Internet Cafe Profitability – Philippine Market

In my previous post, I’ve discussed CU or computer uptime which is generally affected by your selected local market (i.e. immediately within your area). But it is also good to know the national market, how is the iCafe doing in the Philippines in general. We want to know current customer and market trend. By knowing the trend we can strategically take advantage of the opportunities and avoid the problematic area of the industry.

A recent study by Yahoo and research firm Nielsen shows a decrease in internet café usage from 71% (yr. 2009) to 66% (yr. 2011). While an increase in private internet access from 27% (yr. 2009) to 35% (2011).

Although the numbers might be interpreted as customers who already have home internet access therefore they are no longer using internet cafes, that conclusion is not entirely accurate because the difference in the decrease and increase are not the same.

The report only shows the decrease in general. We must analyze which specific internet café type is impacted.

There are three types of internet cafe:

  1. Break-time iCafe – main customers are people who are on break (e.g. students and office workers) and are near schools and business establishments.
  2. Closing-time iCafe – main customers are people who are on holidays, rest days or have already done their classes or work, thus these icafes are in residential areas.
  3. Balanced iCafe. – mix of the above two.

With the report above, we can safely assume that impacted by this shift in customer usage to private access are only Residential and Hybrid. Break-time iCafe would only be minimally impacted. Therefore, Residential and Hybrid should focus on services other than just computer + internet access.

Remember, an iCafe is not just about providing computer with internet access. In the first place, it’s internet + café. There are other new consumer technological trends that translates to opportunities for the iCafe industry (e.g. online transactions, online learning etc.). But the problem is that the industry haven’t yet scratch the surface of these technological demands. That is why the numbers are going down.

Hopefully through this site and the accompanying ebook, these trends and opportunities will be taken by the industry to maximize its profitability.

The icafes of the future might be different from the icafe we have today. But  as long as there’s a need for information, communication and people socializing in one physical place, the icafe industry is here to stay.

What the industry right now is experiencing are just but growing pains toward its socio-technological evolution.

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