LMNE Gaming Lounge’

Business Plan
Topic: Business Planning Words: 1722 Pages: 7

Analysis of the Gaming Business

Environment
The gaming industry has become a lucrative business given the
dynamic technological environment that has seen many new gaming
devices being developed for gaming experiences. The introduction of
the Wii games have changed the way games are being played as they
provide the user with a more virtual and realistic experience when
playing.

The use of body movements and sensory technology has made

gaming experiences to be more enjoyable as more children, young
people and adults look for games that will provide them with a more
virtual and realistic experience (Lainema 2004). The gaming business
environment around the world is one that is characterised as being
very competitive especially with the ever changing technological
environment that has seen more virtual video games being produced
by many gaming companies (Eastin et al 2009).

Some of the main players or companies involved in the gaming

business environment around the world include Zynga which has
designed games like FarmVille, Mafia Wars and Cafe World,
CrowdStar which is known for producing games such as Happy
Island and Aquarium, Sony Computer Entertainment which has
designed Play Station 1, 2 and 3 video games ,Capcom which is the
main designer of Resident Evil video games and Nintendo gaming
company which is responsible for the development and design of
Nintendo games (Dalal 2010).
All these companies have focused their business strategies and
objectives on the development of games that are based on the
player’s needs, usage patterns and player behaviours. These
companies have developed strategies that have ensured that they
remain competitive in the changing competitive environment that
continues to create newer and better gaming technologies that are
meant to provide the user with a more realistic experience (Schulz
2001).

The gaming environment is therefore very competitive around the

world but with particular focus on the UK, the industry has faced a
somewhat downward spiral in the recent past.

According to a report released by the trading body in the United

Kingdom, TIGA, the UK gaming sector has experienced a decline of
9% from 2008 with the tax revenues generated from the industry
declining by over £55 million in a period of two years. This might
present a challenge to any company wishing to join the industry
because of the poor sales that are being experienced by some
companies in the sector some of which include Bizarre and
Wavertree (Houghton 2011).

The gaming lounge business industry is one that is relatively new as

many people still prefer to play their games either online or in the
comfort of their homes. The gaming lounges that are currently in
existence today are mostly online where players are able to play
games while at the same time socialising with their colleagues or
purchasing online products in the game lounge (Chaney et al 2004).

Social networking sites such as Facebook have incorporated virtual

games in their websites that enable users to play online games
while they connect with their friends. An example of an online
gaming lounge is GSN (Game Sow Network) which offers its users an
opportunity to play various games such as word puzzles, card and
board games either online or through TV pay channels such as
DirecTV (Hruschak 2010).

Another online gaming lounge is Apocalypse which also offers online

games in the form of virtual gaming experiences and board games
(Hopper 2002).

Challenges in Implementing Business

Plan
The gaming lounge industry is one that is relatively new and it faces
a myriad of challenges where many gaming companies prefer to sell
their products to video arcades and toy stores that offer gaming
services to their clients. These companies such as Sony
Entertainment also prefer to sell their products in online stores
where customers can be able to purchase and play PS3 in the
comfort of their homes without having to visit any gaming store
(Maw et al 2005).

This presents a challenge to any business person that is interested

in investing in a physical gaming lounge given that the business
world and the gaming world in particular has become more
technologically oriented. More people are turning to the Internet for
their business or personal activities which means that many
businesses operating in the real world are facing obsoletion because
of emerging technological innovations (Kim et al 2002).

With regards to the gaming lounge, the idea is only viable if there is
an emerging market of consumers that prefer to play games in a
physical atmosphere rather than online. But in the technological
world, the business venture might prove to non-viable as more and
more companies are changing their business operations to be more
Internet-based (Fattah and Paul 2002).
The Internet and the technological environment therefore presents a
major challenge to the viability of the business venture as many
people prefer to play video games such as PS3 and Wii games in the
comfort of their homes. The gaming lounge will therefore face some
stiff competition from online gaming lounges as well as from video
arcades and toy stores (Peters 2004).

Another challenge that will affect the gaming lounge is the target
market which according to Appendix 1 will mostly target young
adults such as teenagers and children in Norwich who are mostly in
school during the weekdays. This might affect the profit and income
generating activities of the venture especially if the business is going
to primarily concern itself with offering gaming services.

This will mean that the gaming lounge will be dependent on

weekend sales and school holidays for its income and revenues as
most kids are home during that time (Wetherly 2010). The idea then
becomes non-viable especially of the business partners are focused
on making a profit within the first five years of operation.

While the business idea itself is strong, the plan becomes weak
especially when the operations of the business are focused only on
providing gaming experiences to young people. The challenge
therefore becomes to look for another target market that will
focused on to provide weekday sales and revenues for the business
(Ferrazzi et al 2003).

Evaluation of the Financial Plan

Appendix 3 displays the financial plan for the business where the
visitor numbers projected for the business have been displayed in
the financial forecast. The financial plan has projected that the
business will be able to have visitor numbers amounting to 13,000
within the first year of operation. These visitor numbers are mostly
composed of young people who as discussed earlier are more than
likely to be in school during the weekdays.

While the 640 visitor number projected for January in the financial
forecast might seem to be viable, the number might vary during the
first day operations of the business depending on what marketing
technique the business has used. Social networking sites such as
Facebook and Twitter might prove to be an important tool in
increasing the numbers of visitors to the gaming lounge (Westwood
2004).

Appendix 2 has identified the various costs that will be incurred

from purchasing gaming equipment where the total amount for
purchasing the Wii consoles and controllers, the PS3 consoles and
games and the cables, Tvs and Tv projectors for the games is £3,050
of the total £ 7,400 that is needed to start up the business. These
costs reflect the market prices of gaming consoles in the
technological world as well as other technological requirements
needed by the business.

To meet the costs of these expenses, the business plan proposes to

charge £3.00 per hour and £5.00 for every 3-4 people in one hour.
While these prices might offset the start-up costs, they are not
enough to provide the business with a profit within the first three
years of its operations.

Competitive pricing is only important in cases where many

businesses in a particular area offer the same service which is not
the case in this business venture. While the low prices might attract
school children and teenagers, they are not enough to provide the
business with a profit during its first few years of operation (Squire
and Jenkins 2003).

Potential Risks
The operational risks that will arise during the start up of the
business will involve machine breakdowns where the Wii and PS3
game consoles might breakdown through improper use. Another risk
will arise when the supplier’s of the business fail to deliver the food
and drinks needed in the gaming lounge.

The strategic risks that will arise during the course of running the
business will be potential competition from arcades and toy stores
that have now started offering virtual and realistic games. The
financial risks that will arise in the business will include increasing
rent, water and electrical bills as well as increasing game console
prices (David et al 2010).

Conclusion
The purpose of this essay has been to critically evaluate the
business plan that has been developed for a gaming lounge known
as LMNE which will be located in the Norwich area of the United
Kingdom.

A business plan is an important aspect in the planning process as it

is designed to persuade investors and other stakeholders to the idea
to support the business venture (Timmons et al 2004). Business
plans provide a framework that will be used by the owners of the
venture to outline the specific business goals and objectives that
need to be achieved for the business to be successful. (McKeever
2008: Stone and Desmond, 2007).

The evaluation of the business plan has shown that while the plan
itself is strong, there are various weak points which need to be
addressed in the competitive environment of the business venture.
The evaluation has highlighted the fact that the Internet has played
a major role in the gaming lounge business where many gaming
companies are able to offer online services without having to
physically provide game arcades and lounges to their clientele.

A recommendation for the business will therefore be to tap into the

online market as it seeks to establish itself in the Norwich gaming
market. The business partners should look into ways of designing
and developing an online gaming lounge that will be able to appeal
to the adult demographic thereby increasing the number of
customers the business receives per year. This will ensure that it
has expanded its market segment while at the same time
diversifying its operations to include online gaming sites.

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