Do you want to start a video game store? If YES, here is a complete guide to starting a video game store business with NO money and no experience.
Okay, so we have provided you an in-depth sample video game store business plan template. We also took it further by analyzing and drafting a sample video game store marketing plan backed up by actionable guerrilla marketing ideas for video game stores. In this article, we will be considering all the requirements for starting a video game store. So put on your entrepreneurial hat and let’s proceed.
Why Start a Video Game Store?
Starting a video game store business is very easy especially if you have great passion for video games. Having passion for video games is very essential because you need to keep up with industry trends as regards new video games and be able to speak authoritatively about the products in your store.
If you are convinced that this is the kind of business you want to go into, then there are several factors which you will need to take into consideration before you can successfully start and run your video game business in the United States of America.
Starting a Video Game Store Business – A Complete Guide
- Industry Overview
According to the Global Games Market Report, in 2016, gamers globally generated nearly $100 billion in revenue, with the percentage being 8.5 percent higher than that which was generated in 2015. Mobile gaming surprised analysts by overtaking PC gaming and taking a large share of the market globally, thereby generating revenue of nearly $37 billion.
China accounts for a quarter of the all the global revenue. Analysts therefore expect the global market to not only grow by a CAGR of 66 percent but also reaching nearly $119 billion by 2019, with mobile gaming accounting for at least $53 billion of the total revenue.
According to analysis by Entertainment Software Association (ESA), as at 2014, more than 135 million games had been sold in the United States of America, generating sales revenue of $22 billion. Globally during this period, sales revenue stood at $46.5 billion.
Data showed that an average gamer was an adult of 35 years with 44 percent of these adults being female, which was contrary to popular belief that most gamers were males. Across the 36 states in the United States of America, more than 146,000 people were employed by the video gaming industry.
According to statistics, close to 155 million Americans play video games as every household was seen to have at least two active gamers. 42 percent of Americans who were regular gamers spend at least 3 hours every week on video games.
The rise in this statistics is due to the fact that parents and guardians who earlier saw video games as an addictive activity now see it as a means of socializing and binding with the kids and prefer it to them watching television or movies. Popularity for preferred video games (board games, social games, action games, puzzle and card games) is split almost uniformly across board.
Globally, APAC territories will generate revenue of nearly $47 billion, which is a 10 percent increase. China which has surpassed the United States of America in the gaming revenue generation accounts for nearly $25 billion in the total figure ahead of the $24 billion that the United States is expected to generate.
The PC market in China has slowed its growth as there is a 4 percent increase which shows a drop when considering the 16 percent growth it had the previous year, and this is due to the fact that more people in China now prefer mobile games to PC games; therefore there is an increase in the mobile market, which is expected to reach $10 billion, a 41 percent increase from the $7.1 billion of the previous year. It is expected that China’s games market will grow to $29 billion by 2019.
The North American market is the second largest region with gamers with revenue of more than $25 billion in 2016, growing by 4.1 percent from the previous year. The growth in this market is mainly driven by the mobile segment. Revenues from sale of consoles remain however stable due to the fact that it is gradually becoming digitized. In Europe, the East is seeing more growth in its gaming industry than the West.
The slow growth rate in Western Europe can be attributed to the slow adoption of mobile gaming by serious and average gamers. Latin America is far behind the others as it just recovered from a severe economic downturn that saw its exchange rates falling. However, its improving economy will see it generate $1.4 billion from mobile games.
According to IBISWorld, the video games industry in the U.S has average revenue of $44 billion with a 4 percent growth in the periods between 2011 and 2016. There are more than 35,000 video games businesses in the United States of America employing more than 187,000 people.
Demand in the industry is expected to grow as more customers are expected to get new consoles and games. The reason why the market is so huge is because it is not only restricted to young males but women as well as customers of all ages. More people will increasingly play games online thereby boosting the revenue of the industry.
The video games industry experienced a steady growth between the periods of 2011 to 2016 and the steady rate of revenue for this period is expected to be at 4 percent due to the growth in the economy which has caused an increase in disposable income with more of them increasing their spending on discretionary items such as video games and its accessories.
Starting a Video Game Store Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who visit video game stores are not only young males but also women and consumers of all ages. This means that the average gamer is not just a teen boy or young adult male, but an average adult of 35 years and could be male or female.
This therefore means that the demographics of those who would visit a video game store to purchase games (hardware or software) are not restricted to a group of people but is all encompassing.
List of Niche ideas Within the Video Game Retail Industry That You Can Specialize in
There aren’t much niches in the video game store segment of the industry; however, large scale video game stores due to their financial capability are likely to offer more than one niche area or even all the niches when compared to a small scale video game store.
Concentrating on a niche is a good way to stand out and compete as a small scale video game store especially if you are just starting out. Therefore some of the niche areas that a video game store might decide to major on are;
- Sale of physical games and software
- Sale of consoles
- Sale of video game accessories
- Sale of online games and software
- Sale of used games and accessories
- Sale of vintage games
The Level of Competition in the Video Game Store Business
The video game industry is a multi-billion dollar industry and is filled with so many operators that have caused stiff competition in the industry. Large scale video game stores are however able to compete more than small scale video game stores as they usually are able to open more than one facility which enables them to attract more customers.
Most video game store owners usually have beneficial relationships with video game developers and publishers so as to help push a game to consumers.
List of Well – Known Brands in the Video Game Retail Industry
While it might be easy enough to identify video game developers and publishers, a video game store business is usually a different ball game altogether; except it is one that has its facilities spread across several locations. Some of these brands are those that have performed phenomenally in this industry due to several factors such as; their marketing and publicity strategies, their game inventory or how long they have existed in the industry.
Therefore some of the leading video game stores in the United States of America are;
- Pink Goriila
- Xbox Games Store
- Game X Change
- Play N Trade
- Slackers CDs and Games
- Rhino Video Games
Gamers now have more options as regards what devices they can use in playing the games of their choice as well as the content of the games. This has allowed the games industry to grow especially as business models and platforms have been aligned. This alignment is causing the video games industry to be turned into an all-round entertainment franchise, thereby finding more ways to ensure that customers remain engaged and also generating more streams of revenue.
Revenues from the video game industry are divided between PCs, Consoles and Mobile Gaming. However, revenue from the Virtual Reality (VR) kind of gaming is steadily increasing and will see consumers begin to substitute their spending on other forms of games for this game, as the VR is expected to change how consumers not only communicate with each other but also interact with the content. Most of the revenue that will therefore be generated by the VR will come from its hardware sales, spectator content as well as live viewing formats.
The growth in the video game industry has mostly been driven by the combination of the development of games and the publishing aspects. This means that video games developers unlike before can now develop a game without having to depend on publishers for funding. Also, improved processing devices with high speed and advanced graphics have enabled end users to have a better experience with their gaming.
Money is made in the video game industry via sale of hardware that facilitate the playing of games such as PCs, consoles, play stations, remotes, virtual guns and joysticks. Software is another way money is made as this is the actual video game which can either be bought through a CD/DVD, mobile app or even downloaded. Finally infrastructure (network, internet and connectivity) and supporting technologies are other ways money is being made in the video game industry.
Starting Your Video Game Store Business from Scratch vs Buying a Franchise
There are several pros and cons to starting your video game business from scratch. When starting from scratch, you are in charge of your whole business and can easily change strategies midway in order to adapt to changing trends in the economy. However, while you might be in total charge of your business, you might easily be overwhelmed with all the details and attention your new company will require especially when it comes to handling the paper works.
Buying a franchise is a decision you would need to think well on. You would need to carry out a thorough research on the company which you would be purchasing the franchise from. With a franchise however, you would not need to be bothered about how to market or publicize your business as that will be handled along with other aspects so that you will be able to concentrate on just running the business. You should however be aware that you would not be in charge of certain key decisions affecting your video game store.
Possible Threats and Challenges You Will Face When Starting a Video Game Store Business
Just like every other business that faces threats and challenges, the video game store business is no different; as an entrepreneur, you should be prepared to handle whatever threats and challenges that may arise during the course of starting or running your business.
Some of the threats and challenges you may likely face when running your video game store in the United States of America are; the intense competition in the industry, the increase in mobile game lovers which will see customers buying less of game hardware and accessories or even software as they can download whatever game they prefer from their mobile phones, economic downturn that will see consumers spending less and the arrival of a competitor offering same services in the same location. Threats and challenges will always exist, how you handle them as an entrepreneur will determine the success or failure of your video game store.
Starting a Video Game Store Business – Legal Matters
- Best legal entity to use for a video game store
There are four types of legal entities in existence in the United States of America for those intending to go into the video game store business and they are; sole proprietorship, partnership, corporation and Limited Liability Company (LLC).
The sole proprietorship kind of legal entity is that which is run by one person who is in charge of the whole business – both assets and liabilities. While this is a great option if you are starting small, should your business run into debt, you will be held personally liable. The partnership kind of legal entity is one that is run by two or more partners who have formally agreed to run the business. All partners jointly make decisions and are also held liable for any debts that the business might incur.
A corporation is formed when certain people have decided to form a business which will be regarded as separate from them. There are usually two types of corporations – S and C – and both have its advantages and disadvantages.
A Limited Liability Company (LLC) is also a form of legal entity that is regarded as separate from the owners just like the corporation. Most entrepreneurs usually go for this type of legal entity due to the tax benefits and other advantages.
Catchy Business Name Ideas Suitable for a Video Game Store Business
Having a catchy name for your video game store is very important and so you must take this aspect very seriously; customers do not only like a name that is unique and creative but one that they can easily remember and identify with.
Below therefore are some catchy names that you can choose for your video game store;
- Game Changers Inc
- Top Games Store
- Quad-core Video Games
- Virtual and Software Video Game Stores
- Succulus Video Gamers
- Vintage Video Gamers
Having an insurance policy for your video game store business is very important because it will protect you against any liability that you might incur during the course of running the business. Your insurance policy will protect you from having to pay from your own pocket should there be any damage or theft to your products or if a customer gets injured in your store. While having the basic insurance policies are very important, you should seek the advice of an insurance agent or broker so you can be advised on what insurance policies will best suit your video game store business.
Below are some of the basic insurance policies that you would have to purchase if you intend starting your video game store in the United States of America;
- General Insurance
- Liability Insurance
- Workers’ Compensation Insurance
- Overhead Expense Disability Insurance
- Health Insurance
- Employment Practices Liability Insurance
Intellectual Property Protection/Trademark
The video game store business is one that deals majorly in sale of games (hardware and software) to the end users. This means that video game stores are retailers and therefore not involved in the production of games and therefore have no need to create materials that would need to be protected from theft by applying for an intellectual property protection. There are however large scale video game stores that have been involved in the production of games and those ones would therefore need to apply for an IPP but this is not a usual occurrence.
Most of the entrepreneurs that own a video game stores usually seek to protect their logo, slogan or jingles and so would get an attorney to file for IPP on these with the USPTO.
Is Professional Certification Needed to Run a Video Game Store?
The video game store business involves the buying and selling of video games (hardware and software) which requires no special skills and would therefore have no need for an entrepreneur to get professional certification. There are associations that you can however join so as to boost the profile of your video game store for when you would need to create a relationship with stakeholders in the industry such as video game developers and publishers.
List of Legal Documents You Need to Run a Video Game Store Business
The United States of America is very strict as regards starting a business; this means that businesses are expected to have all the necessary documentation with them. Lack of proper documentation is regarded as a very serious offence that might not only lead to you having to pay a huge penalty but you may also be banned from running the kind of business ever again.
Therefore, before starting your video game business, it is important that you find out what documents your state requires from you. You could also approach an attorney with experience in the video game industry to help you out as regards what documents you would need in order to run your business successfully in the United States of America.
Some of the basic documents that you will therefore need to have in place before you can start or run your video game store are;
- Certificate of Incorporation
- Operating Agreement
- Business License and Permits
- Business Plan
- Insurance Policy
- Non Disclosure Agreement
- Contract Agreement
- Employment Agreement
- Sales Permit
- Employer Identification Number (EIN)
- Federal Tax Identification Number
Financing Your Video Game Store Business
Even though you have a passion to run a video game store, without having the necessary finance for your business, your business is likely to remain an idea. This is why it is absolutely necessary to have a business plan as sourcing for start-up capital is what an entrepreneur must do because not all entrepreneurs can afford to run the business they have in mind with the funds at hand.
A comprehensive business plan is not only intended as a document to help guide your actions and decisions, it is also intended to show those you intend to approach for start-up capital how serious you are with the business and how you intend to pay them back.
Therefore some of the options that you might need to explore when it comes to seeking for start-up capital for your video game store are;
- Raising part of your start-up capital from personal savings and sale of stocks
- Sourcing for soft loans from friends and family members
- Applying for loan from the commercial bank
- Raising money from investors and business partners.
Choosing a Suitable Location for your Video Game Store
Deciding where to locate your video game store business is very important as you would need to be located in an area where there is high foot traffic so that you will have people come into your video game store to get a video game or its accessories. Places that have high foot traffic include shopping malls, cinemas, shopping centers and large scale grocery stores, and other such places where teens, young adults and adults are likely to visit.
There are some that run their video game store business from home and if this is the option you intend to choose, then you would have to build a responsive and secure website, as most of your clients will be making payments via your website and so will want to be sure that their data is kept safe. Asides from selling your products via your website, you would need to sell via a combination of online platforms such as online auction sites and e-commerce platforms and even via your social media platforms as well.
Starting a Video Game Store Business – Technical & Manpower Details
In order to get all the technical and manpower resources you would need for your video game store, it is essential that all requirements such as finance are in place. Having the necessary finance will enable you to allocate what you will need in order to run the business successfully.
In acquiring the equipment and supplies that you would need to run your video game store business, you might need to go online to source for wholesalers so that you will get good prices for the games you will be buying. However, it is vital to conduct a research on the games you will be buying especially those that you will buy in bulk.
This is because if the games aren’t popular and you buy in bulk, you will not only struggle to sell the games, you will be tying down capital on unnecessary stock. You can also get a deal on some used games and consoles especially in online auction sites, flea markets, garage sales as well as thrift stores. Make sure that whatever you buy is in good condition so that you will not end up ruining the reputation of your business.
Therefore, most of the equipment that you would need to sell in your video game store are; consoles, play stations, games, gaming systems, joystick, remotes and virtual guns. You will also need to get a credit card machine, office supplies as well as cash registers.
The employees that you will need to successfully run your video game store business are; chief executive officer (owner), admin and human resources manager, business development executive, marketing executives and sales team, store supervisor, customer service executive/front desk officer, accountant/cashier, cleaners, security guard and an official driver.
What this therefore means is that you would need at least eleven key staff in order to run your video game store business effectively.
The Service Delivery Process of a Video Game Store Business
The video game store business is one that involves the buying of video games and related products and selling to customers. You may need to buy these products in bulk, so would need to go online to find wholesalers that would likely give you a good deal. You can also check local sales website for used games and consoles.
In getting used products, you can either offer cash or trade credit by determining which option you would use depending on the popularity of the title, age and physical condition of such games.
Starting a Video Game Store Business – The Marketing Plan
- Marketing ideas and strategies
Marketing is one major way by which revenue is generated for a business and any business that has been established to make profit knows that it must engage in activities that should enable it to not only recoup its initial investment but also ensure that the business is able to attain all its goals and objectives.
Before marketing strategies can however be created, it is important that a market survey be carried out. The market survey will allow you study the market you intend going into, from your target market to your competitors and other stakeholders, determining what they expect from you and what you should expect from them as well.
Once the market survey has been completed, effective marketing strategies can be created that will enable you penetrate and get a fair share of your target market which will then allow you to compete favorably against your competitors in the industry. Some entrepreneurs usually seek the services of a marketing consultant who has the required experienced in the industry to help them draft effective marketing strategies that are in line with their corporate goals and objectives.
To however ensure that you are standing out in the industry and get a fair share of the market, you will need to combine several strategies such as placing adverts in print and visual media as well as using online platforms such as your website, Facebook and Instagram to market your video games and whatever else you intend to sell in your video game store.
Therefore some of the platforms that you can use to effectively market your video game store are;
- Introduce your video game store formally to industry stakeholders and potentials in your target market by sending out mails electronically
- Place adverts in local newspapers and tech magazines as well as on radio and television stations
- Leverage on the internet by using platforms such as your website, Facebook, Twitter, Instagram and Google Plus to advertise and market the products in your video game store
- Engage in direct marketing and sales by employing proficient and capable marketing and sales team
- Ensure that you advertise your video game store in popular gaming forums and blogs
- Ensure that your video game store is listed in online directories and even yellow pages
Strategies to Boost Your Video Game Store Brand Awareness and Create Your Corporate Identity
Boosting one’s brand awareness is regarded as a huge deal and companies no matter what segment they are in the industry are willing to spend huge amounts annually to ensure that they constantly communicate their brand image to their customers and the general target market.
No one starts a business and do not want to generate awareness for itself. If for instance you are running a vintage video store, you would need to constantly keep your target market interested by engaging in publicity measures that would point to the existence of your video game store.
The internet today has made publicity to not only be very cheap but to also be very effective. You can decide to choose a section of your target market and focus on them especially if you are offering a niche product. Also, you can try a combination of publicity strategies both online and offline to ensure that you are able to boost your brand and create the awareness you desire.
Below are the platforms that you can use in boosting your brand as well as promoting your video game store;
- Use social media platforms such as Facebook, Twitter and Instargam to boost your video game store
- Place adverts in gamers forum and blogs
- Create a website and publicize your video game store constantly
- Distribute handbills and fliers in target locations
- Install a bill board in order to publicize your video game store
- Give out discounts and incentives regularly