Natalie Yue, Analyst
Natalie Yue is a financial analyst with Greenlight Insights. In addition to building complex business and analytical models, Natalie covers emerging VR/AR trends developing in Asia-Pacific.
20 years ago, a billboard in central Beijing read, “How far are you from the information highway? Northward: 1.5km.” The billboard was advertising China's first internet cafe and signaled the opening of the internet for Chinese consumers.
A Billboard Advertising Beijing's First Internet Cafe
Internet Cafes: One Of Fastest Growing Segments For Out Of Home Entertainment
Since the late 1990s, China's internet cafes not only popularized access to the internet but spurred China to enter the information age. Even though the sales of internet-connected devices have steeply risen in recent decades, the numbers of internet cafes are still growing with substantial profits. According to the Ministry of Culture of the PRC, investment in domestic internet cafes exceeded RMB 20 billion ($3.1 billion) in 2015.
Today, China's 145,000 registered internet cafes are thriving as most have converted to diversified entertainment arcades with powerful gaming computers, attracting both professional gamers and affluent consumers who enjoy social outings at the cafes for as low as 50 cents per hour.
Internet Cafes Now Offer Chinese Consumers Their First Exposure to Virtual Reality
The transformation of Chinese internet cafés from information search workshops into entertainment centers have laid the foundation for virtual reality technology adoption by Chinese consumers. The first internet café with VR experiences opened in Hong Kong in 2016. HTC, a leading OEM of virtual reality headsets, signed cooperative contracts with large internet café brands in China and has developed a strategy to help encourage the location-based virtual reality sector.
JESports, a popular internet cafe in Shenzhen, China. The cafe has 230 Alienware computers at the location. (Photo by JESport)
Internet Cafes Offer Entertainment Marketers Key To Reaching Chinese VR Consumers
Presently, internet cafes may be the only place that some Chinese consumers can try VR first hand. For instance, despite their interest in VR gaming, avid gamers frequently do not own a high-configured PC or have adequate space for in-home play. Furthermore, the hourly price charged by most Chinese internet cafés has fallen significantly due to increased market competition over the last decade that the cost is now increasingly negligible in a market where real wages have risen by more than 10% annually over the past decade.
What this means is that highly utilized cafes promise a distinct avenue for reaching millions of Chinese consumers. In a market still grappling to find its footing, internet cafés are one of the best distribution channels for the VR industry to quickly reach the Chinese market.