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March 27, 2008

Are Internet Cafes still a Good Business?

Been receiving a couple of emails lately (mostly from OFWs but there’s one from a Chinese/Taiwanese company) asking if there’s still some good business to be made with internet cafes in the Philippines. From accounts of friends and people who’ve been into the net cafe business as well as what we’re seeing in every mall and street alley, there’s some mixed reaction.

Five years ago, the prospects were better; way better. I myself was thinking of opening up one back then. My excitement was immediately doused after doing the math.

Net Cafe

Just like any other brick and mortar businesses, there are so many extraneous factors that’ll affect your likelihood of success in the internet cafe industry:

  • Location. Pick a good spot and you’ll hit a gold mine. Pick the wrong one and kiss your money goodbye.
  • Competition. Most business-minded people think of competition as a race to charge the lowest prices in order to win customers. While it’s good for the customers, exceeding the lower boundaries can drive you and your competitors to bankruptcy. One cannot expect to recover a Php500,000 investment if hourly rentals go down to as low as Php10. It goes without saying that in this industry, there are no customer loyalty; just cheaper rentals.
  • Quality/Consistency of Broadband Connectivity. For places that don’t have many options for bandwidth providers, this could spell trouble if your only source of connectivity conks out more frequently than you get brown-outs in your area. A backup DSL might be a good solution but many consider the extra cost to be not worth it.
  • Software Licensing. Many people who go into the net cafe business don’t factor in the cost of software licensing in their capital. Either they think they can get away with a few pirated copies or go open-source full-time. Still, there’s the class of ever-popular network games like Starcraft, WoW and CS which cost an arm and a leg to get a per-PC license. Maybe that’s why MMPORG pay-to-play model is more popular in this side of the globe.
  • Expected ROI. While previous half-decade old records saw a return-of-investment in just over a year, lower rentals due to fierce competition and over-saturation of net cafes have driven the ROI further back to as long as 3 years (that’s if you’re lucky enough). To sustain a business that long and derive your income from that sole business could easily drain you of energy and personal savings.

There’s also the question of how many PC units should a net cafe operate in order to realize profit. A friend, who runs a net cafe for about 3 years now, says you need at least 15 units to survive and get decent income. Does that mean others operating below that number are doomed to fail in the long run?

However, the growth and expansion of Netopia’s franchise around the country says there’s still good money to be made from the internet cafe business. Does that mean people wanting to venture into that industry should look into franchising? What do you think — given the opportunity and capital, do you feel a net cafe business in the Philippines is still a lucrative one?


351 Responses to “Are Internet Cafes still a Good Business?”

  1. seth says:

    would be better to just franchise an internet cafe?

  2. LYFE says:

    in our time now internet cafe business is not advisable for the reason that many internet cafes existing to our area and anytime you can log in using phone or home/residential. the internet ay sobrang abot kaya na ngayon. i am a owner also of a internet cafe. base to my experience 1months to 6 months or up to 1 year your cafe have many customers coz its new and the material is very new. but afterward ang mga tao ay mg magnenet sa mga cafe na bago. at isa pa kung makikita ka ng kapitbahay mo na malakas ang cafe mo they also put up a cafe na mas marami pang pc kaysa saiyo. and the price is very low. dito sa davao ng P10/hr kami pero ang new open cafe is P5/hr or P10=3hrs. kung dadalawin mo ang davao mostly ang rate ng internet dito is P5/hour.

    • superjrsan says:

      that is called suicidal rate,i tell you it will not last 6 months and say goodbye,if they will not pay for obligations like dsl connection,electricity and mostly taxes,maybe they can survive,i started ng icafe way back 2002 here in bicol,25/hr then now stick to 15/hr.yun mga katabi namin ay mga 6 months sarado,lugi sa bayaran at utang sa renta at wala maibayad katulad sa amusement tax,ganon talaga ang mga pinoy gaya gaya lang,thats life lyfe

  3. dan says:

    ganian din po ang situation dito sa amin d2 sa la union..since 2005 na ang negosyo na ito na namana ko sa kapatid ko and in those years marami ang nagtangkang magpatayo din malapit sa aking negosyo.ang pagkakaiba lang namin sila nagrerenta at ako ay hindi..tama yung sabi ng isa kanina na kung saan bago dun sila pupwesto.ang advice ko lang, alagaan nio ang mga loyal customers nio.hangang 2 mos lng mahigit yung mga nagpapatayo d2 malapit skin at nagsasara na din sila.ngayon may bago ulit comp shop at mas marami pa atang units kesa sa akin na 12 units lng.ang masama pa dito sa sitwasyon ko ngayon ay kamag anak ko pa ung huling nagpapatayo ng comp shop..putek ang yayaman na nga aagawan pa kami ng ikinabubuhay..ang edge ko lang, marunong akong mag ayos ng computer samantalang sila ay nagpapaayos lng.patience lang..sa una mawawala mga customers mo, wait mo lng tumatagal ng konti..

  4. hi po sa lahat says:

    hello po, mag tatayo din po kasi ko ng com shop malapit sa school and madami ding mga tao may mga ibng com shop din dito pero ang na pansin ko lahat sila walang aircon and maliit lng yung space nila yung sakin 40 sqm and ang unit ko is 12pc . di ko pa alam kung kikita ba ito kasi 1st business ko po ito , pede nyo po ba ko pakitaan ng worse senaryo about sa kita about sa kita ? lahat ng pc ko ay bago and mabilis salamat po

  5. SirMox says:

    hi guys , magbibigay lang po ako ng opinion.. 3 years na po ako nag ooperate ng shop and ROI ko is 1yr and 6mos (1 1/2 yr).. 12 units ko plus 1 server..

    mganda mag negosyo ng internet cafe or gaming shop lalo na kapag ito tlga ang hilig mo.. dpat marunong ka mag maintain ng computer pati na rin ang environment. iisipin mo din ang LOCATION kung san mo itatayo ang shop mo .. iwasan mo magtayo sa very saturated places, kasi mahirap mkipag compete lalo na kapag mas maganda yung specs ng pc ng ibang shop kesa sayo.

    pana-panahon lang tlga ang business,, minsan malakas minsan mahina. kaya kapag dumating ung time na mahina ang negosyo mo dapat hndi ka mawalan ng pag-asa agad agad… darating yung time na lalakas yung negosyo mo . mag isip ka lang ng paraan kung pano ka ulit mkakahikayat ng customers. maglagay ka ng promo rate or any sideline business bukod sa rent ng pc..

    kung gaming shop ang gagawin mo mag invest ka sa specs ng pc mo at accessories, yan kasi ung babalik balikan ng players e.. kapag maganda pc pati monitor tiyak yan babalikan yan ng tao.. consider mo din ung internet connection.. i prefer DSL para stable.. wag ka kukuha ng broadband (signal-based) kasi madali yan mag fluctuate at hndi yan pang gaming..

    kung may pwesto ka na sarili mas mganda yun kasi wala ka na iisipin na RENT.. bawas na yun sa operational expenses mo.. so kahit mahina ung shop mo wala kang iisipin na monthly rent kundi kuryente na lang at internet..

    about sa piracy naman, hmmm depende cguro yan sa location.. kapag nasa commercial area ka, example nasa mall or nasa city tlga may risk tlga na ma-raid ka pero sa panahon ngaun bihira naman yun.. kung nasa private place ka naman like subdivision ok naman mag-install ng pirated OS at games for starters,, then kapag naka bawi bawi ka na ng investment mo palitan mo na lang ng original OS at games ung naka install sa pc mo..

    dapat lagi kang updated sa games or applications para alam mo kung ano ang mga iinstall mo na games at apps na patok sa panahon..

    sikap at tyaga .. wag mawalan ng pag-asa .. yun lang po …

    • Happylink Net Cafe says:

      I agree..base din sa experience ko, 2005 ng mag start aq sa business existing pa din until now, kaya lang iba nun una..sa ngaun more on services lahat aq..dun kc ang mas malaki ang kitaan basta marami kang dapat idea at willing matutunan ang lahat ng bagay na pwd mo pagkakitaan. Dapat hands on and dapat marunong alagaan ang mga customers. Mdami competition kaya lang palakasan lang ng loob…huwag panghihinaan ng loob,,kailangan lang matuto sa mga troubleshooting at wag iasa lang sa mga tauhan. Bright idea dapat…dagdag na services para hnd bumagsak ang business..

  6. chani says:

    Hi…I would like to know how you make money online? Do you write articles and stuffs?do you blog? Thanks

  7. Lav says:

    I just opened an internet cafe here in Makati. I did not put an aircon. It is doing good so far. Though rates in the area are ranging from 12-15, I stick to the 15 pesos per hour rate. The only edge that I have why I am getting customers are my computers because they are really good for gaming and I got a 5mbps internet. My shop is even a spot now for gaming. Players from other places like Taguig and Pasay are coming to the shop to play with the regular players in my shop.

    Since I have a laundry shop located few blocks from my computer shop, I also receive laundries here. And I also have a pizza store in front of my shop.

    In other words, you must have other “add-ons” business if you will put up a computer shop so that you can also earn froim the other add on businesses.

  8. aj says:

    just want to know how u make money online. been searching for quite sometime now but i am unfortunate to locate one. tenks

  9. Jose Rizal says:

    Goodbye Internet Cafe… 20/hr, 15/hr & 10/hr my business is piso net piso/3-5 min, anywhere basta matao patok sa masa lalo na sa metro manila ngayon ng lagay na rin me sa imus cavite and the income is best the costumer is consistent and the key of that is sa piso makakapag FB ka na makakagames ka na makakapag search kana and infact ang bata pag may piso ihuhulog nya na lang sa piso net to games, d gaya sa internet kailangan may 10 pesos ka pa or 15 or 20 pesos para makapag internet… :)

  10. Tacktiks says:

    Based on experience.

    Computer shop depends on Location, Connection and the skills you have doin’ this kind of business. You must be happy on what you are doin with and everything follows. If this business was not your specialty then maybe after 6 months alam mo na! :)

    Nasa diskarte lang yan, wag na wag kang mag tatayo ng comp shop sa alam mo namang walang makukuhang customer. Make sure na maganda ang connection mo, wag mong tipidin. Kasi yan ang babalikan ng customers. Maganda din na marunong ka sa mga side line or add on for example dapat marunong ka sa mga typing jobs, printing inlcuding discounts on your regular customers. Once na maganda ang serbisyo mo hindi ka iiwan ng mga customers. Lakasan lang ng loob ang pag tatayo ng computer shop, nasa sayo yan kung paano mo didiskartehan.

  11. Mel says:

    im selling my computer shop in makati near PRC for 150K only. it has 13 units with assorted spec, with lcd or led monitor, 2HP AC panasonic, complete setup and operational for 5 years. rented premises has 2 floors with 2 bedrooms and a living room on the 2nd floor. if interested call me at 09156458651 for appoinment. rush sale po ito habang hindi pa naka-enroll ang mga kids.

  12. LIwee says:

    how bout yung Coin operated internet machines or PISOnet, balak sana namin ng kuya kong mag umpisa ng ganitong negosyo, since hindi na kailangan ng shop for this units, just like videoke, huhulugan lang piso and then star kana for chatting. balita ko malakas daw ang kitaan nito sa market specially pag marami kang PC, convenient and much apordable ito compare sa typical internet cafe shop, any suggestion po thanks much.

  13. merlvennb
    Twitter: merlvennb
    says:

    ask ko lang if anong on_line games ang patok ngayon sa mga gamers aside from DOTA, cross fire and Shaiya…

  14. Review Cigarettes says:

    The text is promising, will place the site to my favorites..!

  15. jazz says:

    the computations above on how much will you gain a day or a month is just the maximum if and only if your pcs are rented every hour 24/7 for 30 days. you need to take into consideration about those unfortuitous events like natural calamities, blackouts, peak seasons, lean months… need to consider these computation instead: number of pc’s, estimated number of hours each pc is used a day based on the above scenarios. then get the maximum, average, minimum as well as the breakeven computations. and from there you can plan ahead what would be your strategy. this is only one of the things you need to look into. there are more hurdles in the business that you will encounter. don’t just focus on the profit that you will be gaining focus for your longterm goals and how you can overcome the obstacles along the way. and before you put up any business, study it first.

  16. Joey says:

    Andaming matu2nan d2 based sa mga may mga may experience na sa internet cafe kaya lang nalilito parin ako nasa abroad ako now malapit na umuwi plano ko mag tayo ng internet cafe pag uwi ko ga2mitin ko yung ipon ko, may mabi2lan na ako ng pC 10 units 169k mataas naman ang specks package na intallation ng mga games pati set-up w/ ang kulang nalang place tables ang chairs, pero nag iisip parin till now kung itu2loy ko pa, medyo malaki din kasi ang puhunan matagal ko na kasi pplano magtayo nyan nakatapos kasi ako ng computer course magkano kaya ang maga2stos ko sa pagkuha ng mga permits at iba pang lisence? sa ngayun P15 nalang ang rate ng rental samin yung iba may promo pa P25/ 2hrs…

  17. michael says:

    Wag ka mag-alala sa competitors na mababa ang rate. Ang dapat mong gawin bili ka ng mataas na PC specs kahit konti lang unit mo pero madali ka lang makapag-ipon for additional PC kasi mas maraming kang magiging customer, yung iba mahina specs nila at hindi na sila makapag install ng mga bagong laro kasi mataas ang system requirements pero if maganda system mo kahit bagong laro agad-agad ma-iinstall mo in return pupunta sayo ang mga customers.

    Tapos tip # 2, maintenance lagi, check mo bawat pc f anong problema kasi yung iba hindi na gagamit ulit sa pc mo f naghahang, nagkavirus or nag eerror yung games. Tapos isip ka ng mga promos like free 30mins every 4hrs.

    Sa aking kalagayan ganun nagyayari, humihina minsan pero pag may bagong laro na hinihintay nila tapos ikaw ang unang nakapag install babalik ang mga customers mo, then ask mo sila kung anong online games ang gusto nilang laruin, then hanapan mo ng ganong games pero from a private server kasi madali lang ang leveling ng character nila. gawa ka rin minsan ng overnight promos like P60 pagkage from 12mn-6am for a group of 10persons. Tapos yung environment mo may mga themes like dark lights or maraming games poster sa wall, or an aquarium na maganda yung lighting effect, mga laser light sa gabi. Tapos a facebook group for interaction.

    Ilang tips lang yan and Good luck. I ran mg cafe for 5 years na at minsan lang humihina kahit dumadami na ang mga pesonet sa tabi-tabi, be innovative.

    • Joey says:

      Mabuti kung ganun mataas naman ang spec ng ku2nin kung unit para di kailangan mag upgrade agad pag may mga bagong labas na mga games lalo now kadalasan nga mga bagong games mas mataas ang system requirements, sa maintainance may alam din ako sa computer kaya, salamat sa mga tips kung papaano makakahatak ng mga costumer, matanong ko lang kailangan ba talagang kumuha ng BIR at DTI lisence kahit mga 10 units ang laman ng net cafe mo? di ko kasi alam kung ano ang uunahing ku2nin at kung ano ang mga requirements first business ko kasi to….

    • michael says:

      Hindi ako sigurado, pero dito sa amin nung kumuha ako ng business permit at tinanong ko sila pwede lang daw business permit pag maliit lang negosyo mo pero f gusto mo nang tradename sa business mo kailangan talaga ng DTI/BIR tsaka sabi f nasa loblob naman cafe mo at hindi sa may kalsada, hindi na tsini-check ng BIR.

  18. joey says:

    MATANONG KO LANG PO KUNG AKO BA HALIMBAWA KUMUHA AKO NG INTERNET CAFE PACKAGE MAY GENUINE NA OS AT MAY COPY BAWAT UNIT KAYA LANG YUNG MGA GAMES GENUINE DIN KAYA LANG WALA AKONG COPY BALE IINSTALL LANG NILA PAG NA RAID BA AKO CONSIDER BANG PIRATES YUNG MGA GAMES NG PC KO KASI WALA NUNG ORIGINAL COPY?

    • Apollo Tiu says:

      hi Joey try mo ccboot
      - Lower the Cost sa Application Software License, Operating System License, and Games License.
      - Maintenance mas easier na
      Visit mo sa Google iyon site nila.
      or check mo sa youtube.

  19. Name: says:

    Unknown message

  20. Right now it appears like Drupal is the preferred blogging platform out there right now.
    (from what I’ve read) Is that what you are using on your blog?

  21. menma says:

    i think computer shop is still a good business in the Philippines..

    i have a business plan on this kind of business and you can email me for those who are seeking how to put up a good gaming computer shop..

  22. Eury says:

    Im selling all my units for 8k each.Complete set (monitor, mouse, KB)Contact me if interested- 09339473156

  23. jess says:

    Hi menma. Can you please send me a business plan of this kind of business? I’d really appreciate it. Thanks and God bless.

  24. James Mills says:

    Can you email me some information on starting a internet cafe in the Philippines. Perferably Bacolod. Thank you

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