The Internet Café Industry in the Philippines Faces its Greatest Foe……Covid19

Since the beginning, the Internet Café Industry in the Philippines has faced numerous challenges in its operations.  From an unfavorable business image in the community, tightening government regulations, a cut-throat competition to unbelievable low rental rates it has managed to survive and prosper.  In its height in 2008, it was estimated that there was a total of 100,000 internet cafes operating all over the country.  Mostly these are mom and pop operations with an average of 10 computer units per shop catering to gaming requirements of teenagers in the community. In 2020 the internet café owners found themselves facing a formidable foe, Covid19, that could change the manner they operate their business and their survival.

It’s a Numbers Game

          We have to understand first the nature of is operations so that we could relate it to the challenges it faces during this pandemic. It has always been a numbers game.

          Most internet cafes derive their income from computer rental and internet access to gamers thus the more computer units that you have and the more time that gamers spent in your shop the better. Cut-throat competition has forced rental prices to unbelievably low thus forcing some internet cafes to operate on a 24 hours a day seven days a week schedule just to survive.

          Today, you can find big internet café operators that operate a minimum of 100 computer units in a particular location. They rent a big commercial space, have it air-conditioned and create the ambiance that gamers require.  But this is only a few for most internet cafes are still mom and pop small operations cramming as much computer that they could have in such a small commercial space that they could afford.  Some have air-conditioning but mostly they operate it during peak hours. You could still find internet cafes that are dark, damp as if overheated ovens that customers patronize due to the incredibly low rental price and marketing promotions.  There are also the Piso Nets that are scattered around in small sari-sari stores or any available space in somebody’s house willing to be the host and divide the profits from its operations from their principal.

Covid19 The Greatest Foe Arises

          In December of 2019. there was news of a new kind of coronavirus raging in China. At that time little concern was given to the news.  People believed that like other outbreaks before it will just disappear without making much damage.  As time goes by the news became worst as the new coronavirus spreads outside of China. The World Health Organization gave it a name, Covid19, and declared a pandemic.

          In the Philippines, the severity of the situation did not sink in until  March. By March 17, 2020, the Philippine government declared a stay home policy and closed all business operations to manage the spread of the virus. This had caught a lot of people off balance due to the sudden declaration and the closing of the economy.

          For the operators of internet cafes, the first quarter of the year is very crucial.  Summer is coming and soon schools would be closed. The second quarter is considered to be lean months that is why they need to generate more revenues from their operations as possible. Then it suddenly stopped and everybody took a hit.

          With the lockdown almost going on to its second month, the problems of the internet café operators keep on pilling up. No operations mean no revenues to be derived to pay for its bills.  Unlike other business operations, they have no inventories to sell to rely on. The internet café business relies on selling their services to derive revenue.  There is a common notion that it is cheap to operate an internet café but in reality, it is not:

     1. Electricity – depending on the nature of operations and the number of computer units the average electricity bill being paid by internet café operators is between Php8,000.00 to 60,0000.

2.     Commercial Space Rental – depending on their location and size is between Php7,000.00 to 45,000.00

3.     Interest on loans – internet cafes most especially gaming cafes rely on updated computer hardware to keep their customers satisfied.

4.     Internet subscription – depending on their plan an internet café owner pays between Php4,000.00 to 15,000.00.

5.     Government licenses and fees – depending on where they operate and the total number of computer units on the average they pay from Php3.000.00 to Php80,000.00 per year.

What's Ahead

          The Philippines was placed under Extreme Community Quarantine last March 17, 2020 to control the community spread of the Covid19. Hopefully by May 15, 2020, the extreme restrictions will be lifted and some business enterprises will be allowed to open.  Sadly, the internet cafes will not be one of them for some future time.

1.     It is not classified as an essential business by local government units.  Internet Cafes use updated computer technology but it is still considered to be a recreational business due to the nature of its operations.  It is categorized along with pool halls, bowling establishments, and cockpit operations.

2.     Social distancing will not be applicable. Each customer sits near each other thus a high rate of infection of Covid19 is possible. Studies show that a person will have a high rate of infection if he stays for long periods in a crowded indoor venue without proper ventilation.

3.     With the school year opening being moved to some future time till the Covid19 settles down, the internet cafes will not have their regular players that they rely on for their steady source of cash flow.