opportunity to attract more investors. The more investors who
are coming in to fund the business means more opportunity as well to
scale up the business.

Page 87
XIV. APPENDIXES
FIGURES/IMAGES/TABLE PAGE

Figure 2.1. Leading Android apps in the Google Play Store worldwide in 17
June 2019, by revenue

Figure 2.2. Compound Annual Growth Rate of Consumer Payments in 18

the Philippines (THENERVE, 2019)

Table 2.1. TOG! SWOT Analysis 20

Figure 3.1. Video Game Users in the Philippines (Statista, 2019) 23

Figure 3.2. Video Game Penetration Rate in the Philippines (Statista, 24

2019)

Figure 3.3. Video Game Penetration Rate: World Vs. Philippines 24

(Statista, 2019)

Figure 3.4. Number of Mobile Game Users (All Correct Group, 2017) 25

Figure 3.5. Demographics of Global Gamers (Newzoo, 2019) 25

Figure 3.6. Philippine Video Game Users by Age (Statista, 2019) 26

Figure 3.7. User by Age Groups in the Mobile Games (All Correct Group, 26
2017)

Figure 3.8. Philippine Video Game Users by Gender (Statista, 2019) 27

Figure 3.9. Philippine Video Game Users by Income (Statista, 2019) 28

Figure 3.10. Number of Hours of Playing Games in a DAY. 28

Figure 3.11. Missed Daily Activities while Playing. 29

Figure 3.12. Preferred Gaming Device. 30

Figure 3.13. Mobile Games Market Revenue (All Correct Group, 2017) 30

Figure 3.14. Video Games Revenue in the Philippines (Statista, 2019) 31

Figure 3.15. Video Games Revenue: World Vs. Philippines (Statista, 31

2019)

Figure 3.16. 2019 Global Games Market Per Region (Newzoo, 2019) 32

Figure 3.17. Regional Breakdown of Global Game Revenues (Newzoo, 32

2019)

Table 3.1. Global Game Market Breakdown (Newzoo, 2019). 33

Page 88
Figure 3.18. Mobile Game Revenues per App Store (Newzoo, 2019) 33

Figure 3.19. Video Games Revenue Growth in the Philippines (Statista, 34

2019)

Figure 3.20 Video Games ARPU in the Philippines (Statista, 2019) 34

Figure 3.21. Mobile Games Market ARPU in the Philippines (All Correct 35
Group, 2017)

Figure 3.22. Philippine Game Development Technical Expertise (Hose, 35

2013)

Figure 3.23. Philippine Game Development Companies Served Market 36

(Hose, 2013)

Table 3.2. Global Esports Overview (Newzoo, 2019). 36

Figure 3.24. Esports Audience Growth (Newzoo, 2019) 37

Figure 3.25. Esports Revenue Growth (Newzoo, 2019) 37

Figure 3.26. Esports Revenue Streams (Newzoo, 2019) 38

Image 3.1. Steam Chat Rich Presence Feature (Valve, n.d.) 39

Image 3.2. Platform of Garena Mobile (Garena, n.d.) 40

Image 3.3. Platform of Garena PC (Garena, n.d.) 40

Image 3.4. Skill Challenge Board of Arena Match (Arena Match, 2019). 41

Figure 3.27. 2019 Global Games Market per Segment (Newzoo, 2019) 42

Figure 3.28. Segment Breakdown of Global Game Revenues (Newzoo, 42

2019)

Table 4.1. Breakdown of the Initial Capital Requirement 44

Figure 4.1. Operating Margin 45

Table 4.2. Loyalty Program 46

Table 4.3. Forecasted Revenue 48

Figure 5.1. Brand Archetype Map (Map & Fire, 2019) 49

Figure 5.2. Banner Ad (Mialki, 2018) 50

Figure 5.3. Advertising and Promotion Pyramid (Mohr, Sengupta, & 51

Slater, 2014)

Figure 5.4. Tailoring the Marketing Plan to Intended Adopters Across S- 52

Curve (Kerin, Hartley, & Rudelius, 2015)

Page 89
Figure 5.5. Kinds of Sales Promotions and Its Objectives, Advantages, 52
and Disadvantages (Kevin et al., 2015)

Figure 5.6. Cost-Effectiveness of Three Different Communication Tools 53

at Different Buyer-Readiness Stages (Kotler & Keller, 2012)

Table 5.1 Suggested Pricing per type of match 53

Figure 5.7. Pricing Strategies Matrix 54

Figure 5.8. Rating of effectiveness of digital marketing channels. 56

Figure 5.9. Information from 5 most well-known social media sites 58

Figure 5.10. Cost per thousand impressions on social media 59

Table 6.1. Marketable TOG! 61

Table 6.2. Expansion of TOG! 63

Table 7.1. Stage 1 strategies of LaroPH 64

Table 7.2. Stage 2 strategies of LaroPH 66

Figure 8.1. LaroPH’s Management Team 71

Figure 10.1. Overall schedule 76

Table 12.1. Pro Forma Income Statement 80

Figure 12.1. Revenue Vs. Incentives/Rewards 81

Table 12.2. TOG! Projected Statement of Changes in Owner’s Equity 82

Table 12.3. TOG! Projected Statement of Financial Position 82

Table 12.4. TOG! Projected Statement of Cash Flows 83

Figure 12.2. Break Even Period 84

Table 12.5. Break Even Information/Data 84

Table 12.6. Payback Period 85

Table 12.7. Return on Investment 85

Page 90
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