In the past, internet cafes surged in China as a favorite place for gamers to spend hours per day, each café can have hundreds of computers. However, just in the first half of 2020, a total of 6,487 internet cafes were closed or declared bankruptcy. At the same time, the owners of these cafes had to sell computers and other stuff at very low prices to partly make up for their huge losses.
Fancy facilities turned into waste
Di, an internet café owner in Hainan had to shut down his business and sell all the chairs at 50 yuan, which originally cost 570 yuan while an Intel Core-i5 computer was sold at only 80 yuan. In late February 2020, he closed the café to go back to his hometown for Lunar New Year without knowing that would be a farewell. When the COVID-19 pandemic got severe, many shops and public places were forced to shut down to limit the spread of the coronavirus, and internet cafes were no exception.
When the café was first opened, it attracted a large number of customers with many becoming regular customers. Di even planned to open a new internet café this year. After closing for 5 months, however, when he came back to the café, he was overwhelmed with rent, loans, and salaries, which led him to realize the inevitable bankruptcy.
In another example, Chan ran four internet cafes near colleges with his friends, saying the cafes are having a hard time. He said that during the temporary shutdown, they lost about 500,000 yuan. They decided to sell a number of sofas and computers to make up for the loss. They were able to sell 148 new computers at 1,000-2,000 yuan, which would help them keep running the cafes or invest in other businesses to make money.
According to data, in the first 6 months of 2020, there are 1,557 new internet cafes registering while 6,487 cafes got their business license retracted. In February, there were only 43 new internet cafes across the country, indicating a negative growth rate in this area.
Low charges or high charges do no good
In areas where there are few internet cafes left, some owners decided to increase the charge per hour to make up for the decrease in demand. Due to the COVID-19 pandemic, authorities allow internet cafes to fill only 50% of the total capacity and customers have to sit in separate chairs. If they take in more customers than that threshold, they may be forced to close, according to an owner in Shanghai.
While there are fewer people coming in, these cafes are spending additional money on disinfectants, gloves, and masks while doing more tasks like taking temperature and registering health code in case a customer is infected. On the other hand, salaries have been reduced.
Now, instead of 6 yuan per hour, an internet café charges customers 8 yuan per hour. The rise seems small but if a gamer spends multiple hours there, the total is significantly larger, according to Qi, a gaming enthusiast. Other internet cafes also increase their hourly charge by 1 to 3 yuan while more luxury rooms can cost even 25 yuan per hour.
However, some owners say that if they raise the charge too much, there won’t be any customers because in the end, internet cafes are not an essential service and people can totally stop coming.
The downward trend
There’s an undeniable fact that if it hadn’t been for COVID-19, the internet café industry will cease to exist eventually. The pandemic only sped up the process.
Data show that since 2015, the number of registrations for internet cafes has gone down in four consecutive years. The new registrations in 2019 were the lowest in the past decade and only a third of the cancellation number.
The reason for this is the growth of mobile gaming with fast updates on new titles while most games at internet cafes are as old as 10 years. Another reason is that most cafes are established and run by individuals or small companies, making it hard to approach the capital market. This means internet cafes are not backed or invested by corporations or funds.
Many cafes have tried converting or expanding their services by including food and beverage services or converting the cafes into places for mobile gaming, or female gamers. But none of these works.
It’s time we admitted that after 20 years of the internet boom in China, the internet café industry has entered a new, dark chapter.
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