Welcome to the annual Arcade Heroes Year-in-Review, where I take us back down the memory lane of the past 12 months, and review how things have gone in the industry, at least from my perspective. If you are curious about last year’s review, click here.
I’ve been wanting to do a video or livestream about all of this but I’ve been cursed with a cough that just hasn’t gone away since November, making doing live videos a bit difficult. Here’s hoping I can do something soon.
How Is The Industry Doing Going Into 2023?
This is not exactly a rhetorical question – I’d love to hear from other operators on how their year went. I asked this question on a closed Facebook group with operators and received a few responses stating that this was the best year they’ve ever seen, even better than 2019; Checking a group known as FEC operators the general sense I get is that business has also been solid or also better than ever (one post I saw showed the difference in the number of parties that the FECs have seen 2021 vs. 2022 and it sounds like the party room market has been booming). Some of that is attributed to redemption overperforming where it used to be; It also sounds like more places are converting over to cards and that is also pushing an increase in business.
I’m not sure how many locations have raised their prices to keep up with inflation though – there have been many reports of FECs raising prices this year. This could be skewing the “real” numbers (i.e., earnings are higher because they are charging more while actual plays are the same or lower) but overall it anecdotally sounds like it’s been an awesome year for the arcade business.
Unfortunately it has not been a great one for the movie theater biz (which also will likely be affecting theater lobby arcades) and the tech world has seen thousands of layoffs and very bad numbers on stocks; For me personally it also hasn’t been great, which I’ll get into at the bottom.
I definitely reported on more new locations opening their doors this year than last, which is not a surprise; the number of game releases has increased as well, thanks to the industry catching up on the various issues that have lingered since the lock downs. Unfortunately due to factors like inflation and supply chain (production & shipping) issues, the costs on new games has skyrocketed. Where a racing game used to be $7500-$8200 per unit, now you’ll be quoted $10,000-$12,500 for the same. Then there is the trend of moving towards Super Deluxe models which are great for FECs and can earn extremely well…but at those prices and sometimes sizes it becomes untenable for smaller ops.
Of course my issues could certainly be more about my business model – I can’t do the Principal Skinner meme and think that I’m right and everyone else is wrong. But I’ll get into that later.
One of the better barometers we have as to the health, or state of the industry, is in new openings vs. closings. This year has seen a few new places open their doors all around the world, although in some cases these were still investments that started back in 2019. I’ve been surprised the most by arcade growth in India and the Middle East; Timezone is one chain that has certainly been expanding like crazy. Unfortunately we have heard of closures taking place or looming over in Europe, particularly the UK, where electricity bills have skyrocketed to unsustainable levels in many cases. Here are the Location Watches published on the site in 2022.
If it wasn’t for the exA-Arcadia then the games lists of 2020 and 2021 would have been quite sparse. Fortunately, this year has seen this aspect of the arcade industry improve, with Bandai Namco and Raw Thrills in particular showing a much stronger Amusement Expo and IAAPA than they had in 2021. Of course, some of that content we saw at IAAPA is for 2023 – but this is also one area where inflation + supply chain issues is a problem.
I will be posting a video of the 2022 games releases here soon (I’ve been so busy between running my arcade, prepping for closing one of the locations and other end-of-the-year things that I haven’t been able to spend as much time working on this as I wanted; That plus trying to get an accurate list but everyone is out on vacation, making it tough). Until then, you can check out the releases here.
As one item of interest, I did get an email from Betson right before publishing this stating that RaceCraft EVO by Tecnoplay/ICE is shipping now. It’s still not showing up on ICE’s website for some reason but various distributors have it listed, including Betson.
What is your favorite game released in 2022, if you’ve had a chance to play any of the releases? What would be your Arcade Game of the Year?
Top 10 Arcade Stories Of 2022
What was your favorite story of 2022? Anything you think should get attention again?
There were a ton of racing games announced at IAAPA but interest was highest in the upcoming return of Need For Speed to the arcade. THis will likely be launching in Spring 2023
Speaking of NFS Heat Takedown, at IAAPA I did see a photo of a Deluxe version but was asked not to share it; Jdevy just found a photo of it on test out there which is going around social media, so that means its fair game now. One interesting aspect of this is that it uses a motion base that was first developed by Adrenaline with their never-released Drakons game. Note that since this is a location test, it’s a prototype and the final cabinet may very well change; It’s also too bad that this pic was snapped when one side was out of service, although I can’t read the text to understand what caused the problem This is currently at In The Game – Icon Park, Orlando, FL.
My Own Arcade – Postmortem On A Second Location
If you are new around here, my name is Adam, and I own an arcade business. I had the idea to start sharing some thoughts from that perspective in video form this year and it seems to have generated a lot of discussion, particularly when it comes to the performance of retro games and pinball machines in a modern environment.
When 2022 started, I had two locations in operation in the state of Utah, called Arcade Galactic. (used to be the Game Grid Arcade but long story as to why I had to change the name) I originally started in West Valley City (which is just outside Salt Lake) in 2008; The 2nd one is in a northern Utah city called Ogden (east of the Great Salt Lake and very close to Hill Air Force Base). Both locations are in shopping malls; The Ogden one is in more of a prime location within the mall and the mall overall is nicer. It still has a Dillard’s and my location was right next door to a Victoria’s Secret. There are more recognizable chains in the mall where Ogden is at, including Spencers and Hot Topic. I think it’s due to this that my rent was a bit higher in Ogden, despite having less square footage. I picked what I thought was a really good spot within the mall, just steps away from the central food court area. Just keep in mind that my overall cost of business in Ogden is a bit higher than West Valley.
I went to Ogden as a sort of “Plan B” – in West Valley, a giant multi-million dollar FEC opened up at the other end of the mall at the end of 2019. I instantly saw earnings plummet 25% that month. After lockdowns had passed (they were not as severe in Utah as a place like California and I was able to open back up in May 2020), business was very slow but it was going; It was a worry that the FEC might force us out of the mall or would just soak up all of the business. In August 2020, a mall in Twin Falls, ID reached out to me and I traveled there to check it out. While I ultimately didn’t feel like it would work out for me, that planted the seed to try a second location. There were some great deals on used equipment at the time and I could use some of my games at the original location to shore things up. Unfortunately, most malls in Utah are already dominated by an FEC like Round1USA or Dave & Busters. The Newgate Mall in Ogden didn’t have that, although they have a Cinemark movie theater with a decent, but small, “Starcade” attached to it. While it would cost me more to operate, the mall was nice, the foot traffic was solid, so I went for it.
One issue that I didn’t realize going into this however, was that some certain people running the business license division for the city of Ogden apparently find it too difficult to answer an email or pick up a phone when there’s a concern – they held up my business license for more than a month and I couldn’t get an answer as to why. I paid for everything that I needed to and got all of the inspections taken care of but when I would call or email asking about the status, I would get nothing. After complaining to the mall management about the hold-up (they were wondering when I could open too), the General Manager called up the mayor of Ogden and found out that some idiot there thought that I was opening up a gambling parlor. Gambling is illegal in Utah, but had the person got off of their duff and just come down to take a look, or researched that I’ve been operating an arcade for over a decade prior to this, then they would have hopefully realized that their concern has zero basis in reality. Fortunately the call to the mayor got them to issue the license – no “sorry about our lazy incompetence” message though.
2021 was all right but didn’t perform quite as well as I had hoped. One frustrating thing I often observed was foot traffic would be great outside of the store – but few people even glanced our way, much less came inside. We figured that lighting might be a problem (it being too dark) so we made some adjustments and tried some experiments (such as having the room lights on). Nothing really seemed to sway people, but I did put my flashiest games up front to help. This video doesn’t show the most recent layout but it does show more games that the video above (I sold my Daytona’s shortly after filming this; Put House of the Dead Scarlet Dawn where Luigi’s Mansion is and took my Raw Thrills TMNT up there too)
At the beginning of 2022, business was doing well across both locations – not 2019 well, which is when I saw my best numbers since opening in 2008, but still much better than 2020, for obvious reasons. Unfortunately when May 2020 summer hit, I started to see a noticeable hit at both locations, with it being more prominent in Ogden. That trend continued throughout the year, where looking at year-on-year earnings, 2022 was behind 2021. When it came time to renew my lease this past October, I extended it to December but things really didn’t improve. A new bar/arcade opened in November and they were making a killing – just their games made twice as much as what I did in the same month. We made less in December than we made in January of this year – with these considerations, the best answer is to close it down.
So why did it fail? I put as much effort into marketing it as I did my original location, perhaps more – we had a party room in Ogden which we don’t in WVC; I bought an article in a local magazine to promote it, the Newgate Mall helped me promote it online and elsewhere by connecting me to other local business owners – I even bought a billboard ad for a while. We held tournaments there with the pinball guys on occasion and as mentioned, foot traffic was often good.
I can blame some on the economy perhaps – inflation & gas prices hit record highs as the summer started, and both locations do rely a bit on movie releases. This is more true of WVC than Ogden however, as the theater in WVC has no arcades in their lobby, whereas Ogden has the Starcade mentioned. I had more games than Starcade but it’s still competition. Another factor that has affected us in Ogden are the hours. The movie theater can open their arcade whenever they want. We had to be open right at 10am, closing at 8pm (switched to 9pm in October). The mall was super strict about times – security often threw a fit if we didn’t have everyone out the door right at 8, and they would also lock out that part of the mall with a gate (security doesn’t care as much in WVC, which allows us to get some late business from people waiting for their movies to start). But overall we noticed a very odd trend in Ogden where people just didn’t like to be out late. Often the mall would be completely dead after 7pm, which seems strange to me and I’m not entirely sure why. But these do seem to be factors.
As mentioned, movie theaters are on the ropes these days and for both of my locations, we rely on the business that those bring to the mall. When they aren’t doing well, then neither are we; This is why I’m not a champion of the Death of the Movie Theater. Theaters really do help out more small businesses than themselves. Of course, much of this is on Hollywood’s shoulders. They need to make more Top Gun: Mavericks and fewer Strange Worlds, but I also get that streaming is a more attractive option than going to a theater much of the time.
Back to thinks I can control, perhaps I had the wrong game mix – we did find a few games that earned much better in Ogden than in WVC, but also some vice versa. It’s kind of tough (well, mainly expensive) to constantly be swapping things out to find the sweet spot though. I did notice that in Ogden more people walking by were women and children, whereas arcades tend to draw more men – perhaps I should have focused a little more on kids games and less on hardcore/adult ones. Interestingly enough, pinball did do slightly better in Ogden, as I think there was less competition for that in the area, but with the opening of the new bar/arcade which is mostly pinball, we lost that advantage.
I also have done something that in hindsight may not be wise, as it confuses everyone. Since I have to be open at either 10am or 11am every morning, I don’t turn everything on. It’s a waste of electricity, particularly when it can be a few hours before we see anyone even set foot in the arcade. We have signage to explain we’re saving power and I will tell people that too, saying “if there’s anything off that you’d like to play, let me know and I can turn it on for you.” But I’ve seen reviews where we get dumped on for this, saying it’s “odd” or they make the comment “most of the arcade is broken.” I’ll also occasionally see people passing by outside commenting “it’s all closed.” Perhaps I just need to eat that extra cost and turn it all on every day. While I’ve saved a few hundred a month on electrical bills by doing this, perhaps I’m losing more than that just from people who expect an arcade to be 100% operational regardless.
One place I know I did not excel in was promoting the party room. We did get some parties yes, but parties are huge money makers for most arcades out there. I should have been much more aggressive in promoting it but this is an area where I lacked experience.
Of course, where it sounds like everyone else is swimming in dough, this indicates it might be something else beyond these factors. It is quite possible that my business model is at fault here – it’s a straight up arcade that uses tokens. Just walk in, buy tokens, and play video games or pinball. No drinks or food or ticket redemption, although we do have an old crane machine in Ogden. Perhaps I should be going the bar/arcade route or the free play route or the redemption one. As much as I personally loathe redemption, consumers strongly disagree with me there, so perhaps it’s time I relent and copy everyone else.
I’ve long felt that the issue of copying everyone else is that then you don’t stand out…but if standing out isn’t successful then I suppose there’s no value there. They’re doing what works, I’m not and expecting to get a similar result. Granted, my original location, despite competing with an FEC within walking distance, is still managing and doing all right. Pretty much every month sees it doing double or more (like 2.5x) the business that Ogden did. So location does matter a lot but I still am wondering if I should be doing something different than what I am presently doing.
Funny how I’ve had several people lately (including just an hour ago) telling me how they love that I still use tokens…but reality is that consumers prefer cards and it shows with the earnings. I know that I should have a card system but that’s easy to say when you’re swimming in money and spending $25k or so is an afterthought – unfortunately for me, I still can’t afford one of these systems. That said, once I’ve settled the closure of Ogden, such a system is likely going to be my next purchase.
For a last thought, I will admit that I’m feeling burned out on operating but this is in part due to working 6, sometimes 7 days a week at 11-13 hour days, ever since I opened Ogden. I’ve been able to hire help in Ogden but the company as a whole hasn’t been making enough where I could hire someone to cover more, so I’ve been the one working the most. Being at the arcade all the time when you have disrespectful customers (I’m ready to tear out the shifters on my MaxiTunes as I’m tired of constantly having to ask, sometimes argue with, people about treating those nicely). I barely have seen my family in this time where I have two teenagers and a child where dad is never home and never there for their events because he’s always working. This is probably one of my bigger motivators for closing Ogden down – there’s a certain point where it’s not worth the time and effort you’re putting into it and I’ve definitely crossed that point when Ogden started to slide. Maybe it failed because I wasn’t giving it my all, that’s possible. But I don’t feel like I have any more to give (on top of this, I also have been working a second job and the YouTube/blog stuff).
So, those are my thoughts on this failure – perhaps as an outsider, if you’re still reading this far, you can see something else I screwed up on. Just don’t take the failure of one of my locations as a sign that the End is Nigh for all arcades out there. There are many, many factors that go into the success or failure of any business. Arcades can make money – no, most won’t get rich from it (by what I see, a majority become wealthy in some other business, then run an arcade business or chain with the gains they made elsewhere), but they’re still a great way to have fun and escape the world.
See you all in 2023!