The I-Cafés in the Philippines at Present
I was formerly an i-café owner and I have been and up to now involved in the various activities to improve the conditions of the internet cafe industry in the Philippines but I have to say that these efforts have been futile for up to today the industry is still at a sorry state. The situation is turning from bad to worst each year that it would take a miracle to save the industry from eminent failure. This is brought about by the following factors:
- The i-café industry never left beyond being a backyard industry – The industry has been around for a number of years now but it has never fully developed to its maturity. It is still considered to be a backyard industry in which most of the i-cafes in the country are small time operations mostly located in the homes of their owners. Except for Netopia and a few others who are considered to be big players in the industry, the rest are just small time players with an average of ten (10) computers per i-café.
- Incomprehensible level of competition – It seems that most people would like to own their own i-cafés rather than setting up a different form of business enterprise. Who could blame them for it seems to be a very easy business venture. You just set up your shop and wait for the everyday for the customers to come in. Nothing to manufacture, no backbreaking work to do and if you get bored while waiting then it would be the best excuse for the operator to play their favorite online games or surf the internet. On the average there are about 5 to 6 internet cafes operating in a particular barangay more can be found if that area is near a school or a university targeting the students as their customers.
- Operators of internet cafes are very much satisfied with their operations – Most of the i-café operators are just very much happy with the business model that they are operating on right now. Most of them are dependent on computer rentals as the main source of livelihood that they hardly spend the time to do research on how to diversify their business model. This could be attributed to the fact that most i-café operators are gamers themselves. Their primary motivation of setting up their internet cafe is that it would provide them the best opportunity to play their favorite games for free with a source of income as a bonus.
- If they are not gamers then there would be those who are in it just because for them its a good investment. These are the people who went into the business without actually having a background in information technology. These are people who saw from their neighbors that it is a good business to invest in and they went in without the necessary knowledge about the business. Worst there are some people who refuses to learn about the business and are just in it for the money. There are a few who has the passion for it. These are people who are engage in the IT industry and see the i-café as an alternative source of income.
- Those unrealistic prices – The level of competition is now unbearable in that most of the players are now engaged in cut throat competition by offering prices in unrealistic levels. From as high as P50 per hour when the industry started out in 2002 with a dial up connection and slow computers, it is now down to P10.00 or less per hour with the proliferation of fast internet connections and affordable computer systems. Internet café associations tried to regulate the prices in their areas but are faced with an uphill battle of how to enforce a regulated pricing scheme in an unregulated environment.
The problem could be traced to the manner in which the i-café operators and the community in general perceived the operations of the i-café. The i-café industry does not enjoy a good reputation in the community. Often perceived to be on the same level of the videoke bars, billiard halls and other establishments related to entertainment, it has not contributed to the importance that i-cafés play on a particular community.
Often considered to be a gaming center, people still sees it to be just that and not as a center which offers access to the internet and wherein there are other things to do than gaming. So unless the i-cafe owners themselves would realize the important role that his i-café provides to the community will this problem of pricing be given solution. He must first realize and be proud that the i-café plays the important role of connecting the community to the outside world through the internet.
Basically, these are the issues that confront the internet cafe industry in general but take note that there are other issues as well. Stiff regulations by the local government, issues related to the use of pirated software in their operations, the non-availabilty of support to improve the conditions of the industry and so on, all adds up that one will wonder where will the i-café industry lead to in the future.
Or we can look at the Internet Cafe industry at a different perspective and see it as a success.
-The success of big players such as Netopia showed that the Internet Cafe is a valid and profitable business locally.
-The spawning of small internet cafes showed that many are becoming entrepreneurs, risking their money and generating jobs and wealth for themselves.
-The stiff competition in this industry is a boon for consumers. Years ago, they have to pay P50/hr for a slow PC and a slow internet connection. Nowadays, their P10 or P15 can get DSL speeds, air conditioned rooms and LCD screens.
-The stiff competition has forced less capable operators to exit from this industry and those who were able to adapt to the changes are still profiting.
-The low rental rates has brought affordable technology to the masses. Our less fortunate brothers and sisters can now afford the internet and PC usage for just P10 or P15 an hour.
-The presence of big players did not result in the monopoly of the industry by the moneyed-few, but on the contrary, it encouraged many small players to enter the business with faster PCs and newer technologies.
For those internet cafe operators who are struggling to compete or were not able to compete, thet can look at the situation as dire and call it a sorry state. But for the consumers, the proliferation of these shops at dirt cheap rental prices is a boon. More competition, lower prices.
Oversupply of a particular product or service will ultimately lead to the collapse of prices and the closure of less capable suppliers. This is what happened in the US when the mom & pop laundry shops sprung up left and right and profit margin soon become so thin that forced many shops to close. For the local internet cafe industry, sure there are many shops that are closing but still many are being put up. This may mean two things:
1) that many are still not aware that there is no longer any money to be made in this industry because of the stiff competition.
2) the market is so big that even at P10 or P15 per hour, there is still money to be made and many are still rushing in.