|
DIGITAL
Paradise Inc., the owner, operator and franchisor of the
Netopia brand of Internet café chain in the country, has
narrowed down its losses by 70 percent to P11 million in
the first half of the year.
President and chief executive George Tan said the
company may be able to break even on its full year
results.
“We were
able to narrow down our losses significantly in the
first half of the year. Towards the end of the year, we
might break even. And hopefully, we could be profitable
already at the end of next year,” Tan said.
Digital
Paradise started operating in 2002. In the early years,
Tan said the company, which is 75-percent owned by ePLDT,
the phone giant’s Internet arm, posted ‘small profits.’
As it
expanded, Digital Paradise had to invest more. Netopia
now has 177 branches, with over 8,000 terminals, as of
end May. Of the 177 branches, 90 are company owned.
Digital Paradise envisions to open three new branches
every month.
“Netopia
makes it a point to comply with all of the requirements
before we operate. We had to purchase original software
for each of our terminals, invest in the terminals, and
pay taxes and yet still manage to offer competitive
rates as against the other chains that… operate on
pirated software and evade tax payments,” said chief
operating officer Jose Maria Grau Jr.
From
January to June, Digital Paradise’s operating expenses
reached P181 million. The numbers reflect P11 million
more than company revenues of P170 million.
As of
end-June, revenue generated from Internet surfing,
communications, training and educational research make
up 55 percent of the company’s total revenues. Online
games account for about 15 percent, and value-added
services such as desktop publishing, photo printing and
retail sales of prepaid cards, game cards and storage
media 30 percent.
The
Netopia chain has recorded 2 million transactions a day.
Company-owned Netopia stores, the average daily
transaction stood at 650,000 with revenues of P27
million.
There
are about 7,000 Internet café players in the country.
The industry’s market is 80-percent gaming and
20-percent Internet, according to Digital Paradise.
“We are
not a gaming company. More than half of our revenues
come from Internet usage. Our focus is on the Internet.
We remain responsible by not allowing students play
online games during school hours,” Tan said.
Digital
Paradise closed 18 branches so far this year. It intends
to rationalize the business toward profitability.
“While
expanding, you begin to see that not all branches were
put up in good locations. So, we had to rationalize. The
branches that are not profitable were closed down. We
also downsized the number of terminals in some of our
branches. There will be two to three more shops that
will be closed down this year,” Grau said.
Netopia
mainly provides shared computer and Internet access to
over 2.5 million customers per month. About 58 percent
of its customers are under 25 years old. About 30
percent are 25 years old and above, and about 12 percent
are 15 years old and below.
Digital
Paradise offers three franchising packages, depending on
the number of workstations that usually range from 20 to
30 computers. Its franchising fees range from P150,000
to P300,000, but total investment may reach from P1.8
million to P2.6 million.
Netopia
has also partnered with different content providers to
position itself as a venue for education and learning,
Tan said. “We also provide infrastructure for training.
Now, people can go to Netopia for review for local board
exams. They can also explore a possible career in
medical transcription by undergoing online tutorial,”
Tan added. |
