Nairobi Gaming Arcades will go the Cyber Cafe Way After All

Am publishing this from a Cyber Cafe in downtown Nairobi on Tom Mboya street. To those sophisticated enough to read blogs and have residence in Nairobi the street brings with it a familiar hustle and bustle. All I can describe the picture that it evokes is energy. Far be it for me to term it as positive or negative. Tom Mboya street is full of energy.2335841877_305512b6eb_b

Tom Mboya is the home of the largest cyber cafe’s in Kenya. That is as much fact as you can ever get on this matter of size. There are all of 4 outlets possibly owned by the same person if not the same group of people. Each boasts not less than 60 Pentium 4 PCs with the largest having all of 160 computers. All 4 outlets combined total a whooping 600+ computers. However it was not always like this.

In the very early days memory serves the picture of one African online a startup in the ICT sector and arguably the first Kenyan ISP. The company had very lavish setup’s in their cyber cafe. Much more regal furnishings than the plastic seat I now occupy writing this. Pointedly speeds were far less than the 56kps I am surfing on currently. Yet these cafe’s all dwindled as businesses and most of the retail spots were replaced by Mpesa agents and clothes stalls. The caricature of Nairobi as one big Mall with an Mpesa outlet, a clothes stall, a Big Atm, supermarket, fast food restaurant and a bus stage is not far from truth. These businesses are the only ones that seem to show resilience in the retail sector across the board. When it comes to retail its location location location.

Ask Metro which is a bus company suing the County of Nairobi for placement of its vehicles in the Kencom bus stage. Ask Safaricom, the largest telco with over 65,000 retail Mpesa and airtime outlets country wide. I believe the average Mpesa outlet retail square footage to be less than 100 square feet.  After all how much space do you really need to send and receive money? Location is king and in the very early days pioneers in the internet sector in Kenya circa 2002 did not really understand what business they were in. Only those like WebTouch Cyber on Tom Mboya street that houses more than 140 Pc’s knew they were in the retail business where foot traffic is king.

In recent times Gaming Arcades have come up in town. And as fast as they spring up more are falling by the way side. In numbers alone gaming arcades costs are much lower than cyber cafe’s without the monthly bandwidth fee that telcos charge the cyber cafe owners. This is the only difference between the two businesses that begs notice. The rest is similar. Numbers and Location rule the day. With square footage costs in Nairobi being damn expensive only the arcades and cybers that have more units to lease will emerge winners in this market. Knight Frank’s Wealth report places Nairobi at 10th place in the world’s hottest high-end property markets.

Retail space in Nairobi is only going to get more expensive as the population continues to outstrip the installed capital base of property. This means that with incomes growth being slow albeit stagnant only reduction of costs will bear fruit for most retail businesses. In this mad rush for cash many will fall by the way side as the cyber cafe’s that once dotted Moi Avenue. Bossman Capitalism always wins in the end.