Eco 561 Business Proposal

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Business Proposal blablabla ECO/561
October 30, 2013 thisguy Business Proposal
The Pitch
The concept behind All Play is that people who play video games online should not have a restriction about who they can play with. Many video game titles contain a multiplayer feature that allows players to play with other players from around the world. Multiplayer is even the driving force behind certain game titles. Despite the popularity and draw of multiplayer gaming, there is still no cross-platform gaming. Cross-platform means players with one console can play online with players who own another console. Currently players have a limitation to only playing online with other players who own the same console. This is restricting because certain popular games are released on multiple gaming platforms. All Play aims to change that by allowing players across all platforms to connect with one another. Customers can purchase the software and pay either a monthly or yearly subscription fee. Alternatively the customer can purchase the software and pay subscription fees only for certain games. The customer will be able to purchase the necessary software as a digital download or as a physical disc that can be installed.
The Market Structure and Elasticity The current market structure of the game console industry is best described as an oligopoly. The major players of the home console industry are Microsoft’s Xbox, Sony’s Playstation, and Nintendo’s Wii U. All consoles share a similar price point depending on storage capacity and games cost approximately $60. All Play will be a complimentary product within the oligopoly of the home console industry. As a software product, the focus will be on monopolizing the cross-platform compatibility software market. Video game products are elastic. Customers have grown accustomed to the $60 price point for new video game software. An increase in price over the $60 mark for a video game will more than likely drive consumers toward a similar title at the familiar price point. A reduction in price of a new game will attract customers. All Play is a stand-alone product, it is a complement to the video game industry and subject to the elasticity of the video game industry. If price goes up for certain games, it will decrease demand, in turn decreasing demand for All Play services.

Revenue and Profit Pricing on All Play remain consistent throughout the year. Highly profitable multiplayer titles, such as Call of Duty, tend to be released around November just in time for the holiday shopping season. The marketing strategy is to promote All Play side-by-side with the big multiplayer title of the holiday shopping season. Price will remain consistent at $60 with the expectation that the success of sales from the video game will complement the sales of All Play. Although normally this occurs during the holiday shopping season, blockbuster video games are sold throughout the year and the same strategy will be implemented with each big name title released. Advertising will serve as a tool to increase revenue. Between matches (actual multiplayer playtime) player are in a lobby that serves as a waiting room. This downtime will be utilized as advertising time similar to commercials on television shows. All Play’s goal is to sell the marginal amount where marginal costs are the lowest and marginal revenue is at its highest.

Total Product
Total Fixed Cost
Total Variable Cost
Total Cost
Average Fixed Cost
Average Variable Cost
Average Total Cost
Total Revenue
Marginal Cost
Marginal Revenue

0
35

35
35

1
35
20
55
35
20
55
60
20
60

2
35
35
70
17.50 17.50
35.00
120.00
15
60.00

3
35
43
78
11.67 14.33
26.00
180.00
8
60.00

4
35
56
91
8.75 14.00
22.75
240.00
13
60.00

5
35
68
103
7
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