Possible Revenues For GameHound
Introduction:
The games business is a tough economy to break into but if investment can be secured then
the rewards can be very worthwhile. The best way to gain investment in the economy is to
tap into the latest wave of opportunities and avoiding the traps that many small businesses
fall into. The most recent wave of opportunity appears to be in the disruptive technology
area, this is technology that enables behaviour that were not previously possible, a brilliant
example of this is augmented reality, this enables users of the technology to bring what
would have been only possible in a virtually world previously into the real world. The AR-
Drone is an example of augmented reality and because the technology is new and still in
development any game created using the technology will be unique.
This articles purpose is to outline how GameHound could potentially use augmented reality
games to gain access into the gaming industry and gain investment from possible partners
or big gaming companies.
Potential Investment:
Gamehound is developing games for the AR-Drone which is a flying quadric-copter this is a
new technology and although some games have been created for the drone it is still very
much in development. For us to be part of this development is a massive advantage to
ourselves as it means that anything we create will be an original idea and this will therefore
mean we have a unique IP on our ideas and this therefore increases our chances of gaining
investment. (Cornwell, 2002) (Weill)
Cornwell in the lecture we have been kindly provided also suggests 10 reasons why
companies are unlikely to invest in a small company. The relevant points to our company
are “No standardising billing system”, if we were to gain investment we would need to have
a billing system set up, the mostly likely system would be an online billing system where
users buy the Drone and Game online together and then any updates or downloadable
content will also be bought from the Gamehound website, this system is simple and easy to
use and with it being online it means that it accessible world-wide and will also support
flexible charging.
The next relevant point that Cornwell states is that businesses should have “effective
software standards” this means that the software supplied with the game should be
available to all of whom would like to buy it, this point is also relevant to firmware. During
development we have noticed that different firmware updates for the drone had adverse
effects on some of the software that we have been using, this therefore means we would
need to find a fix for this or emphasise in advertising that our game will only work with
certain firmwares, however setting to only one firmware could decrease our investment
potential.
Another of the pointers from Cornwell that is relevant to our company is the point he makes
about a company’s marketing approach being too slow to reach a critical mass, being unable
to reach a critical mass quickly decreases the potential of investment because companies
want to see that they can make a profit from the deal quickly and effectively. The AR-Drone
is currently marketed at remote control enthusiasts and ‘big kids’ i.e. those who have grown
up and have work and money, but like to play with toys still. This marketing approach is
evident on the AR-Drone website by the images and colours that are used (Parrot). Our
company would benefit from using this marketing scheme as it has been effective so far for
Parrot the main distributors of the Drone.
The value chain of the gaming industry is well known and it is important to consider where
in this chain your company lies before trying to present to potential investors or partners.
Gamehound would be placed in the designer section of this chain which would therefore leave us
quite low in the chain, this therefore means we would need to seek partners or investors from
higher up the chain in order to reach a high market leverage. An ideal partner would be Parrot the
company who make the AR-Drones, or a remote control vehicle(RCV)specialist such as Apex models
who sell RCV products to the whole of Europe. These potential investors or partners would be in the
Distributor/Billing and customer services provider section of the chain and would therefore give us
high market leverage due to good contacts in the specific area we would be working in.
Potential Revenues
For our company to succeed we would need investment or a partner but we would also need to
have a contingency plan of how we plan to bring in our own revenue. Of course if we negotiated
with Parrot we could sell bundles i.e. game software + AR-Drone, NXT bot and Controller this would
be priced highly but would mean that the user has everything to start playing, a typical price for this
would be around £350 for the Drone, £100 for the nxt bot, £10 for the controller and then we would
look to charge around £10-£20 for the game software and lastly the arena would cost around £10.
That amounts to around £500 which seems expensive but fits in with the other tech gadgets such
as 3D Tv’s and gaming PC’s so would be affordable for our target audience.
The game software on its own would probably be sold through our own website and the app store
for iphone, where we can sell the game for a cheap price but sell to users world-wide easily and
effectively.
Selling the game is not the only revenue we could potentially go for though, we could host
tournaments where advertising space can be sold on the arena’s and the location of the
tournament, this would mean revenue from companies who wish to advertise, spectators who wish
to watch, entrants who wish to take part and also any potential partners who would wish to sponsor
the tournament i.e. red bull who currently sponsor robot football and other relevant RC activities.
Then the last form of potential revenue is through selling more games or selling customized
peripherals for the Drone i.e. personalised skins for the Drone, personalised arenas, personalised
stickers to add to the outside of the arena or on the drone and many other things in that type of
genre.
With all these potential revenues being presented to a potential partner it would make our company
reasonably attractive to the people we are presenting too and if all this was drawn out into a
detailed contingency plan and business blue print, then I truly believe that investment would
become a strong possibility.
Conclusion
The article has outlined the potential revenues that the company could bring in and has also
outlined the key factors that Gamehound would need to consider in order to be successful in
receiving investment or gaining partners who will help to market the product that we are creating.
The advantages of our product is that it is unique and has not been done before therefore giving us
an original IP and therefore making our company an attractive option for investors or partners. The
company has also outlined potential revenues and potential billing services which would also make
the company attractive, another majorly important factor that article outlines is that the company
needs to ensure that the software we produce will work with any cross platforms meaning that
everyone is able to play the game.
Overall I feel that as a team and a company we have a potentially marketable idea and with the
background research and ideas in place there is a strong possibility that we could present effectively
to potential partners or investors.
Bibliography
Cornwell, S. (2002, February 28). Interactive games: The investor perspective.
Parrot. (n.d.). AR-Drone Home. Retrieved January 22, 2011, from http://ardrone.parrot.com/parrot-
ar-drone/usa/
Weill, L. (n.d.). Earn money with iTV now !