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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. rjdg33k says:

    Meron din ako maliit na Computer Shop, samin yung pwesto, nasa parteng residential area kami pero nasa Batangas City mismo, ok naman ang kita basta manage ng maayos ang mga hardware, saka magandang plano lang ng shop kahit maliit basta relax ang customers, 6 unit lang sakin pero laging puno ang shop ko, mag 3yrs na kami at nawawala lang customer ko kapag hindi ako nakapag-install ng bagong games pero oras na may bago na ulit silang malalaro pila na mga bata, ok din printing sakin kasi madami ding gumagawa ng projects. Bout sa ordinance nakakalusot kami kasi hindi naman ganun kahigpit yung mga consehal dito about sa ordinance, basta iwasan lang may magreklamong magulang kaya pinapauwi ko na mga bata ng maaga, saka hindi talaga kami nagpapasok ng naka-uniform at bawal ang porno…:-)…

  2. jonex says:

    PLEASE HELP!

    Lagal ba mag-offer ng wi-fi internet connection to the community with a fee? Kasi yung ibang restaurant & hotel may paid wi-fi connection… tnx…

  3. jonex says:

    Please Help!

    LEGAL ba mag-offer ng wi-fi internet connection to the community with a fee? Kasi yung ibang restaurant & hotel may paid wi-fi connection… tnx…

  4. Degree says:

    Dun po sa mga may internet cafe na may nakatiwangwang na pc o kahit anong mahalagang gamit sa loob ng shop, magingat po sa mga nagtatanong ng computer tutorial para sa kanilang anak. may naexperience ako na may pumuntang 3 babae na nagtatanong kung magkano ang computer tutorial para sa kaniyang anak. kahit wala nmng ganung offer ang internet cafe nyo un ang itatanong nya then pasimple ng kinukuha ng isang babae ung system unit samin then ung isang babae nakabantay sa labas at ung isa naman nakikipagintertain. Ingat at magbantay po sa mga gamit nyo. para hindi magsisi sa bandang huli.

  5. Cherry says:

    Hi,
    How about adding skype in your internet cafe for international calling? Skype worlwide plan cost $12.95 per month and your customers can call overseas to mostly landline #s to more than 40 countries I think. Just a thought.

  6. Jun0865 says:

    It depends. Pwede ang naisip mong magdagdag ng skype. Mura na, wala pang hassle lalo na’t katabi mo ay residential, mas madali kang makaka attract ng mga Cs. Ang drawback nito eh yung mga nag o online games e.g. (Dota(GARENA), SpecialForce Online, Dekaron) masyado nang ma lag ang laro, lalo na’t dumidipende ang mga ito sa bilis ng internet connection mo. Skype offers VoIP and video streaming at the same time. Just imagine nalang na may naglalaro ng Rohan, tpos may biglang nag skype, tapos nagreklamo ang Cs dahil dina humahampas yung character niya, malaki ang magiging epekto nito sayo dahil ang iisipin ng gamer eh, lagi nalang maglalag ang laro nila pag may nag skype.

    $12.00-napakagandang suhestyon at kung tutuusin, napakamura nga naman. Pero madaming factors na dapat i consider at hindi yun ganun kadali. Meron akong mga suggestions pero it needs time, knowledge and money para maintindihan ng mga gustong sumubok.

  7. Cherry says:

    @Jun0865
    you have a point there but mayron akong 2 bros that are doing internet cafe biz and I suggested to add skype in their sevices. sabi nla the the sound quality is as good as PLDT in calling overseas, tapos npakamura lang ang singil nla per min. compared to telecom – but still currently observing how it goes. They’re also concerned telecom would squawk about it.

  8. Jun0865 says:

    Just like i said, posible to kung alam mo ang gagawin, like configurations, routing, etc… madaming factors, pero kung alam mo kung pano gawin, madali lang ang lahat ng to.

    I dont think na makikialam pa ang Telecommunications Company dito, at siguro naman walang naka indicate sa agreement o contract ng kahit anong internet provider na bawal gumamit ng VoiP ang sinumang subscriber. Check your contract para sigurado.

  9. Doing business in the Philippines specifically on internet cafes is still a good idea. But above all, LOCATION is the number one factor to be considered in engaging in this business aside from the capital. Nowadays, this business profits more on locations near schools and residential areas where not many people can afford internet connection on their homes.

  10. Distance Education is one such fast developing concept. With this the less successful ones would become more successful and the successful ones can reach to the top. It is a matter of great pride that the excellent quality of course material, faculty, delivery methodology and student support services have been recognized and that has been ranked the No.1 institute for Distance Learning by the prestigious B-school Ranking Survey. The wiser ones in the society would grasp its importance instantly and grab the opportunity earlier than the others. Others, of course, would follow suit. It is always like that in life, the successful ones seize the opportunity earlier than others.
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  11. Lanre says:

    internet cafe is still a good business in philippines. poblema mostly ng filipinos hindi marunong ng tamang competition at services. of course we have to think of the roi pero masmaganda sana na isipin natin iyong services, needs of the customers then in that needs you can monetize it. malaki pa mapupuntahan ng internet cafe kung magiging maayos ang system. its true that computers are getting cheaper and cheaper but few filipinos can buy the new ones, iyong bago talagang labas like computers with spec na intel i7 na micro processor, nvidia na 1gb at iyong 1tb na hdd. kaya for me ang internet cafe business malayo pa mapupuntahan. its the system na kailangan ayusin. hope this helped for some! God bless!

  12. actually if you would be engaging in an internet cafe you should be able first to know what location is good for your internet business and aside from that you should be able to have your own starting money.. this is because if you do have you starting money you could easily buy things that is needed to build your computer shop

  13. m-m says:

    nowadays net cafe’s survive bcoz of online gamers,
    and i still want to put up my own net cafe, i already rented a place infront of school hopefully will open soon… but bcoz of black out i’m hesitant to operate….

  14. Rasshius says:

    maganda ang internet cafe kung 15 pc pataas ang pc mo. kahit na 15 per hr pa yan. kikita ka ng 2 to 3k pataas kung puno (restals only). di pa kasama ang printing and psp, cellphone games services at loading station. kailangan din na tama ang pwesto. malapit sa public school highschools, dame projects! at gamers!. universities not cheap private schools. load up all games and services you can offer then expand your cafe while earning. ingat lang sa mga magnanakaw at inggeterong pinoy na sisiraan ang business mo. yan ang ikakabagsak mo.

  15. Maximo Z. Beltran Jr. says:

    Malaking tulong ang website na ito sa nagplaplanong magtayo ng internet business at ganon din sa mga mayrong internet shop MABUHAY KAYO!!!

  16. Mac Dacil says:

    hai.. :-D patulong naman.. I have 11 units plus server.. malakas dito ang online gaming lalo na ang cross fire.. kaso pag may nag internet, nagla-lag ung laru nila.. anu po ba ang cause nun at anu ang solution? thank you… :-D

  17. Jun0865 says:

    gamit ka ng bandwith limiter. madaming freeware nyan. i search mo lang sa google. Mostly kasi pag may nag pi-Facebook, o kaya naglalaro ng FLash games, malaking bandwith ang nahuhugot nito kahit di naman kelangan. i limit mo ang bandwith ng bawat units mo para hindi naapektuhan yung mga nag oonline games.

  18. bats says:

    talaga, malakas ung internet cafes.. lalo ma sa mga mlapit sa campus.. choosing the location is a a crucial thing in putting up a business.. pro no. 1 na naattract tlaga ang customers is the services you offer.. kaya lng, ung presyo ang unang nkikita nla.. haha.. daming dpat i-consider eh.. goodluck sa mga net cafe owners.. sana mkaput-up dn ako, few years from now, at sana, mas “in” na ang net cafes that time.. para mlakas tlaga income! haha!

  19. stubbs says:

    I am really enjoying the dialog. Living in a large urban area in the US hoping to venture into this business. We are coupling the cafe concept with pc repair sales and service. So it seems we definately need gaming units, and updating equiptment often

  20. ynah says:

    guys pano ba kikita sa pagiging blogger? pls teach me namn, gusto q kze kumita kahit dito lang sa bahay.

  21. jim says:

    dami ko natutunan sa site forum n ito.may bumsagsak o umusenso may maguumpisa pa plng pero kahit na anu status ng internet natin sa ngayon sana lahat maka survive pa rin.tama nga good location good spec pkikisama hands-on good ambiance upgrade if kailangan…panu if wala na pag asa anu dapat gawen , ilipat, gimmik, upgade…???

  22. razorous
    Twitter: razorous
    says:

    I could see that StarCraft II is getting into the gaming geeks rapidly now. If I’m just planning to setup a cafe, what specs do I need for each unit work with SCII, including the other games?

  23. kirby says:

    sarap my internetcafe…tagal n ksi yan plan ko dti pa yong nag school p ako…natopad ko rin yan kahit kuni ang sale maganda pare ang takbo nag cafe ko…visit lng kaayo sa net cafe ko digos city mindanao po yan………………………thanks dis mgs to teach me about busines man…..im kirby devillerez.my net cafe kirjoy internetcafe…kir is kirby joy is joy my wife..thanks

  24. jo says:

    ganito ginawa ko para patok ang internet shop ko, first wala akong aircon, so i charge little lower than my competitors, yung server ko sa labas, mas malakas ang printing ko ksi may mga napapadaan tapos magpapa print, o kya scan, meron din akong photo printing, tapos ang bayad ko sa sa internet plan 999 smart bro, ok lang ksi wala naman akong online games, pure internet lang talaga, puro babae costumer ko, gusto nila dito sa akin ksi tahimik walang gamers

  25. Jun0865 says:

    Ang tagal ko din hindi naka visit sa site nato. Sobrang busy sa Computer shop ko. Well, from my previous posts, I’m trying to use Linux as my OS for my PC’s. Unfortunately, i didn’t succeed on that part. I have tried several distros pero sa bandang huli, mauuwi lang din sa iisang sagot: HINDI PWEDE. Madaming kelangang i consider. 80% of my cx are Online gamers(60% are students, 20% are tambays), 10% are asawa na OFW, may kapatid na OFW, o may friend na OFW. 5% eh yung mga palipat lipat ng shop, 2% yung mga naninira ng programs dahil loyal sila sa kabilang shop at nag ta try mag spread ng virus sa buong network(pero di magawa) at 1% yung mga nakikipag chat sa mga foreigner habang nagpapakita ng cleavage at masasagwang photos. all of these things ay naobserbahan ko sa loob ng halos 2 taon. lumipat narin ako ng pwesto dahil nagkaroon ako ng problem sa previous place ko na inuupahan. SO, im not trying to be a “person-who-knows-all-things” pero if someone who wants any suggestions, o tulong, im willing to help. as much as i want this industry to survive, i also want to help those people na nagpupursige para ikauunlad nila at mapatunayan na ” Internet Cafe is still a good Business”.

    • blenda engco says:

      hi jun, i read your message in yugatech. nandito ako sa abroad now and after one month uuwi na ako sa pilipinas. iam planing to an internet cafe in davao city, philippines but my big problem i dnt know how to start.at this moment i am still thinking what would be my first thing to do on this kind of business we can chat together, here is my ym blenda_bob@yahoo.com

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