Summary of Key Points
Internet cafes, once considered a “sunset industry,” have made a strong comeback in 2023 after hitting rock bottom. The number of internet cafes has increased from 77,000 to 122,600 by 2025, and revenue has doubled from 53.4 billion yuan to 101.68 billion yuan. This turnaround is due to a combination of factors: relaxed policies (simplified approval processes, loan discounts), industry upgrades (transforming into esports venues), the growth of the esports sector, and the continued popularity of low-end internet cafes offering excellent value for money. The industry has shown a “K-shaped differentiation”—high-end esports venues and low-cost traditional internet cafes are doing well, while those in the middle struggle to survive. Entrepreneurs need to target specific user needs precisely.
Detailed Analysis
1. The Counterintuitive Rebirth: Why Go to an Internet Cafe When Mobile Devices Are So Advanced?
With AI-powered computers and phones becoming increasingly powerful, it might seem convenient to play games or surf the internet at home. However, the number of internet cafes is on the rise. Data shows that the number of internet cafes dropped to a low of 77,000 in 2023 but rebounded to over 120,000 by 2025, with revenue nearly doubling. This seems contradictory, but there are two underlying reasons:
- Spatial Needs: Internet cafes provide a physical space for socializing and entertainment, allowing users to play games and chat together in a more immersive atmosphere than playing alone at home.
- Cost Advantages: High-end gaming equipment can be expensive; internet cafes offer top-tier facilities for a fraction of the cost.
2. Policy Support and Industry Upgrades: The Two Key Drivers of the Revival
The revival of internet cafes is largely thanks to policy changes:
- Simplified Approval Processes: After the end of 2024, the required documents for opening an internet cafe were reduced by more than half, and in some areas, there are no approval requirements at all, making it easier for entrepreneurs to get started.
- Loan Discounts: The government provides loans of up to 1 million yuan to eligible internet cafes, with a 1% interest subsidy, which helps lower their operating costs.
At the same time, the industry itself has undergone significant changes:
- Traditional internet cafes (with smoke-filled rooms and outdated equipment) have been upgraded to esports venues equipped with 4K screens and ergonomic chairs, offering additional services such as dining, bathing, and laundry. For example, an esports venue operated by Yu Ge charges between 10 and 20 yuan per hour, targeting the affluent consumer group willing to pay for a premium experience.
3. The Popularity of Low-End Internet Cafes
Despite the upgrades, low-end internet cafes are even more popular. In Zhengzhou, night-time packages cost just a few yuan, and there are also “affordable” internet cafes that charge as little as 0.6 yuan per hour. Why?
- Target Audience: Workers, students, unemployed people, and those with limited budgets often cannot afford high-end esports venues but can spend a few yuan to relax in an internet cafe.
- Cultural Aspect: Traditional internet cafes create a familiar atmosphere that some customers prefer.
- Value for Money: These cafes offer an affordable form of entertainment compared to other options like drinking or going to karaoke bars.
4. Esports as the “Hidden Engine”: A Mutual Boost
The resurgence of internet cafes is closely linked to the growth of the esports industry:
- Large User Base: China has nearly 500 million esports enthusiasts, with a market worth 170 billion yuan in 2025, of which live streaming accounts for 80% of revenue.
- Revenue Structure: In upgraded esports venues, internet cafe fees account for less than 40%; the remaining 60% comes from food and drinks, merchandise sales, event tickets, and sponsorships.
- Popular Games: Games like League of Legends have been popular for over a decade and continue to attract visitors. New hits (such as Valorant) also drive traffic to internet cafes.
In summary, esports provides the necessary infrastructure for internet cafes, while internet cafes help boost the esports industry’s revenue. This mutual benefit has led to their revival.
5. Making Money in the K-Shaped Differentiation
Can you make a profit by opening an internet cafe? Here are some considerations:
- Low-End Approach: Focus on offering excellent value for money, such as low fees and additional services like live streaming.
- High-End Approach: Upgrade facilities to attract higher-paying customers (e.g., reducing the number of seats and upgrading the environment).
- Middle Ground: Ordinary internet cafes without a distinct niche face greater competition; they need to either offer the lowest prices or the highest quality to stand out.
In conclusion, running an internet cafe requires a strategic approach. You must understand your target audience and invest in areas that matter to them (such as fast internet speed, comfortable seating, and cleanliness) to be successful. There are no easy profits in this industry; you need to meet user needs precisely.