1 Page 1 of 16 Business Plan Spirit Guardian & The Spiritguardian TM Project The Spiritguardian TM Online Project
2 Page 2 of 16 I. Table of Contents Contents I. Table of Contents... 2 Contents... 2 II. Executive Summary... 3 III. General Company Description... 4 Mission Statement... 4 Company Goals and Objectives... 4 Business Philosophy... 4 Target Customers... 4 Industry... 5 Strengths and Core Competencies... 5 Legal Form of Ownership... 5 IV. Products and Services... 6 V. Marketing Plan... 8 Market Analysis... 8 Marketing Strategy... 8 Competition... 9 Economics External Effects Product Customers Niche Pricing Proposed Location Distribution Channels Sales Forecast VI. Startup Expenses and Capitalization... 16
3 Page 3 of 16 II. Executive Summary Spirit Guardian and The Spiritguardian TM Project are very excited to be working towards this online gaming project called Spiritguardian TM Online. Online gaming is a hot area for business nowadays with the rapidly changing technology and access to high speed internet. The only game that we will be creating is a Massive Multiplayer Online RPG (MMORPG); MMORPG s are games that allow the player to assume the role of a hero that adventures through towns and cities taking quests that will make them more heroic. This online game will offer many features that other MMORPGs offer including character customization tools, free/paid memberships, and a forum. The paid memberships will cost customers $5 per month is purchased on a monthly basis or reduced rates for multiple months at a time; paying customers will enjoy benefits such as bonus content, special areas to explore, special items, and chances a monthly drawings. The customers we intend to attract are people who play online games between the ages of With more and more people turning to online gaming as a form of entertainment, we believe that this is a business venture well worth taking. As technology continues to evolve and more people are getting access to it, more people will turn to online gaming for a fun pastime. With each partner s expertise in the separate fields that are required to make this business venture possible, it should prove to be a profitable project. With the best case scenario numbers we considered, after eight months, we should be able regain all the cash we put out for this project; after twenty months, we will have cleared our losses and be in the green by $2 million. In the worst case scenario, it will take twelve months to regain our losses, and after twenty months, be in the green by $500,000.
4 Page 4 of 16 III. General Company Description The Spiritguardian TM Online Project deals with video game development that mainly designs Massive Multiplayer Online Role Play Game (MMORPG) called Spiritguardian TM Online. The players take the role of a Spiritguardian TM who meets up with other Spiritguardians TM and takes part in a world of adventures and missions. The Spiritguardians are a small group of people selected by Destiny to guard the spirits because even guardian spirits need guardians. Mission Statement The Spiritguardian TM Online Project is determined to bring quality video games that people of ages can enjoy through a variety of mediums. Company Goals and Objectives Spirit Guardian hopes to bring in new customers to their normal business after people see the quality of Spiritguardian TM Online s website; they believe if people see the complexity of this project, more customers will come to them with more complex projects. They also hope to make at least half as much a year as in their normal day-to-day business with Spiritguardian TM Online. The Spiritguardian TM Project hopes to bring the excitement of their offline games to the online community. They also hope that this will help advertise their games and increase sells. Business Philosophy The Spiritguardian TM Online Project believes gaming should be fun and pleasing to the eyes. You should also get the most for your money, instead of empty promises. Target Customers The main target for Spiritguardian TM Online is gamers. Because Gamers are tired of playing games with repeated themes and dry stories, and The Spiritguardian TM Online Project wants to provide gamers with games that they can enjoy and really get into. Spirit Guardian also hopes to use Spiritguardian TM Online as a demonstration to their customers what type of skills they have to offer.
5 Page 5 of 16 Industry Gaming is a constantly growing area of interest and has millions of potential customers. The big changes and challenge that face The Spiritguardian TM Online Project is the rapidly changing technology. Gamers wants to make the most of the new technology and The Spiritguardian TM Online Project needs to be ready and able to give this to them, while considering not all customers will have the latest technology. Online gaming is going to continue to gain popularity and potential customers. Strengths and Core Competencies Both partners in The Spiritguardian TM Online Project have many skills to offer to this project. Spirit Guardian is already established as a creative design and web development company with many customers, which demonstrates the confidence customers have in their work and skills. The Spiritguardian TM Project is also an already established business that focuses on designing video games so they have the experience needed to design and maintain the online game. Brian Moats studied both computer science and business while in college, so he is well aware of the needs for a business of this type. Legal Form of Ownership The Spiritguardian TM Online Project was formed through a partnership with Spirit Guardian and Brian Moats. Spirit Guardian is a creative design and web development company. They create attractive and fully functional web sites for small business all the way to large corporations. Brian Moats is a graduate of Alderson Broaddus College (bachelors) and West Virginia University (Masters) who has been designing video games for years. Brian Moats started The Spiritguardian TM Project, which just focuses on console video games. Spirit Guardian has decided to expand their business into the world of online gaming when they came across Brian Moats.
6 Page 6 of 16 IV. Products and Services The Spiritguardian TM Online Project will offer players the chance to explore the world (realm) of Spiritguardian TM Online. The player gets to create their own character with tools that allow in depth character appearance, personality, and statistics modifications. There are multiple realms that the players can choose to start in. After a certain point in the game, the players will have the option of going to other realms where new missions, people, equipments, and so much more exists. There will also be a forum where players can talk and help each other out or even discuss teaming up. There will also be guilds that the players can join which will offer specialized equipment and quests. The players can chose to switch guilds, but the longer you stay, the better equipment and quests you will get. Ideally, a player can be with a guild for two months and switch to another one and experience more excitement. Spiritguardian TM Online will be a free game, with bonus features for the subscribers who pay a monthly fee. The bonus features will include better character customization, special subscriber realms, no advertisements, and monthly drawings for free copies of The Spiritguardian TM Projects games. The monthly payment for subscribers is $5 for one month, $14 for three months, $25 for six months, and $48 for a year. Other ways that revenue will be generated is from advertisements. These advertisements will come in the form of simple banners (no special animations that slow down player s connection and no pop-ups). The prices on advertisements will vary depending on the needs of the customer. The big differences between our project and projects like Runescape and other free MMORPGs is The Spiritguardian TM Online Project is broken up into two main parts: the game and the website. The Spiritguardian TM Project will be handling all aspect of the game design including any conflicts that deal with the playability of the game. Spirit Guardian will be handling all of the web designs aspects of the project including people s accounts, website issues, and the setup/maintenance of the web site. This will ensure that issues are taken care of more quickly and efficiently than other MMORPGs. Also, Spiritguardian TM Online offers so much more in terms of character design and world choices for the players. The option of joining guilds offers the player limitless game play that is new with each guild. Also, each realm is quite different rather than just being a clone with just different people in it. MMORPG s like Runescape offer little to the people who don t pay, but Spiritguardian TM Online promises
7 Page 7 of 16 to offer full blown games to non-subscribers. They will have nearly all the features that the subscribers have with a few exceptions. Also, subscribers get the chance to win The Spiritguardian TM Projects games and other incentives like free months to subscriber accounts. Also, the prices for Spiritguardian TM Online are the same as Runescape, but unlike Runescape, the customers can subscribe to multiple months at reduced prices. Also, new features are offered monthly for all players.
8 Page 8 of 16 Market Analysis V. Marketing Plan The Spiritguardian TM Online Project spent most of its research time studying the competitors and what they offered their customers and the number of customers each had. The research showed that the biggest competitors include: Runescape (free/subscribe), Blizzards World of Warcraft (subscribe), and Squaresoft s Final Fantasy XI (subscribe). Each of these offer different features that the customers enjoy. Runescape is free (for limited play) and offers fair customization (in terms of hero skills and equipment). World of Warcraft has beautiful graphics, very good game control, good features, and they give the customer what they want. Final Fantasy XI offers many of the same things World of Warcraft offers including the opportunity for console gamers to play online along with computer games, a first in the history of MMORPG. In terms of number of customers, Runescape has had 9 million free and 850,000 paying customers over its 8 year life. World of Warcraft, partly due to its fame from its ancestor title Warcraft, has had 8.5 million paying customers during its 13 year life. Final Fantasy XI has had well over 2 million customers over its 5 year life. Each offered much of the same type of things to their paying customers; better character customization and special areas and equipment. The obvious thing that set Runescape out from the others is there was a free version; World of Warcraft and Final Fantasy XI did not offer this. This is why in terms of numbers, Runescape has had more customers. In terms of costs and accessibility, Runescape cost $5 per month for its membership area and is downloadable from their website. The World of Warcraft computer disk set, which offers the software for PC and Mac in one set, can be found in stores such Wal-Mart, Circuit City, and Best Buy as well as online stores; the cost for the game is ranges from $20-40 depending on which version you buy with a monthly membership fee of $15. Final Fantasy XI has many varying cost depending on the platform you purchase it on; PC $20, Sony s Playstation 2 $20, and the Microsoft s XBOX 360 $30. The monthly membership cost for Final Fantasy XI is $13. There are other cost that customers may encounter with Final Fantasy XI and World of Warcraft such as character transfers, additional characters, expansion packs, and hardware (for PC version). Marketing Strategy
9 Page 9 of 16 The Spiritguardian TM Online Project will offer many of the same features that its competitors offer, but at a much more reasonable price. Instead of releasing the game on disks, which would cause the pricing to increase, Spiritguardian TM Online will be downloadable. In terms of advertising, The Spiritguardian TM Online Project will advertise on each partner s business website. Small advertisements will be placed in a many of today hottest gamers magazines, which later may turn into full page advertisements depending on the success level. Advertisements will be included in each of The Spiritguardian TM Project s retail games in the form of small 1-3 page packet. The Spiritguardian TM Project will also advertise Spiritguardian TM Online while they are advertising their other games. Competition As stated above, the MMORPG is a competitive market with many key competitors. Shown below is a table showing how they compare. Importance to customer is ranked 1 (highest) to 5 (lowest). Factor Strength Weakness Me World of Runescape Warcraft Important to customer Products Good Fair High quality 1 Price Reasonable May not cover Good Good Expensive 3 our expenses Quality Many options Must work for Good Fair High 2 available for quality control low-high computers Selection Plenty of Good Low High 4 customizations to choose from Service Good tech May be under Good Fair High 2 Reliability support Good tech support staffed at first Not used to online gaming aspect Good Good High 2 Stability Good Good High 1 Expertise Both partners are website design and gaming First for online gaming High Fair High 4 Company Reputation In our fields, fairly known Appearance Been doing this for awhile Not really known for online gaming May need to rethink for gamers Low Low High 4 High Fair High 3
10 Page 10 of 16 Sales Method Advertising Reasonable selection for payment Both partners can advertise with business More payment methods needed Fair Fair Good 4 More Needed Fair Low High 4 Image Fair Low High 3 Economics The size of the MMORPG market is more than 20 million potential customers. The goal is to have at least 5% of the market by the end of the first year. Potentially, after 5 years of success, this percentage could increase to 30-40%. The demand for MMORPG has been rapidly increasing over the last 7 years. This is most likely due to the advances in technology and the expansion of high-speed internet. In terms of cost, the first year will be the hardest. Many costs that will be encountered include additional hardware/software to design the game/website on, servers, training for server maintainers, and advertisements. The Spiritguardian TM Online Project will handle these issues one at a time. Advertising is a must during the first year so each partner will advertise Spiritguardian TM Online alongside their day-to-day business. The Spiritguardian TM Project will include Spiritguardian TM Online in their already established advertisements. This should cut the cost for advertising way down and is acceptable for the first year. In terms of additional hardware and software, during the first year, each partner already owns hardware and software to handle their basic tasks in their own fields so during the first year, minimal purchases will be made only when absolutely necessary. The cost of servers is always an issue with online projects. The Spiritguardian TM Online Project will purchase enough servers to maintain their total number of estimated customers for the first year, which is believed to be 1 million (this figure included both subscribers and non-subscribers). The number of customers will be monitored and when the number of customers reaches 850,000, additional servers will be purchased. Training will also be handled in this way.
11 Page 11 of 16 External Effects As technology changes, the needs and wants of customers also change. The Spiritguardian TM Online Project will stay up-to-date with the advances in technology and continue to working toward utilizing new hardware without forgetting those who keep with the old. Product SpiritguardianTM Online will offer player many options for customizing their characters in appearance, personality, statistics, and so on. Players will also have the ability to join guilds which will offer new, items, new quests, and the ability to meet new people. When the players first start off, they will have the choice to start in one of many realms, which at a later point they can move freely between the different realms. Each realm is quite different than the last, unlike many games where each would be a clone of the last, just with different people in them. Player will also have access to a forum where they can ask for help, report bugs, talk to other players, and all the fun features that forums provide. For a monthly fee of $5 (price varies depending on the membership plan), they get additional features, like special realms, equipment, customizations, and chances at monthly drawings for prizes. Customers The type of customers expected is both men and women between the ages of who just enjoy playing games. The only thing the customer will need is a computer with relatively low specs (for low quality version) and high-speed internet access. Niche Online gaming has become a popular pastime; people of all ages play some sort of online game. MMORPG are just one of those types of online games that have become quite popular in recent years. This is most likely due to the many advances in technology. Spiritguardian TM Online should be able to become as successful, if not more, than Runescape. The reason why is because both have optional free accounts, and both have paying membership accounts. Spiritguardian TM Online intends to offer many features that Runescape doesn t. However, Spiritguardian TM Online will probably not be able to acquire the same level of success that World of Warcraft has. Pricing Initially, the game is free, but to access bonus features, they can become a paying member. The prices for membership are as follows: $5 for one month, $14 for three months, $25 for six months, and $48 for
12 Page 12 of 16 a year. These prices will hopefully not need to change, but may have to based on success and number of advertisement request received. Proposed Location Since both partners are already established businesses, they will stay in their current locations. When they need to meet to discuss the project, depending on the subject, they will meet at one of their business locations. Distribution Channels Spiritguardian TM Online will be an online game. The players will download a client that stores some information needed to reconnect each time they log in. If they choose to become a paying member, they can pay in one of many forms: Credit/Debit Card, Check/Money Order, Electronic Check, and Paypal. Other payment methods may be offered at a later point, but this is all that is expected at launch.
13 Page 13 of 16 Sales Forecast Included below are two tables projecting possible sales forecast. One is a best case scenario and the other is a worst case scenario. We will go column by column explaining what each represents and how we figured these numbers. Months represents the number of months in business. The Free member represents the number of members who have free accounts at the end of each month. Each month, we assume we acquire 50% more members just from friends telling their friends about the game. The next column is paying members; we have estimated from figures of other MMORPG that 10% of the total members are paying members. Cash represents the amount received from paying members; for the sake of simplicity, we assumed each member would be paying $5 month by month. Next is the number of servers required to handle all of the players; we are starting off with three until we see the need for more approaching. When we get to about 4-5 thousand players, we begin purchasing more servers. The Server Cost column is just the $159 per month fee multiplied by the number of servers we have. The revenue is the Cash less the Server Cost (per month). The revenue is only considering the cost of servers. There are other costs, but this give a fair assessment of the figures to expect. The final column the accumulative cost; this is simply adding the current months revenue plus the lasts. This will show when the partnership can expect to begin gain money instead of losing it.
14 Page 14 of 16 In the best case scenario, we consider we end the first month with 100 free members. Months Free Members Paying Members Best Case Received Cash Servers Server Cost Revenue Accum. Cost $50 3 $477 -$427 -$ $75 3 $477 -$402 -$ $128 3 $477 -$350 -$1, $217 3 $477 -$260 -$1, $368 3 $477 -$109 -$1, , $626 3 $477 $149 -$1, , $1,065 3 $477 $588 -$ , $1,810 3 $477 $1,333 $ , $3,078 4 $636 $2,442 $2, ,464 1,046 $5,232 7 $1,040 $4,192 $7, ,788 1,779 $8, $1,656 $7,238 $14, ,240 3,024 $15, $2,704 $12,415 $26, ,408 5,141 $25, $4,486 $21,218 $48, ,393 8,739 $43, $7,515 $36,181 $84, ,569 14,857 $74, $12,665 $61,619 $145, ,567 25,257 $126, $21,419 $104,864 $250, ,363 42,936 $214, $36,301 $178,380 $429, ,918 72,992 $364, $61,601 $303,358 $732, ,240, ,086 $620, $104,610 $515,820 $1,248, ,109, ,946 $1,054, $177,726 $877,005 $2,125,256 As you can see, we expect to begin making a profit after the eighth month. Then by the 20 th month, we expect to bring in nearly $900,000 dollars per month from paying members alone.
15 Page 15 of 16 In our worst case scenario, we assume we only get 25 free members the first month. Months Free Members Paying Members Worst Case Received Cash Servers Server Cost Revenue Accum. Cost $13 3 $477 -$465 -$ $19 3 $477 -$458 -$ $32 3 $477 -$445 -$1, $54 3 $477 -$423 -$1, $92 3 $477 -$385 -$2, $157 3 $477 -$320 -$2, $266 3 $477 -$211 -$2, $453 3 $477 -$24 -$2, , $769 3 $477 $292 -$2, , $1,308 3 $477 $831 -$1, , $2,224 4 $636 $1,588 -$ , $3,780 5 $820 $2,960 $2, ,852 1,285 $6,426 8 $1,283 $5,143 $8, ,848 2,185 $10, $2,070 $8,855 $16, ,142 3,714 $18, $3,407 $15,164 $32, ,142 6,314 $31, $5,681 $25,890 $57, ,341 10,734 $53, $9,546 $44,124 $102, ,479 18,248 $91, $16,117 $75,123 $177, ,215 31,022 $155, $27,287 $127,820 $305, ,366 52,737 $263, $46,277 $217,406 $522,465 Even in this worst case scenario, we begin turning a profit after twelve months. Then by the 20 th month, we expect to bring in over $200,000 per month from paying members alone. Something else to note, we haven t even considered the revenue we will receive from advertisements because it is hard to estimate how many we will receive any given month.
16 Page 16 of 16 VI. Startup Expenses and Capitalization To start this project, we will need servers to run the games off of. At first, it might be best just to rent servers from a Game Server Provider. One company that offers game servers for a reasonable price is Defcon Servers. They offer servers for $159 a month. Our research has shown that a single server for Runescape will have 2,000 players. If we start off by renting 3 servers, that will handle 6,000 players with 3 realms to choose from initially and additional servers can be rented as needed; it would be a waste of finances to rent more than that until we see a need for more. Training shouldn t be necessary to use them given the areas of that each partner is used to working on. Also, we will only need to hire a few additional people to handle customer support since both partners already have teams used to working on similar projects to these. Some additional software may be needed, but that will be purchased as the need arises. Other than that, cost shouldn t be too much of an issue. Each partner will be investing $5,000 to cover the first six months worth of expense. More will be invested if needed and if the project looks as though it will be successful. This will be a 50:50 partnership where each partner gain/loss equal amounts. We are aware that their personal assets can be held liable if we are unable to pay off their debts.
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