BUSINESS: Cybercafes

March 1997

By Salil Tripathi

Browsing with Beverages
Asian bars and restaurants are targeting a new consumer group: Internet addicts

It is late one neon-lit night as two Japanese businessmen descend into the basement of a dour gray building. A woman in a black blouse and red dress bows extravagantly and leads them to a quiet corner of a dim room. There, lubricating her clients with beer, she will initiate them, step by step, into . . . the arcane world of the Internet.

Surfscape is not your traditional Tokyo bar. The hostess, Tanaka Shino, is one of 10 dedicated Net instructors. “We get businessmen, young people, even tourists,” she says of the cafe, which boasts 20 computers, a library, a bookstore and a shop stocked with PC supplies.

As the computer screen comes to life, it transports the two salarymen to the vast World Wide Web. Part of the Western urban landscape for some time now, cybercafes are suddenly proliferating in Asia, breaking another rule of computing Ñ that food and keyboards don’t mix. According to one estimate, Europe has nearly 300 cybercafes. There are some 250 in Asia; even China has a couple, though Japan accounts for close to 200.

Mark Dziecielewski, a computer consultant in London, says: “A few people thought it would be a good idea to combine computer connectivity with somewhere to have a decent cup of coffee in a public place Ñ and cybercafes were born.” A cybercafe works on the simple principle that patrons might want to catch up on some information while having a cup of coffee Ñ sports scores, stock market prices, hotels in another city, news or online discussions. Cybercafes charge from about $4 for half an hour of browsing. Beverages and snacks are extra.

Besides allowing senior managers to tune into the Internet revolution, the cafes can serve a practical function. Says Saito Akishige, a linguist-turned-software engineer who maintains an impressive Web site detailing Japan’s Internet cafes: “For older people, visits to cafes are a bit serious because they’re looking for a new business opportunity or a new job, or they wish to start their own business.”

Tokyo has dozens of Internet cafes, in a variety of guises Ñ pachinko parlors like P-Ark Ginza, Thai and Indonesian restaurants like Club Asia in Shibuya, extensions of stores like Tower Records and Tokyu, and shops that promote the products and services of such companies as KDD, NTT, Epson, NEC and Hitachi.

Some cafes are designed thematically. Cafe Apollinaire in Tokyo’s Roppongi district transports Netizens to the ambience of Paris in the 1920s. In the futuristic Cybernet Cafe in Harajuku, a young man sits with a bored look, downloading pornographic Japanese comics while his friend giggles. Next to him a fashion student is taking detailed notes from the Web pages of Louis Vuitton and Gucci. In a corner, another woman is reading German literature on the Net.

Says Saito: “The cafes are always crowded. There’s not a day that you can’t find the words ÔInternet cafe’ in the newspapers.” Growth is now stabilizing, and some cafe owners have branched out to become Internet service providers (ISPs). But, says Saito: “That’s a tough business, and many aren’t succeeding.” That’s hardly surprising. According to Stephen Anderson, associate professor at the Center for Global Communications, a multimedia research center affiliated with the International University of Japan, there are over 400 ISPs in Japan, including those that provide bulletin-board services. (Hong Kong has nearly 100 and Singapore has three).

Lured by the prospects of an Asian boom, Cyberia of London has targeted the region. The Internet-cafe pioneer, launched in 1994 with an investment of $75,000, is today a $2 million company with five cafes in Britain and one each in Dublin, Rotterdam, Paris and Tokyo. It runs Channel Cyberia, which offers online programs of news and entertainment. Says Karen Durham-Diggins, Cyberia’s former head of marketing and public relations: “Like the Internet, we have no global boundaries. We intend to have a Cyberia cafe in every major city by the year 2000.”

Cyberia has tied up with two Thai-Sikh businessmen, Rachvin Narula and Suthep Srikureja, to open the first Southeast Asian Cyberia, in Bangkok, with others planned for Hong Kong, Singapore, Malaysia, the Philippines and India. Says Narula: “Cyberia has understood that as virtual space becomes more prominent, people will require certain physical spaces to display, promote and interact with virtual space.”

As Cyberia expands in Asia, it will discover the sheer variety of cafes in the region Ñ from a glorified computer school in Vietnam that calls itself an Internet cafe without having Internet access, to the business centers of five-star hotels in India that let the public surf for $23 an hour.

“Internet cafes serve a social need,” says Wong Seng Hon, chief executive officer of Sembawang Media Pte. Ltd., a Singapore multimedia company that runs the city’s premier Internet cafe, cafe@boatquay, on the trendy waterfront Boat Quay. The cafe takes on a business look in the morning, as American executives, eager for sports news, think nothing of paying $7 per hour to find out how their basketball teams have performed before getting down to the real business of trading currencies and stocks from their office towers.

Large, government-owned Singapore companies like Jurong Town Corp. launch their Web sites at the cafe. On Wednesdays cafe@boatquay holds Webcasts (live music broadcasts using Web software like RealAudio). Jek Kian Jin, producer of the Webcasts, says: “The best mix of music may not be on radio anymore. We aim to follow the nature of the Net, where everything is possible. We want to be provocative and aim to show the world that Singapore’s not so safe that it’s completely boring.”

However, recent guidelines restricting the Internet may take the fun out of the Singapore cafes, which had begun to build a reputation as a refuge for the risqu?, ribald and revolutionary. The Singapore Broadcasting Authority can prosecute ISPs that offer access to sites the government considers inflammatory on religious grounds, provocative on racial matters, or likely to undermine confidence in the government. Some cafes have gone cautious by disabling the function that allows users to post messages to the Internet newsgroup (discussion group) that the Singapore establishment considers its be'te noire Ñ soc.culture.singapore.

A typical cybercafe entrepreneur is Felix Limcaoco III, 32, a Stanford University computer graduate who started his cafe, Internet Universe, in Manila a year ago. He invested $100,000, persuaded Korea’s TriGem Computer Inc. and Japan’s NEC to donate equipment (his company is the agent for the two computer manufacturers), and provided Web access to curious shoppers. “Bars need TV sets, and cafes need computers,” he says triumphantly, watching a dozen teenagers eagerly surfing.

Internet consultant Dziecielewski has a word of advice for would-be cafe-owners: “Do not neglect the needs of traveling businesspeople who have a laptop with an internal modem. Many would prefer to pay a small fee for the use of a power point and telephone socket (even limited to local calls) to access e-mail systems, in comfort, over a cup of coffee, away from the office or hotel.”

That could well be the secret to making cybercafes pay.