Why Arcades Haven’t Died In The United States

arcadehero February 20, 2017 7

This past week, I had a few readers point out an article by Brian Ashcraft on Kotaku entitled Why Arcades Haven’t Died In Japan. It offers up that writer’s perspective as to why the arcade business and culture has remained strong despite diminishing in size.

These readers wanted to know my take on this, which I appreciate. The article makes some valid points about the business there and never directly makes the claim that the scene in the US is dead. Maybe it’s just my jaded view from responding to the “Arcades are dead” claims so often that I see implications of such by what isn’t said.  I’ll admit that I was hesitant to write this as it feels like I’ve done this dozens of times before and after a while you wonder if it’s worth the ink. One of those times, we had people send pictures of busy arcades in to the site as a way to counter the notion that “arcades are dead”.

It gets a bit tiring to point out the new games that sites like Kotaku or IGN or whoever else with a massive audience reach never report about. Thus the games effectively don’t exist for their readers unless those readers poke around elsewhere or come across these new products on location.

It gets tiring to point out what “my own lyin’ eyes” see day in and day out in operating an arcade in the Middle-Of-Nowhere USA for 8 years coming on 9. When I began writing this last Friday, I took over $40 worth of token purchases as I wrote the first few paragraphs; jumping to Monday where it is President’s Day and school is out, it has been busy almost non-stop since I opened at 10AM. I just installed a brand spanking new pair of Cruis’n Blast games a few weeks ago and they’ve been doing really well. #1 earning spot well in fact.

Despite the wear on my fingers, it’s worth offering up the American side of the argument as this is how I make a living to feed the four other mouths besides my own that live under my roof.  It’s certainly not through blogging or T-Shirt sales.

To back up what will be said below, let me once again mention my resume for the arcade business. I worked at a Family Entertainment Center (FEC) 1999-2000 in an arcade with over 100 games, about 50/50 mix redemption/video; I’ve been writing for this site and attending arcade industry trade shows since 2007; I’ve run my own arcade business since 2008 right when the “Great Recession” started and rode it out to today where I’m about to move into a larger space; I’ve written a book about arcades that I released in 2013; I sold millions of dollars worth of arcade equipment around the world from 2011-2016 for an online distributor and I’ve done contract writing work for other arcade or pinball distribution companies as well as freelance writing for Replay Magazine for several years. I won’t claim to know everything there is to know about the business but I am familiar with it and familiar with many people in the business that covers evert aspect of the industry: developers, salespeople, managers, marketing gurus, operators, etc.

Let’s state once again for the record that arcades in the United States are not dead. Here’s why:

There are around 160,000+ Locations With Arcade Equipment In Them In The USA

The second paragraph of the Kotaku article does use some data to show that the size of the arcade business in Japan has shrunk from its heyday in the mid-1980s. That is not used to claim that the scene has vanished in Japan but to show that they are still around. I have come across an assumptive notion before that operates like an unwritten law – that the business must surpass the size and scope of what the scene was like in 1982, otherwise it is ‘dead’. Silly!

If Japan’s scene isn’t dead because it still has locations then the same should apply to the US market too. Play Meter Magazine’s State of the Industry Report from 2015 (the 2016 report should be published soon) stated that a total of 166,760 locations contain or operate arcade equipment.

Seems that I’m not the only one putting food on the table thanks to these kinds of machines

BTW – If you are looking into opening said business, you really should be using this report to help build your business plan. It’s not the only information that you should rely on but it is useful.

To explain what some of that data means, 2500 locations are classified specifically as arcades; 3500 as “FECs” which are big locations with multiple attractions (theaters, laser tag, bumper cars, trampolines, etc, etc.). Granted the numbers are rounded but that is because it is a very difficult task to track a particular type of local business across such a large geographic area. Not every new business has the marketing budget, the know-how or the interest in promoting that business beyond their city borders. On the flipside, many of these locations are taken up by big names that everyone knows. Chuck E Cheeses (over 500 locations); Dave & Busters (around 100 currently); Round1USA and Main Event (both growing rapidly). Regardless who owns them, they exist and are worth recognizing as much as any other business.

The rest of that huge number are what we call “street locations”. These are places that people don’t really think of as being arcades – truck stops, small restaurants, dental offices, waiting rooms, the walkway at the mall, that small spot near the grocery store entrance, a little no name shop at the local Wal-Mart next to the nail salon, and so on. Often the equipment in this locations is not owned by the business in question but by what is called an “operator” (also: arcade operator; street operator). The Play Meter data suggests that there are 2000 operators in the US but that is partially an estimate as there are operators who go under their radar. As such, I believe the number is a little bit higher than that.

On this site we report about dozens of locations opening their doors every year but there are many that we miss. Just because the big sites with the millions in ad revenues never mention them doesn’t mean that there isn’t growth.

Aurcade.com tracks locations based on user input. Companies like Bandai Namco have created game trackers so you can find where certain machines are and to quote one of those annoying clickbait articles, “the results will shock you” – at least when you’ve been told over and over again over the years that arcades no longer exist.

Over A Dozen New Games Are Released Every Year By Manufacturers To The US Market

Rhetorical Question: Why would anyone bother to spend the money that it takes to create an arcade title if there is no market of buyers to sell it to?

The Kotaku article mentions that there are new releases that Japanese arcades get to enjoy – the same applies here. We cover every possible real arcade release on this site for the West. We do a bit of coverage on developments elsewhere too. Perhaps it is time to do one of these videos again:

Video arcades do not see quite as many releases now as they did in 1982 by a large factor but they are still made. Expand that to redemption, video redemption and pinball and the numbers are higher.

Now I understand that a dozen titles or so isn’t very impressive when you look at something like Steam, iTunes, Google Play Store, PSN, XBL, eShop or another digital distribution system where hundreds and hundreds of games are released every year. Keep in mind that developers for those titles do not have to develop their own hardware (cabinet, controllers, display, sound system, PC, artwork) and deal with the challenges that such a thing entails (distribution, tech support, parts, warranty). That variable makes a big difference as arcades do have to deal with that factor.

Pinball in particular has been experiencing growth just in the past year as you can now buy new games not just from Stern Pinball but also Jersey Jack, Heighway, Spooky and some others. If it’s an obsolete form of entertainment then I guess everyone employed by these companies didn’t get the memo.

Millions are spent creating these games because the people making them expect to make that investment back and then some.  Jurassic Park Arcade (2015) had a budget of around $4 million. Other high end games like Star Wars Battle Pod certainly didn’t cost a few thousand dollars to throw together. These aren’t sold just to businesses either. I was often surprised by certain equipment I sold to homes. Golden Tee, anything Pac-Man, Big Buck and basketball arcade machines were requested for homes at any time of the year. The frequency for basketball machine requests into homes was a real surprise.

It is worth noting that the numbers of new releases in the US market and those in the Japanese market are not much different from each other. Last year the US market had 15 video only & pinball releases while the Japanese market only had 18 (using Am-Net’s release schedule on the left side; start with Sengoku World War 1 on 1/21 and down to “Bulic s diamond black” in December). Again the US is higher when you take videmption into account.

You would think that if the Japanese market was so massively strong as to not be considered ‘dead’ that it would have a significant number of releases ahead of the US one when the reality is that they are pretty much neck and neck with each other.

Daytona Championship USA 8 Player Arcade

In case you hadn’t heard, Daytona is coming back

One thing you will notice if you visit big sites like IGN, Eurogamer or Gamespot is that they like to categorize the systems that they cover. The same was done on magazine front covers back in the day so you knew what systems they would touch on inside. You will see various platforms mentioned but not a peep about arcades (to the credit of Japanese game media sites, they still do have Arcade sections, despite having about as many annual releases as we do).

Then there’s the reality that American developers like Raw Thrills are joining forces with Japanese-owned companies like Bandai Namco to produce content including a new Pac-Man, a new Galaga and a new Alpine Racer. They also just released a brand new Space Invaders arcade game.

Raw Thrills at the JAEPO 2017 trade show, Feb 2017

Game Makers Understand Trends For The Market Here; Focus on Exclusive Experiences

Generally speaking, Japanese gamers have certain tastes that are not shared by all of their American counterparts and vice versa. Thus, not all games sell on both markets. Round1 USA and Dave & Busters have tested or placed various Japanese games on location but so far, not much of that content has managed to capture the investment dollars of other locations. You have had Mario & Sonic Olympics or Luigi’s Mansion Arcade find their way into general distribution but if you are hoping to find Gunslinger Stratos 3, Silent Scope: Bone Eater or Dariusburst Another Chronicle then that isn’t the easiest task for most gamers outside of Japan to track down.

 

Likewise if the Japanese arcade goer is looking for the latest Golden Tee, then good luck in that quest.

The Kotaku article mentions how Japanese arcades respond to demographic trends and for any American venue, they do the same. It’s just a different mix of games. If you go to an arcade floor and it is 80% redemption and 20% video, that’s probably because the customer base responds to that mixture of games, catering to kids and families. You don’t see much redemption at bar/arcades because that caters to an older crowd. Either way, the business is responding to trends and giving their customers what they want.

Running a video arcade with no tickets, no alcohol and in a mall makes things interesting. I see parents walking around with newborn babies while a 70-year old man plays some pinball. Covering all demographics isn’t hard as long as you carefully pick your game mix.

Now we can certainly have a debate about the quality of games. Many titles these days do not demand much skill from the player.  We’re seeing controls become more simplified while cabinets become more flashy. Often when a game does require more skill to play, a ticket dispenser is thrown onto it to “hedge the bet”, just in case. But new product isn’t produced ex nihilo. These games are selling because that is what people want to play. I’ll applaud any innovative or skill game that can earn or par or out earn a ‘dumb-downed’ one. But if dumb downed games is the hot thing that people are willing to pay for, then that’s what we’ll get.

Sure, I would give this a spin but will your average modern American player try it?

That is why we’ve seen a focus on racing and light-gun games for such a long time on the video side. They can make their cost back in a relatively short time. If it is taking a game three or more years to pay itself off, you can bet that the next purchase that an operator makes is one that will be paid off in less than a year.

That’s also why we’ve seen an increase in videmption games along with the existence of companies who almost exclusively produce videmption content. They wouldn’t be around if there was no market for them to sell to. Whether we like it or not, that is also why so many facilities have a large number of redemption games. That is what the younger market often wants to play and it is what they have come to expect.

Where Japan has certain exclusive arcade experiences, these still exist here.  Alley Bowlers (more commonly known as skeeball, although that is a brand which gets applied to a genre, much like calling all tablets “iPads”), basketball machines, air hockey, pool, crane/claw machines, coin pushers – all of these are still very easy to find. Thanks to that, arcades here can offer a pretty diverse line-up of entertainment.

For Companies That Make Arcade Games, They Do Have Site Operations

The Kotaku article does make a valid point about the business culture for many game developers is an arcade one although there a growing disparity on this. World famous developers like Shigeru Miyamoto got his start specifically designing games for arcade use but his focus has been on home entertainment for many years since. For those thousands of developers out there making games for home devices (consoles or mobile), they either do not have an arcade background or are not creating any title with the arcade market in mind. The weird thing about the arcade business is that you essentially have two buyers – the operator who pays $7000+ for the game then that operator’s customers who might be paying $1 a pop per game. This requires a different philosophy on how a game should work versus a home environment.

The article also gets into how many companies have site operations – Sega, Taito, Capcom and other branded arcades a a very common part of the Japanese landscape and that is a bit different than what we see here. However, these tend to be divisions within a much larger company.

Companies like Namco have an entire division dedicated to either operations or a facility in the United States. Level 257 in Illinois is a prominent one. Sega used to have Gameworks, which operates independently now but over in the UK we saw an opening of a Sega branded location recently.

Sega Prizezone Front

Very few people know about this but even Raw Thrills is involved in a few site operations. Like many street operators though, these tend to be low key, remaining out of the spotlight. But they do exist.

An Arcade Culture Still Exists In The US

Speaking of trends, we’ve seen growth in two particular styles of locations in the US for the past several years – Family Entertainment Centers and bar/arcades. The former tends to be very expensive to open, with a full feature FEC costing millions in capital to produce. Bar/arcades don’t need quite as much money put into them but expenses can pile up quickly.

The reasons for the growth of these businesses is multi-faceted with one of those facets being culture. For some it is nostalgia of chasing high scores for others it is that social gaming experience. The nostalgia has driven Hollywood films like TRON Legacy, Wreck-It Ralph and Pixels – all of which caused my classics to increase in earnings for a time(and certain classic titles saw their values skyrocket on the after-market).

Donkey Kong Arcade Getting Play On the Popular TV Show The Big Bang Theory

It was also mentioned above how many arcade series are seeing revivals after a hiatus. Let’s list it out: Pac-Man, Galaga, Space Invaders, Cruis’n USA, Daytona USA, Time Crisis, Alpine Racer. A new Q*Bert has been in development but not sure if it will be released or not and Eugene Jarvis recently mentioned in our interview with him that they are going to try and give Defender the same treatment that Pac-Man and Space Invaders has. Making new arcade versions of these games wouldn’t be feasible if you didn’t have hundreds of locations willing to purchase these games, which cost quite a bit more than a home game console with a decent collection of titles.

Regardless the personal reasons, it brings people into locations to play. Whether that is to top the posted high score, their personal high score or to train for competition at a later date. I know of more arcades than just my own that posts the top scores on a white board or monitor as a way to incentivize people on their high score quests.

Then you have the whole eSports circuit and tournaments. Yes, console/PC gaming soaks up most of the attention there too but Play Mechanix has been broadcasting their World Championships for Big Buck Hunter on Twitch for the past couple of years and rewarding thousands and thousands of dollars in prizes in the process. Big locations tend to operate their own tournaments on everything from racing games to fighters to alley bowlers. Then you have the indie game Killer Queen Arcade, which draws in crowds of contesting teams to locations with that game.

Tournament frequency depends on the venue and the games they have but when you put big money and big prizes on the line, it brings people out.

Conclusion?

Just as arcades are not dead in Japan, they are not dead here in the West. Numbers of locations will ebb and flow with time; companies developing titles come and go with new ones taking their places; overall I would rather remain optimistic as to the possibilities of the future than to write them all off as eventually going to go the way of the typewriter. I personally feel that the exclusive attractions that arcades offer combined with a social experience can make them timeless – as long as people still go out of the house to do things. Perhaps you disagree with that or any of the other statements here – sound off below and let me know what you think.


7 Comments »

  1. SaraAB87 February 20, 2017 at 6:33 pm - Reply

    I seriously doubt arcades are dead, regardless if its a redemption type FEC or a classic type barcade or an arcade where you pay admission and all games are on free play it seems they are getting plenty of business here. As you say people need to get out of the house and do something and an arcade is just as much on that agenda as a theme park is these days. If console games were going to completely kill the arcade or another form of entertainment was going to kill it as people so often say, this would have happened a long time ago and you would not be writing for this site nor would you have this site and I would not be writing this comment.

    I draw a correlation to my area, in my area according to various news reports we apparently have 2-3 malls that are near the end of life as in so dead they are on their way out within the next few months.. I went shopping at one of these 2 malls over the weekend and it certainly did not look dead to me. Was it at 1982 levels, no it was not, but I do not think any kind mall is.. but I did not see an entire mall of closed storefronts or anything like that. I have seen dead malls before and these malls that the news claims are dead are definitely not dead. There was plenty of activity and only a couple closed storefronts which you will find anywhere. It certainly was not a plethora of closed stores with only 1-2 stores left in the mall as I have seen at other malls in my area in the past. I shopped at these same malls the news is claiming are dying during the holidays and the malls were filled with people and there were lines at every store, that is not dead. I am not sure who would want to close a mall that is quite active from what I see. Is a mall going to be at pre-holiday levels during Jan and Feb.. no its not.. is it going to be full of shoppers on weekday afternoons… no its not…. are stores going to close after the holidays, of course they are it happens every year. Businesses have to accept that profits cannot keep going up for forever, there has to be slow times and there will be slower years than others due to many factors. But my gosh have a slow period and now suddenly the whole property is dying….

    My point is the more you say its dead the more its going to be dead. If constant news reports about arcades dying or malls dying are coming out and people are reading them they are less likely to go to these places, thus making them even more dead. Though I haven’t seen too many reports from the USA about arcades dying lately so that is a good thing.

  2. Voltz February 20, 2017 at 10:15 pm - Reply

    I think I’ve heard enough talk about ticket, redemption, app ports and of course “classic” games. We still have to do something about the games that Japan is still pumping out and we have to do something about the hardcore gamer demographic that has been gone since the late 90’s

    I’ve had a talk with different people about the industry in these past few months and the one thing that strikes out the most is this payola scheme that $$$ only lasts 5 minutes and there’s really nothing in it for those who are skilled anymore. I understand this is a business in making money, but times like these the players need something to justify the means rather then a quick thrill ride that jips $2-3 because the settings were meant to force continues. How can we address that? People want the whole experience these days.

    • Voltz February 20, 2017 at 10:23 pm - Reply

      I’m disappointed that Gunslinger Stratos is up to 3 already and I’ve never been to a location that has even the first one yet. It’s like I said a few years ago that we need a hard network of locations and titles on hand, yet here we are in 2017 still playing this guessing game of what’s inside the arcade and will my favorite game be there next time?

  3. Steve Zap February 21, 2017 at 5:21 am - Reply

    Long live PINBALL! Check out Modern Pinball NYC in Manhattan.

  4. Chris Friebus February 21, 2017 at 9:48 am - Reply

    Arcades may not be ‘dead’, but there is no doubt they are nothing more than a niche market for adults who remember the heyday, not for the average kid looking to have fun after school. My kid is 11 and expresses no desire towards visiting an arcade, partly because there isn’t one to visit locally. I live in SoCal, and I haven’t seen a true arcade (one not 90% redemption) in 20 years. I am a rabid fan of pinball and would have to drive 30 miles into LA just to play at a location with more than 3 machines. The fact is, going to an arcade for most people now involves making plans like it’s an event, not just casually deciding it’d be fun to go play some games. Even our local bowling alley has ditched the arcade room.

    I would love to see arcades make a true reappearance. I think one of the reasons pinball is growing in popularity again is because it is a true mechanical machine that plays completely different from digital versions. It’s also still affordable to play, unlike modern video games that cost $2-3 a play. We likely will never see the popularity of arcades like I did in the 80’s and 90’s, mainly because of the type of games those were and how that’s what you play on your phone now. But most will feel the scene is dead when finding an arcade involves a deep Google search rather than just going to the local mall.

  5. PC Engine Fan X! February 22, 2017 at 2:17 pm - Reply

    The very last indie arcade in Modesto, CA, closed it’s doors back in May of 1998 (due to losing it’s business lease). There hasn’t been another independent arcade business there since then. Heck, I’ve never seen a “barcade” type of arcade open up there for that matter. I’ve had to resort to getting a few superguns & a Japanese candy cab along with the obligatory arcade Jamma PCBs to satisfy my arcade gaming hobby. The current stash of PCBs that I do own will put all the local FECs (Family Entertainment Center) and street locations to shame (considering that those type of arcade PCBs will never see the light of day in a public setting — so thus a private and personalized arcade for one person, myself, is the way to go (sad but true in this day of age). Sure, during the “Golden Age” of the American arcades during the early 1980s, we’ll never see it ever again (it was the newness & never knowing what new arcade game would be released on a weekly basis type of deal + plus the fine art of “jamming” — the act of placing a row of quarters to :stake your turn next in line” to try out the latest arcade game that had come in direct from the arcade distributor or manufacturer).

    As an interesting experiment, I tried “jamming” a quarter while another fellow was playing the Atari Games’ Tetris arcade game back in 1991. After the guy’s current Tetris gaming session was over, he took my quarter and played another gaming session without saying anything. Back in the early 1980’s, there was the unwritten rule that the current arcade gamer was to play their share of games with the quarters or tokens placed on the arcade game’s marquee and leave so that the next player could try out the latest arcade game — it was the act of being polite and civil (unless if you wanted to start a fight over stealing someone else’s quarters or token lined up to play next in line). The old-school grizzled arcade gamer, like myself, from the early 1980’s era will recall the fine art of “jamming” with fondness.

    I think that a “barcade” type of arcade would do quite well in Modesto, CA today — it’d just be a matter of getting the proper liquor license, hire a bartender, get some arcade games + pinball machines & you’re good to go. It’s been said that if your small business survives it’s first five years being in business, you’re better off than most small businesses to begin with. I’ve talked with one former co-worker whom was a bartender in the past and she said that she’d earn $500 in tips on any given night — not too shabby in this day of age, folks.

    PC Engine Fan X! ^_~

    • Voltz February 23, 2017 at 6:42 am - Reply

      If only more bar owners would focus on trying to add real games to their establishments rather then those goddamn slot machines. I found out about one bar next to my location awhile ago that was hosting a few titles and I didn’t know this up until after the place had closed permanently. Green Bay used to have something like 3 big arcade centers between two malls and a spot just outside of one 15 years ago. Once those were gone, there were at least two PC gaming centers that lasted half a year, then that was it. Just all bars everywhere you can think of. One of them is at least part of a chain that I wish would host a Killer Queen setup at the very least.

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