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Internet Café Franchise in Thailand

Date:2011-12-21


December 15th , 2011

In Thailand, Internet café owner is required to apply for a license from the Culture Ministry. The license will be expired within five years. National statistics showed that around 18 million Thai people are using the Internet in 2011, and the number of newcomers to computer game is increasing by 2,500 each month.

Besides the licensing measure, the government had launched a White Internet Café’ campaign to endorse the Internet shops that meet the required standards such as being free of alcohol and limiting service hours to child customers.

The White Internet Café would be given a sticker to distinguish themselves from the others, along with incentive packages such as special software programs at cheaper prices.

To promote healthy and wholesome cyber surfing among youngsters, the government is inviting operators to join the White Internet Café project. The Internet Café participating in this project must offer a safe environment and must ban smoking and must not allow anyone younger than 18 to stay after 10 pm. A survey found that youths under 20 years of age were the major customers of Internet Café, and they spent almost all of their time on entertainment, especially playing games.

According to the survey, at present, there are 3 major companies operating Internet Café Franchise in Thailand. In addition, the survey found that TOT Public Co.,Ltd, formerly Telephone Organization of Thailand” is operating Internet Café under “T-Net” Brand but not operated as franchise yet.

Company

Franchise Name

Website

No of franchise

True Lifestyle Retail Co.,Ltd

True Coffee

www.truecoffee.com

56

API Net Co.,Ltd

API Net

www.api-net.net

22

ATEC Computer Co.,Ltd

WARP

www.warp.in.th

8

ATEC Computer Co.,Ltd, a leading local computer manufacturer, has expanded their business line to Internet Café Franchise under the WARP Brand (WARP-Game & Internet Café) and claimed itself as a five-star Internet Café.

ATEC Computer Co.,Ltd has been operated for six years and it currently has 10 outlets, of which 6-7 outlets invested by ATEC and 4 outlets being full line franchises under brand “WARP”. Furthermore, there are around 10 Internet Café Shop purchasing know-how but not operated full integrated franchise and not using WARP Brand.

Currently, the fiercer competition of Internet Café market in Thailand has resulted in the lower hourly Internet access charge starting at 10 Baht per hour. As a result it takes the longer time to break-even and the outlet expansion is quite limited. Furthermore, the behavior of customers using Internet Café service would have the wider ages, not limited to students under 20 and the number of Internet using hour is decreased.

The Internet Café market in Thailand might not be significantly growing in this year and the playing on-line game seems not to be booming as the recent years. The old customers or players have older age, which might be bored and stop playing game. Even though the number of newcomers to computer games is increasing, the using or playing time is decreasing from more than 3 hours to only 1-2 hours. Also, the popularity of social media especially “Facebook” and its most popular game “FarmVille” which can play on iPhone has decrease the number of online game players as well.

In the overall Thailand’s Internet Café market, at present, it is found that there are over 10,000 Internet Café countrywide. The average income per shop is around 500,000 Baht per year. The market value of Internet Café in Thailand is approximately 5,000 Million Baht per year, according to Mr. Nithipat, general manager of ATEC Computer, WARP Internet Café Franchise Owner.

The Weekly Manager, a leading local newspaper conducted an interview with Mr. Apitep Saekow, the managing director of API Net Co.,Ltd, Internet Café Franchise Owner under API Net Brand, he mentioned that the long-term growth of Internet Café Business in Thailand should have other contents helping the society and API Net is now emphasizing on educational content by cooperating with ICT Ministry and other relevant private companies.

True Internet Café under True Coffee Brand has been launched in Thai market seven years ago to promote the True brand and demonstrate the True Group’s business-convergence concept. Customers can pay True bills, sip coffee and surf the Internet using the company’s broadband service at outlets around the country.

True Coffee shops quickly gained popularity among trendy people and students. They are located in prime areas and offer various kinds of services besides beverages and food, from paying bills of the True telecom group to broadband Internet access. True developed the True Coffee brand to reflect a trendy image and promote the telecom-convergent services of its group.

Under the franchise-licensing terms, franchisees must pay an 800,000 Baht fee up front and share 10 percent of revenues with True. They must also source their coffee, bakery products from True.

In addition, True Corp’s chain of multi-purpose coffee shops, True Coffee, is offering foreign-language and barista courses in a new step towards becoming venues for community service.

Furthermore, True Coffee has entered China and Laos several years ago. The company invested around 20 million baht to set up a True Coffee outlet in Shanghai, China. Also, a company in Laos with automobile and Internet-service businesses had also approached True for a license to open two True Coffee franchises in Vientiane and Luang Prabang.

True Corp was founded by agricultural conglomerate the Charoen Pokphand Group. Its businesses include cellular operator True Move, with more than 9 million subscribers, pay-TV operator True Visions with more than 400,000 subscribers and True Internet with almost 600,000 subscribers.

Trend of internet café in 2012

(Below key points were summarized from comments and journal published on http://www.internetcafe.in.th which is the largest online community of internet café operators as of November 27, 2011)

1. Wireless connection will be more adopted.

2. Basic internet speed will be faster since each internet café will promote this as their outstanding service. At least 10 mbps will be the standard. Faster speed, smoother online game play.

3. Because of fierce competition, small internet café which own by individual person will be gone from the market. There will be more internet café in form of the registered company or franchise with at least 30 computers per branch.

4. The using of one harddisk per computer will be decreased since Client server system will be more adopted.

5. Cost of opening an individual internet café will be reduced because of the using of second hand computers.

6. No. of customer will slowly increase since there are not many new online games launch until middle of 2012.

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