Two thirds of Internet cafes suffering deficit

Several people play games at an Internet cafe in Seoul in this undated file photo. The Internet cafe business is in decline with expansion of smartphone devices. / Korea Times file

By Yoon Ja-young

Internet cafes, which were once regarded as the goose that lays a golden egg, have fallen into deficit. The expansion of smart devices that have become a computer in the palm of a person’s hand is leaving people with little reason to visit the cafes.

A recent survey on Internet cafe owners by the Korea Federation of Small and Medium Business showed that 64.5 percent of them have been in deficit for the past year; one out of three was barely breaking even, and only 1.8 percent saw a profit. Six out of 10 said their business seemed in bad shape, and 34.5 percent said it was very bad.

“The number of Internet cafes around the country has fallen to around 15,000. The whole industry is already in a critical situation,” said Choi Seung-jae, chairman of the Internet Content Federation.

The number of Internet cafes once amounted to 24,000 in the early 2000s, amid a boom in online games led by Star Craft from Blizzard. People also frequented them for online chatting and checking email. Owners could break even in their investment in less than a year. This isn’t the case anymore. The rates at Internet cafes haven’t changed during the past decade — around 1,000 won an hour. When considering rent and other expenses, it is hard if not impossible to make money.

The recent fall of the Internet cafes has to do with the expansion of smart devices. According to Korea Creative Content Agency data, Koreans visited Internet cafes on average 6.4 times a month in 2009, but the figure fell to 5.8 last year. Those in their 20s who are accustomed to smartphones were especially shunning Internet cafes. Those aged between 20 and 24 visited on average 7.2 times in 2009, but this dropped to 5.5 last year.

As they have the devices such as smartphones and tablets, they can do most of the simple tasks such as Web surfing or checking email with them. Moreover, many coffee shops in the country provide free Wi-fi. They can thus use their laptops and tablets conveniently sitting in cozy chairs instead of visiting Internet cafes full of cigarette smoke.

Moon Seung-hwan, an office worker in his early 30s who still enjoys playing StarCraft, said he goes to Internet cafes only to play the game with his friends. “I go there every two weeks, I think. For other occasions I would rather use an iPad 2.” Internet cafes are relying on online game players, but the outlook isn’t bright as games are also making the shift from desktop to mobiles.

According to the White Paper on Games by the Korea Creative Content Agency, Internet cafes used to take 29 percent of the total sales in the 2009 game market. The ratio fell to 19 percent in 2011 and is expected to fall further to 12 percent by 2013. Sales of mobile games, meanwhile, are expected to double to 579.6 billion won by 2013 from 260.8 billion won in 2009.

The shift to mobile games is expected to accelerate due to fourth-generation long-term evolution services, which offer up to a five times faster download speed than 3G services.

The advancement of better smartphones offering high definition displays and equipped with upgraded CPUs and RAM is also making mobile games more available on them than before. Industry analysts estimate that in a year or two they will have little difference with desktops.

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