New business model idea

[Grrrr]

Hey guys,

This is the first post I've had in this forum and I'm looking for some feedback for a slightly different business model than your typical lan center.  A partner and I have had the idea of creating a competitive gaming center which will focus mainly on cash tournaments, cash leagues and ladders (leaderboards). We would like to regularly send teams to MLG events (main promotion) and focus on the highly competitive gamers. The consoles or computers would still be available to rent at an hourly rate but we are intending on taking percentages from payouts to replace the normal rates. By taking percentages from the winnings, the players wouldn't just be paying to play on a machine for a couple of hours but would be paying to compete with a chance to win their money back (or more likely, win more than their buy-in).

Has anyone attempted to run this type of business model? or does everyone offer tournaments to supplement the hourly income?

Any type of feedback would be greatly appreciated. We are putting together our business plan right now and are trying to decide what services we would like to promote and focus on. Thanks again for the feedback

[drtydawg]

have you researched if you could keep enough interest in your area to maintain that many tournaments? And how often will these events take place? To me it sounds like a great concept if you could keep a steady flow of customers. Usually after the summer season the customer flow decline and creative thinking begin. I dont know of any tournament only based LAN, but try giving MLG a call, or other competitive organizations. Matter of fact I do know of a competitive team, Look for them on facebook- zYn gaming is the name.

[RsteeleAUG]

MLG has expressed interest in doing tournaments at Lan Centers.
I've spoken with a rep on 2 separate occasions. I haven't heard anything back from them in several months. They even had a thread on their forums at one time listing all the LAN centers and a survey asking about tournaments at LAN centers.

Tournaments have been great for helping us spread the word. However my crowd isn't as interested in MLG style tournaments they prefer smaller, just for fun, slack rules tournaments like the ones we run at all night events. I have since started letting customers set up their own tournaments and I help promote and try to get local businesses to help sponsor them by providing prizes. I charge a small door fee $3-$5 and that allows spectators to watch or play on systems during the tournament.

Our real money makers have been private birthday parties, all night events, and church and social group rentals. There was another center in town that based itself solely on tournaments. They were around for several years only opened 3 or 4 days a week and closed their doors last month

[Grrrr]

Thanks for the great feedback guys...Essentially, we are thinking of the lan centers becoming a "minor league" for the MLG which would allow gamers to become better and take a more serious approach to practicing. With what steele was saying, I believe we could focus on the competitive side but still offer the social events as a supplement. I'm currently trying to get a hold of a rep from MLG to see if we could actively promote MLG as a part of the lan center (We believe having the name brand of MLG would be a big draw). I'll keep everyone posted with everything as we move along.

Thanks again

[Deeds]

Our center groomed competitive teams at our centers then we had cross center tournaments.  We were going to sponsor a MLG but...Well it just didn't pan out.

-deeds

[Alomax]

I think the idea is a good one, but it's time has not yet arrived.  Centering the business around competitive games is fine, but focusing on cash tournaments and MLG-level play would be a mistake right now, IMO.

The eSports scene is definitely beginning to grow, Starcraft 2 is making a large splash on both sides of the Pacific and thanks to internet streaming and Youtube, is gaining a large audience.  DOTA-esque games are also beginning to make inroads into the broader mainstream consciousness.  But the market isn't quite there yet.  I would encourage any LAN to explore the concept, and play with it, but I don't think eSports has the market penetration yet to make a compatition-centric LAN a success (yet!).  Give it another 3-4 years and hopefully it'll be there.  Depending on how DOTA2 and SC2 do, I expect to see a lot of LANs begin to shift toward that scene in the next 5 years or so.

[ICe287]

Now is the time to tap into the gold mine of E-sports. Just like Alomax said, it's a matter of time before it extremely booms into a well-established form of entertainment. I'm hoping to get my LAN center up soon, so that I could possibly help pave the way for E-sports in the States.

[Hades]

I know I'm super late to the thread here (hopefully the original poster still reads), but I disagree with most of the comments here.

Pulling people into the door is never a bad idea. The local community is the best resource to building something great. I just think that most are not capable of doing it right to make it work out in the long run when it comes to making money on competitive gameplay in the LAN center environments. For example, relying on MLG to run tournaments in your area is not a good idea. You should build yourself up to become the next MLG instead. That's really the disconnect how you can make money or not make money off doing cash tournaments or tapping into that scene.

I do agree it does depend on the scene though. If no one in your area is playing those types of games on a more competitive level, then obviously your return is not going to be huge. But, it does take some research first and some do not go as far as to find those group of players to begin with from my own personal research. For another example, I know there are some very large groups in my area that play a specific game competitively and follow the competitive scene. They don't play at any of the local LAN centers, and the guys who run that LAN center are too old to really know about what's going on in specific gaming scenes. They are missing out on a big market of players locally who would come to the shop to play big tournaments, spread good word-of-mouth about the location and everything.

The other thing I disagree on is the eSports not being in a good spot right now to cash in. There are so many competitive games out there right now. I think people are blinded by the fact that the current eSports leagues are still trying to catch up to the DotA's, StarCrafts and everything else. The games do exist right now, many are playing them both casually and competitively online. You just have to find a better way to pull them together as a community in your area (if they exist) than becoming blinded by how others may not be doing it as well.

Hope this helps

[johnlarson]

I think if you are going to run a center for competitive play, then you better have other sources of income for the rest of the time.

I do not know anything about the MLG business model, but I am guessing that entry fees to tournaments is their bottom source of generating income.  I would guess marketing with the major sponsors brings the most income.  This is just a guess as I have no clue about any of it.

We work with the local Shoryuken players and are doing tournaments with them.  We get a $5 venue fee and sell drinks and snacks.  We also have our own tournaments, $15 entry fee - we keep $5 the rest goes to prizes. At best is 200 players = $1,000 (which we have NEVER had).

How many tournaments are you going to have a week?  How about the times 200 players do not show up?  How many players do you expect to come?  How much are you going to spend to promote it?

For us, Elite Zone does tournaments as a community service.  We now encourage others to put the tournament together and we let them use our venue.  We recently did a tournament with GameStop for BF3, total bust.  Total.  We are doing something with them for MW3, we shall see.

[Hades]

I think if you are going to run a center for competitive play, then you better have other sources of income for the rest of the time.

I do not know anything about the MLG business model, but I am guessing that entry fees to tournaments is their bottom source of generating income.  I would guess marketing with the major sponsors brings the most income.  This is just a guess as I have no clue about any of it.

We work with the local Shoryuken players and are doing tournaments with them.  We get a $5 venue fee and sell drinks and snacks.  We also have our own tournaments, $15 entry fee - we keep $5 the rest goes to prizes. At best is 200 players = $1,000 (which we have NEVER had).

How many tournaments are you going to have a week?  How about the times 200 players do not show up?  How many players do you expect to come?  How much are you going to spend to promote it?

For us, Elite Zone does tournaments as a community service.  We now encourage others to put the tournament together and we let them use our venue.  We recently did a tournament with GameStop for BF3, total bust.  Total.  We are doing something with them for MW3, we shall see.

The model mostly runs on things like advertisement from anything from streams to the showfloor to other sources of revenue like door fees to merch. The model is also one that many stores, including Elite Zone by the sounds of it, are not taking full advantage of when running their tournaments. You cannot amplify your revenue by simply relying on local cash to fuel your store. You have to think more outside the box when considering how much additional money you could make outside of the store itself too.

I don't mean that as a smash to Elite Zone, I just wanted to point that out because I'm in the RTP area myself. *evil*

[Saagi]

What does RTP mean? EliteZone have you had that MW3 tournament yet? How did it fare?

[Hades]

What does RTP mean? EliteZone have you had that MW3 tournament yet? How did it fare?

RTP = Research Triangle Park (Raleigh-Durham, North Carolina)

[johnlarson]

What does RTP mean? EliteZone have you had that MW3 tournament yet? How did it fare?

RTP = Research Triangle Park (Raleigh-Durham, North Carolina)

We had MW3 tournaments at all of our locations this last Sunday.  Our customers had fun.  The turnout was not very good at all.  We had only two teams are our newest location in Jacksonville, NC; four teams at out Columbus, GA location and Thirteen teams at out Fayetteville, NC location.  Bottom line is that our customers had fun.  These tournaments were put on the behalf of Game Stop.

[johnlarson]

The model mostly runs on things like advertisement from anything from streams to the showfloor to other sources of revenue like door fees to merch. The model is also one that many stores, including Elite Zone by the sounds of it, are not taking full advantage of when running their tournaments. You cannot amplify your revenue by simply relying on local cash to fuel your store. You have to think more outside the box when considering how much additional money you could make outside of the store itself too.

I don't mean that as a smash to Elite Zone, I just wanted to point that out because I'm in the RTP area myself. *evil*

I think that sounds like an awesome idea and I hope you make it work for you.  I am not sure how to find these advertisers, but I know there are centers in the RTP area that would love to make more money.

I am not familiar with any game center getting extra revenue from outside of the box non-local cash, I am sure it is there.  I am just grateful for the help I do get from a few of our local vendors.  I am also not familiar with any game center that has had long term financial success from running a competitive gaming center which focuses mainly on cash tournaments, cash leagues and ladders (leaderboards).  If there is one, great - point me to it.

For our business model, tournaments have been an expense.  All attempts to form leagues have failed also.  For us, we are focusing our energies in a different direction and letting other people host tournaments at our locations for a venue fee on Sundays.  Plus we have some CRT's set up for stick fighters who host on Fridays and have a monthly tournament.

[Hades]

I think that sounds like an awesome idea and I hope you make it work for you.  I am not sure how to find these advertisers, but I know there are centers in the RTP area that would love to make more money.

Research and the internet! Of course, I do this for a living in the video game industry already so I might be speaking out-of-body right now in terms that may not make full sense unless you are well versed in the art of advertising and how companies like Youtube and etc make their money.

But yes, I do plan to make this work for me in the RTP area for sure. That's only because it's important to not only build a solid gaming community locally, but also online and internationally as well.

I am not familiar with any game center getting extra revenue from outside of the box non-local cash, I am sure it is there.  I am just grateful for the help I do get from a few of our local vendors.

Most aren't just because they focus too much on the local customers and not that much on say, building an online community or creating a digital brand around their center. It's more about the local community rather than anything else. That's what I'm referring to when I mention the failure to see outside the box and etc.

I am also not familiar with any game center that has had long term financial success from running a competitive gaming center which focuses mainly on cash tournaments, cash leagues and ladders (leaderboards).  If there is one, great - point me to it.

Me either, but it's not the point of focusing only on that aspect. It's about doing competitive activities on top of the norm.

For our business model, tournaments have been an expense.  All attempts to form leagues have failed also.  For us, we are focusing our energies in a different direction and letting other people host tournaments at our locations for a venue fee on Sundays.  Plus we have some CRT's set up for stick fighters who host on Fridays and have a monthly tournament.

Indeed, I could see this being true for me as well. That's why the model has to be different than just 100% local and everything else. We will of course take a different approach to the whole model and I welcome you to come take a look when we get things running in Raleigh to fully see what I mean. I of course wont explain it much more than that, but I think many centers are missing out on a number of avenues in the gaming scene that can be well taken advantage of locally if you have a good local scene to boost.

This is why I'm actually leaning towards getting into starting my own LAN center soon too, because there is actually a lot of big things you can do with the competitive scene that many are simply not looking at with LAN centers at all.