I've never really understood why Arcade Racers declined in popularity so much. I blame Gran Turismo and all the identikit sim racers that followed it myself .
I have nothing against sim racers, but it kind of defeats the purpose. I can go drive a real car so I want the experience to be as "out there" as possible... all of the fun with none of the tedium.
I can't agree with both of you. I love all kinds of racing games. In real life, most people don't drive at all like in a sim, and not the same kind of cars. All kinds are enjoyable and GT or Forza have nothing to do with the pour sales of Outrun.
Arcade racing games don't really talk to most casual gamers, they are often more attached to the reality and they will be intrigued by games which look like the reality and especially if they allow them to do things they dream to do in real life. I'm sure many casual gamers buy a console for GT or Forza, like many does for FIFA (or NFL in the US). Not having sim would not make them interested in arcade games.
Arcade racing games still hare popular among less casual gamers, but only "console" arcade racing games (NFS, Burnout... vs "pure" arcade racing games like Ridge Racer, Daytona or Scud).
Almost all of us here have grown up with "pure" arcade racers, dreaming of Virtua Racing, Daytona USA, Sega Rally or Ridge Racer (I've waited so much the release of the PS1 dreaming of Ridge Racer, "the arcade at home", and enjoyed it so much...). We could spend months on a game with 1 to 4 tracks, because the gameplay was so fun, because those tracks where very memorables in many aspects, and also because it was new and we didn't have so many games.
But let's be honest, now you have tons of games to chose from, particularly if you don't only take recent ones, and most of them have a lot of content. So if you ask someone not attached to those "pure" arcade racers to play to some of them, he will probably try them 5 mins, think they are simplistic with too few tracks and pour graphics, he won't see what they have more than the others, and he won't make any effort to play more because he has already played to many racing games and/or because there is a lot of other games available.
There is also some gamers who like to play from time to time to such games in the arcade, but who don't want to spend money to play to them at home, because of the pour content not worthing the money or because they don't want to play alone at home but with friends on an arcade cabinet.
Many people just can't understand the particular feeling of "pure" arcade racing games that everyone in this topic probably understand very well, it's sad but normal, it's something that have scarred us for life.
Crap, too long post to say obvious things while I should be sleeping...