OT: Computer gaming business models

from Stardock Forums
I've just posted a question in the Fellowship thread but was advised to post it out here to solicit more comments, hopefully also from Brad&Co.

Basically, I'm dreaming of starting my own business and was trying to see if there is any way I could combine my entrepreneur interest with one of the passions in my life - computer gaming.

I'm a novice with regards to this industry so would like to hear comments regarding how computer gaming could become a viable business for a startup.

I know Brad's story provides an excellent example but I don't see myself going into game development. Are there any other profitable computer gaming business models out there?

In Singapore, there are obviously computer games distributors and retailers but I really wonder if they make money with the small population in Singapore and the problems of piracy.

We have online gaming shops which offer gamers facilities to play internet or LAN games but I always felt this business model is weak because it's hard to differentiate oneself against a competitor offering the same service. Moreover, labour and space rentals in Singapore are costly.

Was thinking about the apparent success of MMORPGs. However, how can one get a piece of this action in the form of a business unless you develop and run the MMORPG?

As I said, I'm a novice in this industry so pls indulge me with your advice/comments.

~SDC~
373 views 25 replies
Reply #1 from Stardock Forums Top
I dont have any expertise in the computer gaming industry, so wont presume to offer technical advice. As a consumer, IT companies of any sort (not only gaming) appear to be a high risk endeavour - the days of have a small working capital as a solo operator and developing the Next Big Thing might well be over.

I would simply encourage you on the personal side; as a partner in my own business I would say being the captain of your own ship brings immense satisfaction as opposed to working "for the man". It is potentially the path of greatest reward financially, too, if all goes well. The flip side is the risk of catastrophic failure; this really depends on what you have to lose right now. If you're single with no dependents, and it all goes pear shaped - how badly do you really suffer? Age and stage of life is important - timing can be everything.

I might also say that life balance also becomes harder to adjust when the operation depends upon you directly for success; it's another "life stage" factor to consider.

And hey - you can promote yourself directly to Senator without any argument - that can't be bad, can it? ;)
[Message Edited]
Reply #2 from Stardock Forums Top
One of the key motivations behind my interest to start my own business is the fact that I do not want want to look at myself in another 30+ years time after slogging for others and then feel a deep sense of regret of not having the guts to strike it out on my own.

Honestly, I'm quite prepared to fail on this first attempt and lose my entire investment. I had considered furthering my studies but I thought I would rather spend the money learning from the school of hard knocks than to acquire an MBA. I believe that if I'm worth my salt, I would be able to get a job back in the workforce if I'm forced to call it a day.

Computer gaming as a business is just one possibility I'm considering. I felt it would be best if I'm able to start a business with something that I'm also passionate about.

~SDC~
Elemental: Reforged
Reply #3 from Stardock Forums Top
again, i'm not an expert, but i believe places like Microsoft, Nintendo etc do offer kits to game developers, so they build for their respective platforms. i know that microsoft recently donated 15 or so kits to the Victorian Government for the Game Development Industry - perhaps Singapore is doing something similar? Having one of these kits might be a leg-up.

my knowledge of the the local game industry is that most $ work is 'sweat-shop' (ie moving games cross platform, making animations etc) - most orginal game development, regardless of quality, languishes do to lack of cash (a game these days often has a similar budget as a feature film).....

if i think of anything smart i'll let you know!

:)
Reply #4 from Stardock Forums Top
What skills do you have that might be relevant?

What type of work do you want to be doing? (Ie mostly interpersonal stuff, mostly programming, or what?)
Reply #5 from Stardock Forums Top
My academic training is in Accountancy. My skills and working experience is on the business side. I've done finance, biz devt, project work at a managerial level. I've worked in a port, dotcom and logistics companies (all under the same group). My technical skills are very limited (I did take a Minor in IT in uni).

I'm looking at doing general management of the business, which basically entails everything, but I can't do any technical stuff like programming for lack of such skills.

~SDC~
Reply #6 from Stardock Forums Top
most orginal game development, regardless of quality, languishes do to lack of cash (a game these days often has a similar budget as a feature film
End of quote


Just as players, we already see so many flops and those are the games that reach the market. I'm sure there are countless others which didn't even make it to completion. That's why I'm not keen at all with regards to game development. It's too high a risk for a startup.

I'm thinking more of some kind of spin-off or related business to the computer gaming industry.

if i think of anything smart i'll let you know!
End of quote


Thanks :)


~SDC~
Reply #7 from Stardock Forums Top
My plan is to find an industry which I would target for my business and then get a job in that industry to gain experience and learn the ropes before I start up.

I sent my resume recently to a major South-East Asian computer games distributor (they also distribute Galciv). They distribute computer games, educational software, game peripherals, utilities etc. They had "Must be a computer games enthusiast" as a job requirement. :)

~SDC~
Reply #8 from Stardock Forums Top
Just thinking out loud: Mostly all games needs a community, alot of game developers doesn't have the ressources to support these (Stardock is an exception).

Income would come from 1) Margins on selling the games from website 2) Possible consultancy/advertising fees

This kind of thing could be started without alot cash, but one would need good contacts in the industry (especially with the smaller companies)
Reply #9 from Stardock Forums Top
business unless you develop and run the MMORPG?
End of quote

There is a big difference between developping it and running it. For instance, MMORPGs are mostly developped in the U.S but are sold/licensed abroad to companies to operate them in the national language.
I do'nt know what language is used in Singapore, but if people's mother tongue is not English, you could probably get some business by contacting some successful existing MMORPG and proposing to make and run a translation. This would mostly require language skills and then to manage the IT for the servers, plus all the usual legal/administrative stuff.
Reply #10 from Stardock Forums Top
i iz of the understandin' that the capital of MMORPGs is South Korea.....

:)
Reply #11 from Stardock Forums Top
Singapore's working language is English so Singaporean MMORPG players are already subscribers of current popular MMORPGs. Was wondering whether there is a market for Chinese-language MMORPGs, obviously targeting the China market. Don't think there are any major ones catering to that market now.

Steve - Indeed. I should do some research on S.Korea. In some ways, Singapore is similarily wired up so it may be possible to replicate that kind of success here.

Found an interesting article on South Korea gaming.

South Korea is a often thought of as an ancient land, but when it comes to modern technology this is a very wired world. Every second household has a broadband connection to the Internet, and there's a computer cafe on or under most street corners.

They are called PC baangs, and there are tens of thousands of them across the country. The baangs are part pub, part video parlour. The computers have high speed Internet access, allowing game players to go head to head or mouse to mouse against people on the other side of the world.

It's not as easy as it looks. I chose a game that had something to do with killer space maggots, and kept getting beaten by someone called the Rabbit. I wanted to meet my tormentor, and was told to visit an upmarket PC baang on the other side of town. The Rabbit it turned out was not your average computer nerd.

"Excuse me you must be the rabbit."

"Are you the dingo?"

"Yes."

"You are really bad at playing computer games!"

The Rabbit is no bunny. Kim In-Kyung is a professional computer gamer and a major Korean celebrity.

"I started playing when my male friends as me to go to a PC baang. They wanted me to just chat beside them."

"And can you beat all the boys now?"

"Yes."

Kim earns 40 thousand dollars a year competing in computer game tournaments like this one. Competitions are broadcast on national television. Four South Korean channels are dedicated to the subject, and they pull vast audiences.

It's estimated there are now more than one thousand professional gamers in South Korea. Many of them live in dormitories like this one. It's a geek's dream, the gamers get to sit in front of computers and shoot each other for virtually every minute of their waking lives.

"I once continued to play games for three days and nights except for one to two hours a day, when I slept."

The ages here range from 16 to 23, the gamers only leave the apartment to go jogging, something that helps their endurance. Computer companies spend millions of dollars a year, housing supporting and training professional gamers. Scouts scour the PC baangs to find suitable candidates.

So when the inevitable challenge came I was prepared to put my pride in the firing line.

"10 seconds, I'm still alive, OK."

My new friends assured me it was an educational game, it didn't seem particularly academic, but I did learn something - that online gaming is a South Korean obsession, although I'm not sure if it is a healthy one.
End of quote


~SDC~
Reply #12 from Stardock Forums Top
I wondering whether there are professional TBS gamers. LOL

What kind of profession is professional gamers?!?

40k a year is really peanuts when you consider that they are likely to have a very short gaming career.

Unless you can pull in endorsements and such by being a nationwide celebrity.
~SDC~
[Message Edited]
Reply #13 from Stardock Forums Top
Just read another article about how big boys such as Sony Online Entertainment are already adapting MMORPGS like EverQuest for the Asian market. Don't think there is room for small players to run popular MMORPGs on a worldwide medium such as the Internet unless you are translating it into a niche language.

The article also explained why a MMORPG like Lineage succeeded in South Korea whereas EverQuest didn't. The reason is cultural differences.

~SDC~
Reply #14 from Stardock Forums Top
About gaming communities, look at a site like http://apolyton.net. I'm not sure how much DanQ and Markos get out of it, but the site is apparently enough business for them to survive. This is a community site, whose main revenues come from links to amazon and such and referrals, plus ads and direct sales of junk(T-shirts, mugs...). They even explain somewhere how they do it, what the revenue breakdown is, etc. They could even charge people for accessing the site or some portions of it, and many people would actually pay, but that probably works well only for more general gaming sites.
The point about poly is that the site is based around a big community aroung games with lasting appeal (TBS) and little or no official dedicated forums (Galciv being an exception, but then, apolytoners like me or Asmodean discuss Galciv here rather than on poly). So if you can find a game that would have a lot fo community around it, it's possible to run a web site on it, but you need the game first, and nowadays companies tend to make their official forums. Of course, some are so bad at handling their forums (MOO3 comes to mind) that people move to other places. That's probably very risky, though, because you must find a game/kind of games and get people go to your site...
Reply #15 from Stardock Forums Top
Ray,
unless you have the computing skills, or know the people with those skills, then there is very little you can do on the start-up front. Most computer start-ups involve hard initial work and lots of long hours of programming to create a product. Until that product is created there is little money available to supporting accountants or business development people.
You could however try a slightly different approach. If you could locate budding programmers who were eager to try something knew then you could look at funding the first 2 years of development. As a businessman you could probably put together a reasonable project plan and approach a bank for a loan. The trick is locating those young programmers with the ideas who would never get funding on their own. You could then focus on the project management and business side and let them work on the game development.
The same approach could work in a non game development environment. Find the people with the ideas and merge your skills to them. Your primary skills are likely to be project management, business acumen and accounting. These could be just what a start-up needed, but you'd have to take a risk as well or else why would they let you share their ideas.

Paul.

~SDC~
Reply #16 from Stardock Forums Top
Solitaire,

well said.
Maybe I could demonstrate, and add something. I did not want to add something before as I do not consider to be apropriate to recommend something from Czech republic, anyway, if you are interested, here is my short story...
We started as company of four programmers (ERP oriented) back in 98, and I was responsible for managing, accountancy, business plans and everything related to company managent... just because of my two years on Economic University (IT faculty), and some general overview in this area (I worked as economy consultant time to time). There were simply not enough resources for "real" manager, and the idea we started on did not looked promising - and it was our idea (special way of implementing - but no need to be too verbose ;) ). Since then, we achieved... not a big succes like Stardock, but we are surviving (quite a success in this country, I tell you ;) ). Recently, we have been bought out by mid-sized (we are their only foreign branch) foreign company and expected a "real" manager... And go figure, I simply got promoted to manager, but still working as programmer quite a big part of my time, and have no formal education - and maybe not even the necessary skills - of one.

There is no moral in the story, I believe. Maybe just one - you need skills and idea. Idea can and should be yours, but skills you do not posess - you need someone to provide them AND you cannot expect to earn any money any soon, if you will not reach great success (as your skills are not probable to attract any money at the beginning). And not to mention, you have to keep people with skills not to start their own business, if succesful.

I hope my words (both in syntactical and semantical part) do not offend you. And maybe I have helped at least a little bit.

~SDC~
Reply #17 from Stardock Forums Top
Unless you can pull in endorsements and such by being a nationwide celebrity.
End of quote


I think the best ones earn several hundred thousand from endorsements and tournament winnings.
Reply #18 from Stardock Forums Top
Another thing: they have TV stations devoted to gaming. And people will pay hundreds of dollars to watch people play live.
Reply #19 from Stardock Forums Top
Hmmm...it is great to all those ideas, i live for dreaming about how business can be done (don't have the balls to actually start something of my own).

I was thinking - given the succes Stardock has had with this community and probably also the Drengin.net idea - could that idea be sold to other small software developers using Stardocks experiences ? Just an idea
Reply #20 from Stardock Forums Top
Interesting. Found out from some research that a Korean online game developer, Nexon, started a company developing and hosting online games in Singapore in Sep 2000.

It was reported in Aug 2002 that it had 30 staff, 50,000 local subscribers and US$25k revenues a month. It was the largest online game provider in Singapore.

I used the word "was" because it closed in June 2003.

My feel is that this company was ahead of their time.

~SDC~
Reply #21 from Stardock Forums Top
me iz thinkin.....

1. facilitation (across da nation). there's a big hole in the market for gaming events? bring the Gaming World Championships to Singapore? Start one up?

2. public gaming - is there a place for the niche marketed public gaming venue??? something a bit more 'comfortable' than the usual gaming cafe???

:)
Reply #22 from Stardock Forums Top
You could start up an bluetooth gaming area. Just a comfortable area with sofas, desks, etc which provides bluetooth support for all those new Ngage players (and of course laptop and other bluetooth players). How do you make your money? By providing rented games so that large groups of players can compete against each other, providing drinking and food facilities and once you get the numbers, charging a small fee for entry.

Paul.

~SDC~
Reply #23 from Stardock Forums Top
One fundamental problem I see is that the gaming population in Singapore is small. That is inclusive of PC and console players.

In addition, even though we now have a generation of gamers who are adults with higher purchasing power, the bulk of gamers are teenagers or younger who will not have as much to spend on gaming.

I've just visited a forum where they had a list of gaming cafes. Barely a year later, someone noted that half of those cafes have closed. I've mentioned earlier the high business costs. Another key issue is competition. How do you compete against someone who plonks down a similar establishment near to you? Once a price war starts, it's curtains for everyone.

Found out that there are 3 Singaporean game developers who have just started their business 2-3 years ago. They admitted as much that they are struggling with funding and manpower problems. Only 1 of them have managed to release a game commercially so far. I really don't see them having much of a chance.

The more I look, the less I think there are any interesting opportunities in this industry in Singapore. The timing may not be ripe yet.

~SDC~
Reply #24 from Stardock Forums Top
Ray hello,

As you might know we just purchased a house which is great! The down side of it's that a business venture we've been working on for about 4 years had to be put on hold . . . even if your not interested, if nothing else it might give you some inspiration as to what you might like to do its kinda 'out-there' . . . email me [email protected] or Paul [email protected] if you'd like to take a look at the synopsis . . . :)
Reply #25 from Stardock Forums Top
Found out that there are 3 Singaporean game developers who have just started their business 2-3 years ago. They admitted as much that they are struggling with funding and manpower problems. Only 1 of them have managed to release a game commercially so far. I really don't see them having much of a chance.
End of quote


2-3 years to develop a game doesn't look like much if they start from scratch. Consider that Galciv seems to have been very well managed (released on schedule) and they had prior game which existed plus lots of people to do beta testing, they required a good year to get the product out. Consider MOO3: Being one year late, they didn't get a half decent product. 2 or 3 years sounds like minimum time to get a first product out. And then you must find a publisher...

But indeed if there is no market in Singapore, maybe it's better to choose something else, or look abroad.