Thursday, July 27, 2006

Philippine Internet Cafe Growth and Challenges

I'm having a dilemma in getting an estimate on the number of Internet cafe in the Philippines. Even Yahoo's listing on it is too limited. Perhaps local government units should start listing Internet cafes in their respective websites.

When talking to industry experts, the number of Internet cafes are currently pegged at 8000 to 14,000 all over the country. Most are surviving by offering more than just your traditional Internet rental service. Others are offering scanning, desktop publishing, gaming, encoding, research, among others. I believe that there shall be changes in the Internet cafe market within a year or two as the not so well-funded players, who rely on pirated software, will be more pressured to go legitimate as their competitors are the ones who report them. Microsoft is now actively educating the market with its Internet Cafe Rental Rights program to ensure that these places operate legitimately in using their products. Although there's nothing stopping Internet cafe players to use open source.

Gaming is one popular activity in Internet cafes. Like in China, there are now Filipino gold farmers in these gaming communities who sells account identities or charge a fee for playing another person's account to reach a particular level.

The use of Internet cafe by the youth has also elicited a lot of reaction from the local government units. Some even issued local regulation to ban minors from going to Internet cafes during school hours. Roberto Verzola's experience in this area drives the point to its necessity.

Another expansion approach that some Internet cafes are now pursuing is to function as a call center, or rent its facilities out for such use, like Netopia. Companies like PLDT are also making the Internet Cafe business an option that new entrepreneurs can look into.

On the advocacy side, there are now groups who sees the Internet cafe as a place where their philantrophy work can be deployed.

With the maturing Internet sector, the Internet cafe owners appear to be the most organized and even strategically quantifiable as most cities in the country have been establishing one. Some of these associations are: Internet Cafe Association of the Philippines, Internet Cafe Association of Cebu, among others.


pekto_real said...

It is possible when all telcos and ISPs can make a list of their current subscribers. They may not include those subscriptions under home users. Even with the existence of i-cafe operators' associations is not a guarrantee because most i-cafes do not join groups.

Mike Abundo said...

The game publishers have great databases -- but they sure as Hell aren't sharing.

pekto_real said...

It is actually a challenge in the industry for i-cafes who have duly complied with the law. There is unequal playing field in this industry where illegitimate outnumber those legit ones by more than double. Those who have not complied with the software licenses can afford to put down their rates as they've not spent as much as we do. In Cebu City, there is an estimated more than 600 i-cafes but those who've been issued biz permits are only a little more than 170, it is obvious enough that there are a lot of illegals, not complying with the law, not even paying taxes, social insurances for their workers and yet competing unfairly to the legit ones. It has affected our competitiveness in the industry.