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The Complex World of the Video Game Company


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Business Plan for a Video Game Company

Tread lightly in the video game industry in terms of trying to startup too fast. These types of companies come and go because of the high risk of the market not liking the developed product or the risk of problems developing with the games. Video games today represent complex software developed by technology experts. Many versions can be played online by virtual communities, while others are played alone or only with others in the same room. Games target different markets, like children under 12 years old or teenager. Markets are also segmented by interest, like sports, military, or science fiction.

Startups have two options in business models


In the first model, the company develops the software, usually using a team of developers. Another business path that can be taken is selling licensed video games developed by other companies. Either way, it requires a significant amount of capital to get a video game business up and running. Other things to keep in mind during the development of a business plan for a video game company include the following:

• The amount of capital raised needs to cover the cost of software development, online or storefront setup, development team expenses, and the first few years of operations or expected profitability, whichever comes first
• The staff must have specialized expertise in software development and in-depth knowledge of video game marketing and the video game industry
• Extensive market research is mandatory because this is a highly competitive industry; conduct research on the types of video games the target gaming community is hoping to see in new releases in the near future
• Business developed video games need extensive testing; many companies have failed because they did not thoroughly test their product before release
• Development of the product distribution channels is critical, and include game retail chains, business owned brick-and-mortar stores, and online stores; if selling online, games can be sold as downloads or shipped as DVDs
• The business needs to develop clear-cut policies on game exchanges, returns, and upgrades.
• Prepare a video game business plan that includes a marketing plan, pro-forma income statements, balance sheets, and cash flow projections

Careful and in-depth business planning will go a long way towards convincing venture capitalists or other types of investors to commit funds to a risky business. The gaming industry is volatile and changes rapidly as technology advances. Video games are getting increasingly sophisticated, so the games most likely to sell are filled with features like interactive play and virtual community capacity.

Developing a business plan for a video game company requires close attention to a number of details that are important to success in a competitive industry. OGS Capital professionals can provide critical assistance to business owners who need a highly professional business plan that engages potential investors.

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