It is time to look back at the year and see where we’re at as an industry, with this ‘State of the Industry’ report. I’m hearkening back to Play Meter Magazine with this idea, where that trade publication used to present a ton of valuable data about where the arcade & amusement business was at, and possibly providing a hint to where we were are headed.
I’ll start off with some quick website stuff.
Having reached our 17th year in existence, the blog here continues strong, although I’ve seen more growth on the YouTube side than other social media channels. YouTube is currently at 17,200 subs and I started a member side of things. Thanks to everyone, regardless of being a subscriber or a member, for supporting the site in that regard. I’ve done more news videos due to increased interest over there but no worries, no plans to end the site here are in the pipeline.
I will be livestreaming about this subject on the 1st or 2nd of the New Year, so stay tuned for that if you care.
Readers to the blog come from all over the world but most come from the USA, followed by the UK, Canada, Japan, then Australia. The disparity between the US and everywhere else is quite large though. This changes when looking at viewership on YouTube, where the US is still #1, but that is followed by Indonesia, the UK, the Philippines, then Japan.
Ted has also joined the site in an editorial capacity; I am happy to have the extra perspective and assistance from him. I recently changed the Arcade Heroes logo too, although I keep meaning to make a couple of more minor adjustments – I’ve just been super sidetracked from doing that.
How Is Business?
How was business for you in 2023?
For the handful of other operators who answered my “how is it going” question online, reports are mixed. Some saying this year was better than last, others saying it was worse. Here’s some feedback I got on Facebook from some operators that come from across the land:
For myself, I operate an arcade with about 65 games called Arcade Galactic in Salt Lake City, UT. I’ve been doing this for 15 years and in that time have been able to see a lot of boom & bust, economically speaking. Between 2020-2022, I operated a second location up in Ogden, UT but that was not doing so great and combined with some other factors, I closed it down on Dec. 31st last year. I sold some equipment off but took the rest to my original location, which definitely gave it a boost as we started things off.
That said, 2023 is one of the weirdest years I’ve encountered, and I’m not 100% sure what the cause is. I have some guesses however.
Let me set it up for you first. Generally speaking, my business ebbs and flows like a wave – there are two peaks and two doldrums in the year, with the peaks being Summer and Christmas, the bottom being around the time school gets out and when it returns. This is not how it operates for everyone, particularly venues located in tourist towns. Their peaks will depend on when tourists come to the area.
This year has sort of reflected the pattern but not entirely. It started off strong, then outside of a blip in July, it’s been increasingly weak. November was my worst month of the year – something that has never, ever happened. Usually with holiday shopping kicking off around Black Friday, the month tends to be the 2nd or 3rd best performing time of the year. So for it to perform so poorly, it does set off some alarm bells.
There are a number of economic indicators that one can look at when determining why business is good or bad(or determining where things are headed). These include but are not limited to:
- Real Unemployment (not just national but local)
- Labor force participation rates
- Consumer Spending & Sentiment
- GDP Growth
- Interest rates
- Retail sales data by quarter
- Stock market/investing performance
- Trade balance/deficit
- Consumer debt
- The present regulatory & tax environment
…and more. I admit that I don’t follow every single one of these like a hawk, while there are a few other things I regularly look at, just to help me know the direction that things are headed in. Any business also has to deal with competition, which can be somewhat of a wildcard (depending on the area).
From my observations on several of these indicators, things are mixed although a lot of them are consistently pointing in the negative direction as of late.
You also can have industry-specific factors, one of which has stood out to me this year: Movie & theater performance.
What do movies have to do with arcades?
Aside from the fact that some theaters have a lobby with an arcade attached to them, film & arcades are both Out Of Home (OOH) or Location-Based Entertainment (LBE). With a few thousand theater locations out there, and plenty of high-profile, well-marketed content to back them up, the performance of theaters helps you know how arcades might be doing. Our disadvantage is that we don’t have $150 million marketing campaigns promoting a single game, multiple times a year, like movies do. That said, it’s still fun that you have to leave the house to enjoy, and in both cases, it is more social.
In my case, the good or bad performance of films is directly tied to how I do. Now this situation is not present for thousands of arcade locations out there. Speaking to my specific situation – I’m in a mall, with an IMAX theater right down the hall. They have no arcade attached to them. Overall, they bring foot traffic and arcades tend to thrive off of that. Ever since they opened their doors in 2012, I have known which movies are a hit locally and which ones are not, just by looking at how things go for my arcade every weekend. Family movies in particular help my business a lot.
While this year has seen more films hit the screen than we’d seen the past couple of years previous, the big corporarions have been been putting out a lot of bombs. Disney (which includes Marvel, Lucasfilm, Fox) in particular has had an astounding number of flops in 2023 and its bad enough that one Disney investor is trying to kick Disney CEO Bob Iger out. More positive recent moments like the ‘Barbenheimer’ effect and the success of the Super Mario Bros movie have shown this isn’t always to be the case, but these don’t stop the overall cinema picture being quite uneven.
As a quick tangent, when I see movie critics or read articles/social media posts of people demanding that theaters die, I can’t help but cringe. The amount of help that they bring to surrounding small businesses isn’t the kind of thing that deep pocket investors and economic journalists pay any attention to, but it is there and it is important for helping small business thrive. If theaters die, so will a lot of small businesses – many arcades included.
Back to the kernel of the discussion, I also have a giant FEC competitor further down the hall, where they take in business that I otherwise would have enjoyed. I regularly overhear customers saying “let’s go to that other place” as I don’t have something that they were looking for, like bowling, laser tag, or a game I don’t happen to have. I do what I can but with my space and budget, it is a challenge.
They have only been around since the end of 2019 however, so I have data that sprawls back to 2008. I can see that with or without the FEC, my performance is tied to film performance to a strong degree.
Is the poor performance that myself and some others are experiencing all down to Hollywood tripping over their own feet? No, of course not. That doesn’t help though. Here’s hoping that things will improve next year.
Trade Shows & Organizations
Let’s shift our focus now to some positives. Each year, the arcade business as a whole holds a number of trade expos, all over the world. This year really saw them all come back to form and they were well-attended, which is a good indicator of how things are going within our particular sector. IAAPA 2023, the largest of the bunch, saw record numbers. My most popular booth tour video from IAAPA 2023 was Raw Thrills; You can read more about it here, in case you missed it.
The AAMA, which represents equipment/product manufacturers, raised around $400,000 for childrens charities this year. They had a Gala in September, although it is usually low key.
Earlier in there year was Amusement Expo, which I attended and it was a good show. Raw Thrills’ booth tour was also the most watched from the AEI booth vids, but since they already have IAAPA, here’s Sega:
JAEPO did garner a bit of attention as we see down below, while EAG in London caught attention among European readers.
Which manufacturer put on the best display of games, in your view?
New Game Releases 2023
Now onto games that have been released this year. If I counted everything right (excluding Japan), there are 57 new games that were released this year. That does include videmption-only and VR but even removing those, the number was higher than usual (40). Sadly, a vast majority of these games get zero mainstream press; This number also doesn’t include redemption-only pieces, which would push the number much higher.
The “usual” would be in the 25-30 range. Of course these numbers were quite different back in the “golden age of video games” (where you could see 300+ new games per year), but an increase is an increase, so no complaints here.
Why the increase, you might wonder? Demand plays a strong role here, although it takes a good amount of time to create a game from scratch (roughly 18 months, for most video games). There is also still the “pandemic glut” of delayed developments that they are still working through, although that will continue diminish as we get into 2024.
Higher demand can only come from a large number of locations out there who regularly purchase equipment. The more arcade rooms out there, the more buyers there are for the games.
Not every location out there is necessarily buying new equipment either – unfortunately one negative result of getting through the past few years has meant accumulating a bit of debt. It isn’t wise for me to take on more right now, especially with the downturn I’ve been going through this year. I wonder how many others are in a similar predicament.
Along those lines is how expensive most equipment remains. There are various factors that play into that, but with most games pushing $20k or higher, it makes running a smaller operation even more difficult to handle. Hopefully by the time the next IAAPA rolls around, we’ll see some of these numbers come back down.
All that aside, which game that launched this year is your favorite – if you’ve had a chance to play any of the games found on our 2023 release list? Which one might deserve an “Arcade Game of the Year” award?
Stay tuned for an Arcade Games of 2023 showcase video
Coming Soon 2024
Here on January 1st, I will launch the release tracking page for 2024. Thanks to IAAPA, we know of several titles that will be released this year, including Apex Rebels (Sega), Asphalt Moto Blitz DX (LAI Games), Godzilla Kaiju Wars VR (Raw Thrills), Goldstorm Pirates (Bandai Namco), Taiko No Tatsujin USA Model (Bandai Namco), and plenty more.
I’ve also been told about some new games headed to arcades on exA-Arcadia, including one that I think will make some waves (everyone knows the name). Unfortunately until the announcements come, we’ll have to wait to chat about them in detail, but if you are into fighting games, the exA will be a good place to look (Omen of Sorrow AC and Phantom Break Omnia were shown off at IAAPA).
One thing I wish I could do is tell you exactly how many arcades are in operation out there, which is something that Play Meter would publish. In their last SotI issue, they estimated 2,500 arcades, 3,500 FECs, and almost 161,000 street locations. Given that the industry was on a strong growth trajectory up until the beginning of 2020, those numbers certainly increased – but how PM came to those estimates, aside from polling their readership, I do not know. Here’s a snap shot from that report:
Since this site started, we’ve been covering new locations, often combined into posts called Location Watch. We did five LW posts this year, which you can find below. From those, I’ve counted 202 new locations that opened their doors all over the world – but I am not claiming that this covers everyone. We do our best to cover every new location that opens, but there are always a few that elude our radar.
To be fair, there have also been some closures out there, which frustratingly tend to grab many more headlines than any place that opens. The pace and number of openings is far larger, however.
While I mentioned that my location and some other more indie operations seem to be struggling, FEC growth continues to be a strong driver in our industry, which in turn gives us the kinds of games we see. That is why there are so many games with big designs and bigger price tags. I can’t help but surmise that the strong push for games that cost well above $20,000 is harming the smaller operations though – there are so few games below $10,000 anymore that it really limits options for venues that wish to add something new to the mix. As it is, most are going to rely on used games when it comes down to it, although in my experience those tend to perform behind new (most of the time).
For some stats here, Dave & Busters/Main Event has a combined 220 locations at present (162/58, respectively); Round1USA has 50; One of those mentioned throughout the LW posts is Bowlero, which has expanded across 13 states this year. I’m not sure how many locations that Chuck E. Cheeses/Peter Piper Pizza has at the moment – they used to have well over 1,000, pre-bankruptcy – but as this infographic from their CEO shows, they’ve also had a great year and put a lot of people to work:
Those aren’t the only FECs and chains out there of course, but they are some of the higher profile ones.
Top 10 Posts & Videos
With the AH YouTube channel growing at a decent pace, here are the top 10 videos. None on the list were uploaded this year though 😛 The top video is #1, and that’s my first video to crack 500k. I did record a full playthrough of The Walking Dead as found on Big Buck Reloaded, but then the video had no sound (which was a chance from the norm on how BBH outputs audio) :/ I will give it another shot soon.
For videos I published this year, the direct capture of House of the Gundead was the most watched of those.
Which stories were you interested in the most this year?
It’s not much of a surprise that the sequel to Deadstorm Pirates has garnered a bit of attention out there, ending up on the top 10 list twice. As I’ve noticed however, news about games in Japan is what everyone wants to read, even though most readers to the site aren’t in Japan.
As I just mentioned, you crave news from arcade games in Japan… even though many of these games won’t get official support in the States or Europe. That said, many do get the chance to come to the US thanks to Round1USA exclusives, so perhaps that is where some of this interest comes from. Let me know in the comments below why Japanese game news intrigues you more than Stateside stuff – as I’m genuinely curious (I have a hunch or two about it, but I’d rather hear from you).
The most read story on the site from those published this year was the location test for Taiko No Tatsujin by Bandai Namco Amusement America. The strangest part of this news however has been that BNA has not brought the game to any amusement-facing trade show, and as of today, the game is still in the test phase. So, if it does get a release, it’ll be in 2024 but as to when that might be, we don’t know.
Thanks for supporting the site and channel – we’ll see you in 2024!