GolfGames: Funding A Digital Startup

write (1 - 2) pages answering the following questions:

• The customer Golfgamez is planning to serve
• The problem Golfgamez is seeking to solve / need Golfgamez is seeking to address
• A description of the product/service being developed
• An explanation of whether you think this business will be viable. If so, why? If not, why not?
• A list of questions that should be addressed before financial analysis should proceed. What else do you need to know about the market (i.e. the target customers) and the industry?

For the past three months, 27-year-old Cal MacTavish had been exploring an idea for an innovative mobile application (app) called Golfgamez. At this point, MacTavish had twisted the ear of every one of his golfing buddies (over countless pints of post-round ale), received deep feedback on an impressive set of wireframes and prototypes that he had developed (on his own time, frequently working late into the night) and arrived at the conclusion that he was holding onto a potentially great idea. As he watched from his clubhouse balcony perch as another foursome arrived on the eighteenth green, MacTavish nervously pondered some critical looming decisions. How should he go about building, distributing and pricing the app? Should it be developed on the Apple iOS or Android platforms? What kind of start-up capital would be required, and where would he secure the funding? Would he have to risk his successful banking career and take a gamble on this new venture, or could he continue to develop this idea "on the side"? REVENUE STREAMS Like several other golf apps already on the market, Golfgamez would leverage the global positioning system (GPS) technology built into smartphone hardware to provide high-resolution, satellite-based aerial views of tens of thousands of golf courses located around the world, allowing players to track and share detailed statistics about their games (e.g., clubs used, distances hit, shots, putts, greens in regulation and so on). MacTavish believed that building an attractive GPS-enabled scoring app was essential, even before attempting to introduce any value-adding differentiators. Without a competitive core offering, users would not be bothered to download the app MacTavish was uncertain how to go about pricing the app. Prices for basic golf-scoring mobile apps ranged from free to $4.99. A few more sophisticated, GPS-enabled scoring apps were available; for example, the top-selling Golfshot app (by Shotzoom LLC) was sold on both the iOS platform (via the Apple App Store) and the Android platform (via Google Play) for $29.99. The revenue potential appeared significant, with an estimated 65 million golfers worldwide,2 in the United States, golfers were categorized rounds per year) or "Occasional" (i.e., 45 per cent played one to seven rounds per year).* MacTavish did as "Avid" (ie., 28 per cent played 25 or more rounds per year), "Core" (i.e., 27 per cent played eight to 24 not yet have a very clear sense about the proportion of golfers who owned smartphones, but there did appear to be a very high age/income demographic correlation (e.g., according to one report by Business Insider, 50 to 80 per cent of affluent Americans under 65 years of age already owned a smartphone Thus, for the purposes of estimating a baseline market size, MacTavish assumed that 50 per cent of golfers in the world already owned, or soon would own, a smartphone. Stll uncertain about how much to charge for the app, MacTavish was determined that the basic Golfgamez app user experience would meet or exceed the Golfshot Selecting a development platform was another important, complex decision that would have to be made quickly. Mobile apps developed for the Apple iPhone, which used the iOS operating system, were typically sold via Apple's App Store. Meanwhile, apps developed for the Android operating system (e.g., to run on Android smartphones manufactured by Samsung, HTC and Motorola), were typically sold on Google Play Both the App Store and Google Play charged sellers a sales commission of 30 per cent. At the end of 2012 these two platforms accounted for 92 per cent of total smartphone sales-22 per cent for iOS and 70 per cent for Android. Moreover, selling prices were on average 50 per cent higher on Google Play versus the App Store. On the other hand, App Store sales continued to dwarf Google Play sales by an average factor of four to one. MacTavish pondered these data and wondered: Should Golfgamez be developed on Android first, iOS first or perhaps both concurrently? The top five globally downloaded iPhone and Android apps as of December 2012 are listed in Exhibit 1 In addition to the core GPS-enabled golf-scoring app, Golfgamez would be differentiated from competitor apps in two important, value-adding ways. First, golfers would be able to access and browse high-value discount coupons for local golf equipment and services. Rather than pushing these promotions on players (e.g., in the form of unwanted advertisements), the app would enable users to opt to click to review available deals, along the lines of Groupon's coupon offers. Thus, sellers would be approached to offer deep discounts to buyers (i.e., 50 per cent or more off retail prices), with the remaining 50 per cent of sales proceeds split evenly between Golfgamez and the seller. While the Groupon model had been criticized as unsustainable for some types of sellers, MacTavish felt it would work in the golf industry considering frequent manufacturer incentives, significant retail markups on golf equipment and the attractive tied- selling and up-selling opportunities it would enable sellers to pursue. In short, he suspected golf retailers would be receptive to an idea that precisely targeted affluent golf buyers and drove them into retail stores. Yet another revenue stream idea involved enticing players to connect deep ly with one another by wa