Business Plan. Ron Davis. for. Prepared March 2015
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1 Business Plan Prepared March 2015 by Ron Davis for!
2 Table of Contents Executive Summary... 1 The Product... 1 Value Proposition... 2 Production: The Summer Intensive... 2 The Market... 3 The Online Video Game Market... 3 Create Rather Than Compete Market... 3 The Typical Gamer... 4 Other Market Trends... 4 Competition... 5 Direct Competitors... 5 Indirect Competition... 5 Marketing and Sales... 5 Live Streaming Development: Twitch Generation... 6 Website and Mailing List... 6 Kickstarter... 7 Pricing... 7 Distribution and Sales... 8 The Team... 9 Leadership... 9 Summer Intensive Positions... 9 Advisory Board... 10
3 Executive Summary Reactuate Games is a new video game company in Abilene, Texas using local talent to create games. We were created to take advantage of Abilene s strong arts community, and the five universities and colleges producing students with the skills needed in an artistic entertainment company. While Reactuate Games has small games in production, this business plan focuses on our first big one that is set to go into production this summer. For this large product we are taking a new approach to development. We have planned a Summer Intensive with the goals of building the initial development team, launching Reactuate Games online marketing strategy, and inspiring a community. Proceeds from the Springboard Challenge will be matched by additional founder s capital providing sufficient funds for the Summer Intensive. At the end of the Summer Intensive, Reactuate Games intends to launch a successful Kickstarter campaign to crowdsource enough revenue to fund the company until the game can begin to bring in revenue. Once the foundation of this first game is established, Reactuate Games will be able give its equity partners ROI not only via game profits, but through publication deals and ultimately acquisition by a large game company. Once initial funding is in place, we will build a team of local talent recruited from college students, recent graduates, the arts community and local gamers. We will create a work place for them that not only allows maximum creativity and production, but allows participation by the growing community. We ll use Agile development techniques to iteratively produce work that can be shared with potential customers and stakeholders. We also intend to take advantage of the current explosion in online video game videos to promote the company and its product. To fully take advantage of this, we will have a person dedicated to producing daily content, both live streamed and edited. The ultimate goal is to create an entire universe players will pay to be part of. When our plan is successful, we will not only have started a new video game company with players all over the world, we will have created a new universe where they live. In the end it will be the world Abilene created. The Product Reactuate Games exists to produce games in their many forms. For the purposes of this plan, we re focusing one of those games tentatively called Colony Manager. Colony Manager allows the player and their friends to create colonies, and build cities and economies in a persistent online world. 1
4 Colony Manager is unique from other games in the genre because the player s constructions will happen in a persistent virtual world. In other words, the player builds their city on a planet we created for them and that hundreds or thousands of other players are also building on. A player can play far from others or they can choose to build a colony next to a friend or group of friends and work together to build an interdependent economy. Value Proposition Games are entertainment and the entertainment business is about making the user feel a certain way and have a certain experience. Video games allow a player an experience of something they can t have in the real world. Call of Duty lets the player be a soldier fighting to right the wrongs of the world. World of Warcraft lets them be fantasy warriors or wizards. SimCity or Civilization gives an experience of what it feels like to build a city. In Colony Manager the player gets to experience what it is like to build a new world: to nurture a colony, build a business, start an economy. In a real world with no frontiers to explore, Colony Manager lets the player be part of a new virgin world, where they can work with other players if they choose or go it alone on the frontier. The value of the Colony Manager game is its ongoing experience, measured not in hours, like many video games, but in real time months and years. This ongoing experience and ongoing revenue stream make Reactuate Games a different kind of game business. We don t produce a product once, sell it to as many users as we can, and then have to create another product. Rather we begin creating a product, and then continue to create and build on that product as our players build on their experience. Production: The Summer Intensive One unique aspect of the production of Colony Manager is the Summer Intensive. Games, like most entertainment, really can t be created by just one person. With nothing to show potential investors or to entice a crowdsourced audience, how do you start such a company? After attending the Game Developer s Conference in San Fransisco, along with 30,000 other developers from companies big and small, the idea for the Summer Intensive was born. Ron met a lot of young talented new game designers, developers, and artists who were desperate to be part of a game, both for the experience of it and for the additions to their resumes and portfolios. He saw reflected in them many of the students at the local Abilene colleges. What if we formed a team of such people and built a functioning prototype of the game over the summer? That is the idea behind the Summer Intensive. Since that initial idea, the vision has grown to include live development as a means of audience building and the planning of the Kickstarter launch at the end of the summer. Reactuate Games will use an Agile Scrum development approach to create the Colony Manager alpha. Agile Scrum uses an iterative process that creates something working and demo-able 2
5 every cycle. This will allow frequent concrete products that can be viewed by all stakeholders and feedback given. The Market With Colony Manager Reactuate Games will target video game players who play games online, like to create rather than compete, and meet the actual typical video game player demographic, not the stereotype. 59% of Americans play video games. Gartner Research projects the total revenue world wide for video games in 2015 to be $111 billion. According to the Entertainment Software Association, the video game industry grew at a rate four times faster than the U.S. economy in recent years and that growth is projected to continue at least through The Online Video Game Market Today almost all games have some ability to be played online, but these are generally transitory matches where players connect, have an online battle lasting a short period of time, and then either look for another match or go offline. Some games do continue even when the player isn t online. Generally these games are referred to as MMOs, Massively Multiplayer Online games. This is the market Reactuate Game s Colony Manager will compete in. According to Gartner, 11% of online games have a Persistent Multi-player Universe. As of July 2014, there were an estimated 23.4 million active subscribers to MMOs with an total global revenue of $14.9 billion. 2 Of that total $2.5 billion was in North America. Create Rather Than Compete Market There is a common misperception all video games are primarily about competition, but certain genres are really more about creation and cooperation. Those genres include 4X, Strategy, and Simulation Essential Facts About the Computer and Video Game Industry, Entertainment Software Association, April
6 In 2013 of the best-selling computer game genres by units sold Strategy was 38.4%. Of the top 10 selling games, creation games held half the spots: #2 Sim City 2013, #3 through #6 The Sims 3 and its expansions. 3 The Typical Gamer There is a stereotype about people who play video games. They are thought to be teenage males who live in their parent s basement and have no friends. This is totally inaccurate. According to Gartner Research, the average age of game purchasers is 35 and they are split evenly between male and female. Given the statistic that 62% of players play with others either online or in person, they are far from friendless. As MMOs grow they quickly begin to see the formation of player groups, often called guilds. The purpose of these groups is play together and to help each other out on an organized or ad hoc basis. Other Market Trends Next Generation Consoles Driving much of the industry growth in the last year has been the continued growth of the mobile market for games and the release of next generation of game consoles, including the Xbox One from Microsoft, Playstation 4 from Sony, and WiiU from Nintendo. In the life cycle of software products one important entry point is soon after the introduction of a new platform or market is this market entry time for the new platforms Xbox One and PS4, both platforms Reactuate Game intends to target. Multi-platform Development Given our product will run on a server - or in the cloud - we can take a multi-platform approach and allow the player to access the game via multiple means. We will tailor each platform s access to its strengths. For instance a desktop or console are excellent platforms for building, but the small screen of a phone would make this difficult. A mobile client, though, could excel at monitoring your economy and making tweaks to your building plans. Cross platform tools such as Unity allow a developer to write code once and target multiple platforms. A total of 21 different platforms in the case of the Unity 5 development environment Essential Facts About the Computer and Video Game Industry, Entertainment Software Association, April
7 Competition In an $111 billion industry there are a lot of competitors. For the purpose of Colony Manager, we ll only consider direct competitors those games that have a persistent online presence. Direct Competitors There are a number of games with persistent worlds like World of Warcraft, or Everquest. World of Warcraft currently has around 7.4 million users down from a peak of 12 million. World of Warcraft differs from Colony Manager in that it is focused on building a character, does not allow the player to change the world permanently and can be very competitive. In Colony Manager the focus will be on changing the world. Stronghold Kingdoms is a MMO RTS with a Medieval castle building theme. It launched in 2009 as an alpha with 150 players, much like Colony Manager will. In May 2011 there were 14,000 active players in the first World. Since then it has open various world game servers. There are currently 29 servers in various languages around the world. 5 It has a competitive aspect, but also allows players to just build up their kingdoms, which do persist when the player is offline. It is similar in concept to Colony Manager, but with a Medieval theme as opposed to a science fiction one. Blitzkrieg 3 is an in-development MMO RTS to be released in Not a lot is known about this game, other than it builds on offline versions of the game, and it will focus on allowing the player to be part of the battles of WWII. Indirect Competition Video games are entertainment and our indirect competition is all the things that a person could do with their free time rather than play a video game. This includes things like watch TV or movies, read books, and play physical games or sports. Reactuate Games will use fun gameplay, beautiful art, and the chance to build a world to entice people away from these pursuits. We will also use new media, such as YouTube and Twitch.tv, to draw people away from other sources of entertainment and into our game. Marketing and Sales During the Summer Intensive our goal is both to build a workable alpha of Colony Manager and build sufficient audience of the game for a successful Kickstarter campaign. We will use a number of techniques to do this and will continue to use them to grow the game s community for the near future
8 Live Streaming Development: Twitch Generation Reactuate Games will make extensive use of online video as the primary method of reaching video gamers. We will use both live video streaming of development and archived videos on traditional video sites such as YouTube. We picked this as our primary marketing channel because of the explosive growth of video-game-related videos that started in 2014 and continues in Of the top 20 YouTubers by subscription, half (10) were video game commenters and streamers, including the #1 YouTube channel. 6 These YouTubers work full-time playing video games and commenting on them and make six figure incomes via YouTube ads. Twitch.tv is an online video streaming service dedicated to streaming content about video games. After explosive growth, it was purchased by Amazon.com for $970 million in September Much of the content the top YouTubers are posting was first live streamed via Twitch.tv. In 2013 Twitch.tv had 45 million unique viewers per month, 6 million video broadcasts, and 200 million hours of content streamed. Twitch.tv has more prime time viewers than television networks, MTV, TNT, AMC and Syfy. According to their own statistics, 68% of their viewers have decreased their TV watching in favor of Twitch and 50% spend more than 20 hours per week watching Twitch.tv. 7 This rapid growth of video game streaming is an opportunity for a new company like Reactuate Games to build their brand and community. Twitch.tv channels are generally grouped by the video game they broadcast, but they do include a grouping for Game Development. Reactuate Games will have their own Twitch channel where we will broadcast every developer daily meeting, planning and brainstorming meetings, and weekly retrospective meetings. We ll also host live Q&A s from the community so they can ask questions about the game and the game development process. Website and Mailing List The Reactuate Games website will be the hub for communication between us and our players. All the content from our various video campaigns will be linked to or embedded in this site. It will also be the primary place where we build our mailing list. For the most part marketing channels on the internet are under the control of the buyer in terms of consuming the content. In order for them to see a video stream, they have to go to Twitch.tv and request our video. YouTube videos and content on the Reactuate Games website. This is why it is so crucial for us to work to build our mailing list
9 is one of the few means of push marketing, meaning we have the ability to send a message to our fan base and grab their attention on our time table. Reactuate Games staff and advisors have extensive experience in doing this kind of marketing. We ve built many sites that optimize the building of lists, using data driven approaches to determine the absolutely most effect methods for a particular company, market and site. Kickstarter Reactuate Games plans to raise their second round of funding via Kickstarter at the end of the summer. We don t look at Kickstarter as only a source of funds. It is also a very powerful tool for marketing. One of the primary reasons Kickstarter campaigns fail is a lack of momentum. To overcome this, you need to begin building buzz about the campaign before it goes live. This Kickstarter prelaunch campaign is a major marketing push with a goal of getting enough people to contribute early and spread the word to create a critical mass to get others to participate. At the end of a successful Kickstarter, you have more than just the funds you need. You have validated your product because people have shown they will spend money for it. You ve also built a list of buyers and potential buyers you can communicate with in the future. Pricing There are many new business models available in the modern video game market that weren t an option even decade ago. Free is the major theme in these new models: Free-to-Play, Free-to- Start, Free with In-App Purchases, etc. While these can help build your audience quickly, Reactuate Games is planning to go with a more traditional subscription-based model for a number of reasons. In the end Colony Manager will be a success or failure based on the experience it gives the player. If it isn t fun, players won t keep playing no matter how much you give them for free. All of our business decisions must keep this in mind and a subscription-based business model helps with a number of game-based problems. We must moderate our user growth in the beginning. Since our game is online, we ll be running servers for the world. Too rapid growth will cause delays or lag on our servers, degrading player experience. We will also be developing the game live in front of our users, smaller numbers give us more ability to use the experience of our users for development. There is one problem the game faces that will be there no matter what pricing system is used.what do you do with abandoned colonies? If a player builds a city, then quits, what happens to these ghost towns? Possibilities include entropy, where the town degrades and eventually disappears, or even allowing new or existing players to buy an abandoned city via auction. This problem would be greatly exacerbated if there were thousands of free players who start and then never come back. 7
10 Pricing will be determined as the game and player community develop, initially starting low, but rising as we approach version 1.0. Kickstarter reward levels will include various lengths of subscription which can also be seen as pricing research. For example a $5 reward gives the backer a 3 month subscription, $25 a year, $100 3 years, $500 lifetime subscription. The monthly subscription isn t the only means of revenue generation. In game economies could be harness to bring in additional revenue raising the total customer value. Selling of resource, allowing players to trade resources with real world dollars, and selling of ghost towns are just a few possibilities. Distribution and Sales While it is possible to directly sell your game to your customer, and Reactuate Games will do this via their website, there are strong advantages to distributing through stores. In the past selling video game software involved giving the player physical media, which meant you needed to get your games onto retail store shelves. Those days are past. While some software is still sold in stores - primarily for consoles - most game software is distributed via the internet. While brick and mortar stores are no longer the power houses they were, the new gatekeepers of distribution are the various app stores. The power house app store for video games is Valve s Steam store. Also each platform, such as Xbox, PS4, and Apple, has their own stores, which are the exclusive means of distributing software on the platform. The advantage of these stores is the access to large markets of customers. The disadvantages are they take a commission on every sale or subscription and they require you to use their sales process and control the customer experience and payment. Requirements for entry to these stores vary as much as the stores themselves. Some, such as Apple s Mac App Store, reject applications primarily based only on objectionable content in the games, which shouldn t be an issue for Colony Manager. On the other hand Steam looks at the viability of the company making the game as much as its content, meaning once you get one game on Steam your subsequent games are easier to place. Each outlet will be evaluated on a store-by-store basis when we are ready to open enrollment for the app. 8
11 The Team Leadership Ron Davis, CEO The CEO is a polymath with a wide range of prior experiences. He has degrees in both Mass Communication Radio/TV, giving him a background in media production, and a degree in Computer Science, giving him the technical background to lead those aspects of the company. He's worked for over 20 years as a computer engineer for such diverse companies as Apple Computer, Metrowerks, Datawatch, and The Society International, leading multiple teams on many different products from simple websites to anti-virus software protecting thousands of computers. Ron has produced multiple online productions including the Photographer and Model Podcast, Confessions of an EMS Newbie podcast, and Distinctions for Life, an online video program. In addition to management tasks, Ron will hold positions of Game Designer and Code Artist. Summer Intensive Positions To produce the alpha prototype of Colony Manager, Reactuate Games will be hiring the following staff positions: 1 Coding Artist Code Artists write the computer code that makes the games and other products of Reactuate Games come to life. Code includes not only those thing written in a language like Python or C#, but logic created in development environments like Unity. Responsibilities: - Create elegant, beautiful and effective code to bring the game design to life. - Conform to the Reactuate Software Coding Standard for the language the code is written in. - Obsessive use of the source control system. - Always write and document code with an eye to how someone else may have to expand, maintain or otherwise interact with it in the future. 2 Digital Artists Digital Artists are jack-of-all-trades artists with a wide variety of skills to create assets for actual use in game. They will have knowledge of the tools needed to create the art work and the ability to quickly learn new tools. Responsibilities: 9
12 - Create beautiful art work that wows everyone that sees it. - Deliver game artwork in formats needs for use in the game. - Obsessive use of the source control system - Always create art assets with an eye to how it may serve multiple purposes in the game and allow customization by other artists. 1 Marketing Producer A marketing producer creates all of the content used to grow the Reactuate Games brand and promote the product. They have a strong skill set in digital video production and online social media marking. Responsibilities: - Establish and manage the Reactuate Games online presence. - Produce daily content and broadcast via social media. - Coordinate and inspire other team members to participate in marketing outreach. - Plan and execute Kickstarter pre-launch and launch campaigns. Advisory Board Adam Allegrucci is a designer, animator and game developer. Allegrucci created and founded INVIGOR Animation Studio in April 2011 after increasing demand for his strong creative talent and abilities. With an associate s degree in Digital Imaging and Design and a bachelor s degree in Animation, Allegrucci has been able to leverage his knowledge, talent and experience to build a broad-brush company specializing in design, animation and game development for companies locally and Internationally. Aaron Frankel makes marketing look easy. He has consulted on marketing for everything from big data behemoths, materials handling dynasties, and large automotive companies, to several best selling authors. His love of marketing stems from the joy he takes in sharing with others by first empathizing with their unique pains and passions. Craig Fryar is the Head of Business Intelligence at Wargaming.net, an award-winning online game developer and publisher, and one of the leaders in the free-to-play MMO market. Based out of Wargaming s Global Services office in Austin, Craig leads the world-wide data and analytic efforts and is responsible for informing design, development, marketing and management with actionable insights and business intelligence. Prior to Wargaming, Fryar was the Director of Analytics at BioWare, a division of Electronic Arts, where he launched, staffed and managed the analytics and reporting teams to inform datadriven design and executive decisions for global AAA computer and console software titles, including Star Wars: The Old Republic and Mass Effect 3. He has also served in various executive positions leading highly-effective teams within innovative analytics and data services, hardware, software, simulations, biotech products and R&D. 10
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