Gaming for Charity

Discussion in 'Starting a Business' started by Ownaholic, Mar 23, 2011.

  1. Ownaholic

    Ownaholic
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    Hey everybody,

    First allow me to apologize for the fact that I'm brand new (feel free to call me Julian), but this is something that has been wracking my mind a bit.

    I'm certain many of you reading this know how big the video game industry has been growing the last couple of years, and with that has come a very high number of websites, fansites, new retail companies, etc.

    Lately I've been trying to come up with a business idea that I would enjoy doing (and that's the key part, as I've read so many times that it's better to try something you enjoy rather than something that you think would earn more money), and so far the only topic I've been able to come up with is video gaming. So, from there, I asked myself the question, "How can I market the topic?", and came up with the idea of "Gaming for Charity".

    Initially, I thought about how neat it would be to open up a space where people could come in, pay by the hour, to play video games and such; perhaps in a mall or busy setting so it would draw in a larger crowd. Now, this is nothing new, so I asked "What can I do to make this somewhat unique?" And I came up with the idea of having a certain % of the funds going to charities.

    However, there are a few problems:
    I'm currently in college majoring in Psychology, with just under $4K to my own name due to a previous job. I'm very wary about taking out loans and such, especially since I don't even have a job right now. And moreover, the problem of actually even being given the loans to begin with, is a whole different problem.
    To top that, I've done some research and read up on the high-risk involved with this kind of company, and have heard many, many stories about these things "flopping". So, I've more-or-less given up on this idea.

    Now, then I got the idea of, "Hey, what if I don't make it a physical place, but rather, and online company that holds frequent video gaming contests with entry fees, giving away a prize to the 1st place winner, and letting them choose which charity they want to donate a % of the raised money to, then I would keep the rest as a small profit."

    I've already owned and run my own Video Game Review company (Called "GamerFill"), which I recently had to end, simply because we weren't getting enough revenue from traffic and user support to pay for the monthly fees and all the fees that went in to the equipment and software I had to purchase (like vBulletin 4.0 Suite, and the Hauppauge recording hardware).
    Point being, I already have access to professional-grade software to run the website on, I already know how to use it, and I can record and upload videos of the matches to the website for everybody to view. I even came up with the idea that I could occasionally live-stream the matches as well.

    The main problem is, is this a plausible idea?
    How would I go about legally running this operation, because isn't this type of "tournament" concept considered to be gambling-based or raffle-based, even though winning is based purely on skill rather than luck?
    Even if it is a "good idea", what would I charge for the entry fees? Should I even charge anything to start? How do I advertise it, how do I include the profits in my taxes each year, would I have to pay the taxes on the earnings in spring during tax time or as I earn money, etc etc.

    Obviously, this type of thing wouldn't be enough of a profit to live off of, so I'm thinking purely on the side.
    But mathematically speaking, it's risky. Because no matter what I charge for the entry fee (either per person or per team), the reward is going to have to be many times that, and being able to include a generous charity amount along side that, as well as put a little money in my own pocket, all seems almost impossible. What happens if only 2 people enter at a $5 fee each, but the prize is like $50 or something, along with a $50 charity giveaway?
    How should I go about determining prices and ensuring a very low-risk chance that I'll lose out?

    I apologize for the long post, but I really want to take this idea and run with it, mainly because I lack the funding to start my own gaming-based business in the "real world" as of right now. In the end, I've always come up with what I thought of to be "great ideas", and I can easily see myself running a business as my full-time job someday. The problem is, what kind? Is this a good idea, or should I go back to the drawing board?

    Thanks a million to whoever can offer their sage advice! =]
     
  2. Fergal

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    Hi Julian, welcome to Business Advice Forum.

    It sounds to me as if the set up costs of your online video game business would be quite low, is that correct? Low set up costs would allow you to launch and test the business idea without incurring significant financial risks to yourself. That could be the easiest way to test and research the concept, to determine if it is something you can make money from.

    I especially like the idea of allowing players to chose the charity that gets supported. Will it be the winner of the contest who gets to pick the charity? I feel that this is a great way to get people involved in your site and to help build a sense of community and loyalty amongst your players.

    As you state in your post, making people aware of your site and promoting it will be a major factor in its potential success. It would probably help to offer free credits to the first x number of players. This will allow you to build up a strong user base as participants will be able to join and play without having to pay anything up front. Another option would be to consider a freemium model, whereby users can get a basic account free and then pay something if they want to upgrade to a premium account with additional features.

    One thing you could do to reduce the risk of having to give out prizes is to only give out prizes for tournaments that have a minimum number of players. This rule would avoid you having to give a prize say where there were only two players.

    Please post back with your thoughts and I will try to give some further suggestions and feedback. Hopefully some of our other members will also reply to give you additional ideas.

    Good luck with it!
     
  3. Ownaholic

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    Hey Fergal, thanks for your response!

    You're right, the start-up costs would actually be next to nothing, since I already have the hardware and software to record in-game footage, I already have the appropriate professional-grade vBulletin license; so really the only cost to me would be of monthly hosting, the domain name, and prize money; which really is next to nothing.

    I'm trying to think of the best way to integrate this idea on a solid, community-based level. I know vBulletin has a "badge" type mod that I could use to give out virtual awards to the winners, in addition to the prizes. This might hopefully integrate them into the community a little bit better.

    I like your idea of the "freemium" type basis; I could let people register for free, but offer a price to upgrade their accounts to a premium account, where they can access different features of the site.
    Since it is a gaming tournament based website, I could even charge a fee for clans/guilds who want their own private, un-monitored forum to post in within the site itself. This way it would be like a home within a home to them. And it might even attract other guilds irrelevant to the tournaments to come just for the guild forums feature.

    And yes, the winner(s) of the tournament would be the one(s) picking what charity to donate to. Of course, it would have to be a legitimate charity, and if they give me something bogus or something that looks a little shady, I'd likely just pick a charity out of a Handbag or something. Or perhaps I could conduct a list of official charities for them to pick from.

    And good idea with the free entry concept at the time of launch, I could just hold a free tournament or two in order to advertise the website a bit; I've actually still got two brand new video games that I was using as giveaways for my old website that I don't ever plan on playing myself, perhaps I could use those as winning incentives.

    I could also always offer different types of tournaments, ones that are like $1 to enter, but there is no prize money for the winner; only the charity gets the money. Then I could offer higher entry fees for real prize money ontop of the charity.

    Do you have any ideas for fees? This is the other area I'm struggling with concept-wise; how much to charge, and when.

    The other real problem I'm having is trying to figure out how to do this on a practical, efficient level. vBulletin can get quite messy when trying to integrate a bunch of unique new features into it, so I want something that flows together.
    Like brackets that members can view on a regular basis to see where they are in an extended tournament, as well as an actual area to sign-up for tournaments in, rather than just "sign your name on this topic post".

    Any ideas?

    Thanks again for your help! =]

     
  4. spurs

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    thats an awesome idea bro

    i really like it
     
  5. Fergal

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    I'm not a gamer myself and am not familiar with that industry. The best I can suggest is that you have a look at some of the existing sites who offer something similar to what you will be doing and research what they are doing. Try to get a feel for what works, what doesn't work and how you could improve on what they are doing. Is that an approach that you feel could work for you?
     
  6. Ownaholic

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    That ought to work, but the only real existing company I know of who holds paid tournaments is MLG (Major League Gaming), but they're on an incredibly high level that I wouldn't be able to mimic. (IE: Giving away $10,000 or more on average in prize money, and orchestrating the tournaments between a massive number of participants) And thus, I think their entry fees would be a little inflated as a result; and I'm willing to bet their funding for the prize money is sourced by other means such as advertising and sponsorships.
    The most in advertising I'd have to start off with are meager AdWords ads here and there which would likely only generate about $100 every three months or so. And I highly doubt I'd be able to find sponsorships; as I am looking to make make at least some money off of this, and I'm willing to bet a sponsor would raise question as to why the sponsored money isn't 100% going to the winner or given away for charity.

    I guess you're right though, research is the way to go for this. The problem is, where/what do I research?
     
  7. Fergal

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    Sponsors' main concerns will be regarding the publicity they are getting in return for the money they invest in being promoted on your site, hence most of them won't require that their sponsorship money goes directly to the players or the charities concerned. The reality is that it will take some time before you are making a profit from the site, so in fact any initial sponsorship that you receive will actually be going directly to the charities, the players and to the running and maintenance of the website.

    I'd start by searching for competitor's sites on Google. Visit them and take note of what they are doing - who their sponsors are, who they are targeting as regards players, what features and benefits they offer to their members and most importantly try to find ways that you can improve on what they are offering.
     

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