When I was a teen, we went to the arcade to play games, not really hang out. Cuz the general attitude of arcade managers was that if you weren't spending money, Get out!
In the early 90's, most teens I knew complained there wasn't anything to do. I think it's still the same now. Businesses dont want teens hanging out. Teens don't have that much cash. So a bunch of rowdy people hanging out at your establishment not spending money isn't good business.
Arcades won't come back for the social aspect cuz teens today have text messaging, internet chat, and all that for socializing.
Japan, as mentioned already, is a whole different social dynamic. In that society, people go out all the time and the population is so condensed.