Cybercafes losing business to smartphones

Many seats are unoccupied recently at a cyberbar in Xi'an, Shaanxi province. Yuan Chen / for China Daily

Owners look for new ways to compete with popular devices

Han Lina has been running a cybercafe for seven years, but recently she began to worry about her business.

The 36-year-old's cybercafe has 107 computers in the downtown area of Mengzhou in Henan province.

Making money was easy in the beginning, she said, when there were not so many home computers or smartphones.

"It has become more and more difficult to attract consumers. People would rather play with their smartphones," she said, adding most of her clients are young gamers.

Yuan Pengwei, who also owns a cybercafe - known as wangba in Chinese - in Xi'an, Shaanxi province, had similar feelings, and described the industry as having "entered winter".

With 900 computers running around the clock, Yuan was earning 10,000 yuan ($1,640) per day a decade ago. Now he makes half that due to lack of customers.

To save costs, Yuan sold some computers and relocated to a smaller place where the rent is lower.

"The days when people waited in line to play at cybercafes have gone," he said.

More than 300 million Chinese downloaded video games on smartphones in 2013, a sharp rise on the previous year, according to a report in December by the Game Publication Committee, a group affiliated with the State Administration of Press, Publication, Radio, Film and Television.

Smartphones had a 13.5 percent share of the video game market, more than double the 5.4 percent of 2012, the report said.

According to the Ministry of Culture, by the end of 2012, there were 136,000 cybercafes with 11.95 million computers nationwide, about 6 percent less than in 2011.

Guan Qingbin, a 26-year-old migrant worker in Beijing, said after buying a smartphone a year ago he stopped visiting cybercafes.

"I can play games and get news on my phone," he said, adding that for several years there were not so many cybercafes in his residential community in the capital's Fengtai district.

Gu Ruocun, a student at Shandong Normal University, said many cybercafes around his college have shut down in recent years.

"I paid membership fees to a cafe four years ago, but I couldn't claim my deposit back after it went bankrupt," he said.

He said his classmates would rather play video games in their dormitories than go to a cybercafe because it's more convenient and cheaper.

"All our classmates have computers, and we needn't go to the cybercafes to search online information like our predecessors did," he said.

Rising costs

Han, in Mengzhou, said the cost of running a cybercafe has been rising - she has to upgrade her hardware every 18 months to meet players' rising demands.

"In 2006, computer screens were 14 inches, thick and heavy. Then they were replaced with 17-inch LED screens, then 21-inch and now 27-inch high-definition," she said, adding she is planning to buy 3-D screens to provide a more vivid experience to customers.

She pays about 60,000 yuan a year in rent for 300 square meters, accounting for about 10 percent of her total investment.

The salaries of her employees have also risen from 400 yuan a month in 2006 to 1,500 yuan, which has also affected profits, she said.

According to the Ministry of Culture in April, cybercafes had a combined income of 53.7 billion yuan in 2012 - 13.2 percent less than the previous year.

About 126 million people visited a cybercafe in 2012, a drop of 5.5 percent, the ministry said.

Ding Ruixue, a 20-year-old cafe owner in rural Rizhao, Shandong province, said her business remains the first choice for local adolescents since there are not so many nearby entertainment venues.

Even though the business is booming in her village, Ding said she has felt pressure since many rural families have bought computers and have access to the Internet at home.

"Five years ago, people went to my cybercafe for various purposes, including checking e-mail, but nowadays they mostly come here to play games since they could search online information with their private computers," she said.

To attract more customers, Ding offers discounts to players who deposit money on membership cards and improved the environment of the cafe.

Young clients

The cybercafes are not so attractive to the users as they used to be since most of their functions have been replaced by mobile Internet devices, said Zhang Yi, CEO of iiMedia Research, a third-party data mining and integrated marketing agency in the mobile internet.

The main clients are young people who play intricate video games since cyberbars provide larger LED screens and fast downloads, he said.

At the same time, he said, most of the online game producers are focusing more on the development of smartphone games, which makes the cybercafes more difficult to survive.

Han agreed she had to make some changes, or her cyberbar would have likely gone out of business in the next several years.

To make her business more attractive, Han installed a coffee machine four months ago. The decision proved to be wise and popular, yet not able to reverse the overall trend.

"The golden days have passed. It's impossible to earn money easily like we did in the past," she said.

She noticed that in some big cities like Shanghai and Hangzhou, many cybercafes have been replaced by cafes with computer and Internet facilities, where people can have a cup of coffee like at Starbucks while at the same time play games.

"I'm also thinking of changing into a cyber coffee bar model," she said.

Even though lots of cyberbars have gone bankrupt, Han said she was optimistic because of the fast Internet speed and high-digital screens.

"Many people went to the cyberbars for online shopping frenzy during an industry fair on Nov 11, because with the high Internet speed, they could buy some limited products more easily," she said.