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State of the U.S. Arcade Industry 2004
Gamaroo writes "1up.com has posted an article on arcade game machines, the loss of the profit margin and the future of the industry. In their words: "There was a time when an arcade operator in America could buy a Ms. Pac-Man machine for less than $1,000, let it sit in an arcade, bar or storefront, and see that game make back over 30 times the initial investment. In 2004, that kind of profit margin is little more than a pipe dream.""
I route arcade machines (place them out in locations to be played) and repair and convert them.
There are two major costs of these machines. Monitors and PCBs. A standard arcade game uses a 19" monitor (cabaret, the smaller uprights, tend to use 13" monitors). These 19" monitors brand new range from $200 to $500, and used ones need to be in good condition to be useful, so they're not much cheaper.
The PCBs, mostly the entire game, except for some of the interchangeable systems such as the NeoGeo MVS and the Naomi Systems, are quite expensive. Although these are mostly based on how new they are and how popular they are, if you're lucky you'll find a PCB for a game that may bring in quarters for about $50 on eBay. For a game like Tekken Tag Tournament, you'll be spending $250-$350.
Then there's the cabinets. You need solid enough wood to hold the monitor in the upper part of the machine and make sure people can't easily access its guts. At least $75-$100 to build your own from scratch, and at least that much to buy a decent cabinet to convert to a proper machine.
The controls are relatively cheap. Buttons are about $1-$2 each, $3-$10 for the joysticks, $25-$40 for the trackballs, etc. Since these are universal, buying in bulk if you do what I do is a way to save money without anticipating which games you'll have in the future.
Okay, that's out of the way. For me, I'll spend between $300 and $1500 to purchase parts or fix-me-ups and rebuild them into fully working and restored games. To make it worth my while, I have to assume that I'll make that money back in under nine months, or I feel it'll be a costly venture. This is just my estimate, since I'm the only one who works on these machines, I have a much lower overhead.
When you route a machine, instead of having them in your own location, the standard of the industry is split. That is, for every two quarters you get in a machine, one goes to the location and one goes to you. They pay for the electricity and just make sure that the machines aren't abused, and I keep them working and buy more machines. In the end, I have a higher cost, but I also choose where machines go more than the locations and can always sell them if I need the space or money.
Yes, arcades will be unprofitable these days for one specific reason, and that is what I described above. To drag people into an arcade, you need to make sure they want to go there. When I route machines, people are going to the location mostly for the location first, and if they have spare change, or a need to play, they'll plunk quarters into the coin slots. For an arcade, they're going to the arcade mostly to play the games, so you need to make sure you have some games for those players.
The investment to insure you have enough of the big machines or new machines, like DDR or SNK vs. Capcom, is extremely high. A DDR will set you back $15,000 easily for a two player machine with a new mix inside. Plus the space for this will drag your rent upwards. When I route, I just need to make sure there's enough clearance at the location, where they pay the rent.
Then, if you have too many people coming just to play games at an arcade, you need to make sure you have enough copies of the popular games. If you have one DDR, one SNK, one Ms. Pac-Man, one Galaga and, let's say, one air hockey table, along with several other less-played machines, people will be waiting around to play the popular games, and may just leave and not come back. Therefore, many copies of these are very necessary, higher costs. For me, having one DDR, one SNK, one Ms. Pac-Man and one Galaga in a location will be perfectly fine, as there won't be as many people playing at once, and people will return to the location for the location anyways.
In conclusion, arcades are a dying breed. They need to find a new angle to survive, such as what sportscard retailers did when sportscards were bombing (they got into Magic: the Gathering and other games), or what comic shops did when the comics indust
Human nature is the same everywhere; the modes only are different. -- Earl of Chesterfield
Problem is, it takes even more skill to find a decently set-up and clean Addams Family pinball machine these days than it does to play it. In other words, finding a good pinball joing is damn near impossible.
> Anybody know of a pinball museum with accessible games to play?
Google for a pinball collector named Tim Arnold. He has semiregular "fun nights" in Las Vegas that'll give you a chance to play some of the machines in his astounding collection.
Tim has also set up a nonprofit to found and fund an open-to-the-public pinball museum that would be a welcome addition to Vegas.
If you're in the Bay Area, be sure to attend the annual CA Extreme classic coin-op convention in San Jose, and Pin-A-Go-Go (link to one of many 2002 show reviews) in Dixon, near Sacramento.
I was a fan of DDR before the US arcade release a few years back and after seeing how much money it was pulling in at the metroplex Putt-Putt I decided to try getting into the arcade business.
I went through all the steps, getting a business license, registering with the state and county and found my first machine....an import DDR 3rd Mix Korean machine. It cost me about $1500 for the game and shipping from Korea to get it here. On the same note, a new US version machine was about $7,500. I cleaned it up and worked out a deal with a local store owner and put the machine inside. At times the machine was pulling in over $500 a week. I was splitting the profit with the store owner (a suggestion given by other arcade operators) so it was making me $250 a week at times. On average I would say it made me about $125 a week. This was in a town of 30,000 people about an hour from any major city. People would drive down from the bigger cities just to play it.
I eventually added a Beatmania IIDX 2nd Style machine to the lineup (later upgrading it to 4th Style) and a sit down Neo-Geo 4-slot. They made a nice chunk of change as well but nothing compared to the DDR machine. I ended up selling them off after a few years for more than I paid for any of them. It was a sweet little setup and fun while it lasted.
I wish I could have started my own import arcade at the time but couldn't come up with enough funding to do so. That's my only regret. I had big plans but couldn't get any financial backing. Splitting the profit 50/50 sucked but at least it gave me a place to put the games.
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