Feasibility of opening an Arcade

[DaOld Man]

I asked this question in the mame legalities thread, but I thought I would back out (slowly, watching over shoulder..) of that thread and re-start the topic here.
 Soooooo..............

What do you think of the idea of opening an 80's style arcade today?
Do you think it would make enough to support itself and you?

(I can retire from my job in about 3 years, been looking for something to keep me busy after that. My love for arcades is drawing me like a moth to a bug zapper...)

[severdhed]

i would like to think that this would be a good idea, but there arent any arcades around for a reason...nobody makes any money running one. THere are a few cabinets here and there in my area, but only two places have any quantity of them.  one is CHuck E Cheese, and the other is this localy owned place.  it is similar to chuck e cheese, indoor play area, lazer tag, redemption games, and some arcade games.    sad thing is that they have 20 to 30 arcade games, and not a single one of them has a joystick.  they are all light gun and racing games.  when you go in there, the arcade section is relatively empty.  THey make their money on food and other things.


kids today don't have that same attraction to arcade games like we used to.  so that makes your target audience people in their mid twenties and higher...most of us have kids of our own, so we can't afford to go hang out at the arcade anymore, or we don't have time.    and since our kids want nothign to do with the games, taking them there is not really an option.

i would love it if there was an awesome arcade around here with some classic games, but at the same time, i couldn't go there very often even if there was one.  This is why there are no arcades.  and this is why i have a mame cabinet in my basement.  i can get my classic arcade gaming fix, even when i have very little time, and no money.

[Kaytrim]

A few questions to ask yourself...

Will you be depending on this site for income?
Are you located in a medium to large metropolitan area?
Are there other arcades in your area including those at bowling allies, movie theaters and restaurants.
Will you be able to operate at a loss?
Do you have several machines or have the finances to purchase several machines to get started?  This includes more modern machines like Dance Dance Revolution and driving games.

There are other questions I am sure but this should get you thinking.

TTFN
Kaytrim

[shardian]

As an income, it has a very, very small chance of working. There are several arcade/ museum types that are fairly sucessful, but it is more of a love affair than a true moneymaking venture. Here is a thread detailing the Arcade 1984 in Missouri.
http://forum.arcadecontrols.com/index.php?topic=68068.msg692439#msg692439
They say they make good money. That is VERY rare nowadays.
It is also a huge investment of time and money.

If you really want to tinker in the hobby and make a little money, you're best bet is to learn the trade of repair well, then work at a local arcade as a techie, or do your own in house techie work.

[bluevolume]

Here's how you make it profitable:

1. Have an all-you-can-eat buffet included with admission.
2. Have the game-win tickets be redeemable for energy drinks.
3. Have a caged pit where kids can actually fight each other after they've grown bored of doing it virtually.

Ok, I'll end the sarcasm.  I think the problem with opening an arcade these days is that there's just no market for it.  You have to keep in mind that teens and pre-teens today are much, much different than those of the "arcade" era.  There is a media-overload geared towards them; there's no time to be bored with the countless entertainment options available.  Remember when you used to wait for the release of a band's CD/tape, being excited for that Tuesday when you could hit the record store?  That concept is completely lost on a kid today.  We used to call a friend and talk for hours after school; they are texting a dozen different friends throughout the entire day.  Attention spans have become so short, I don't see any hope for an arcade past the first month it was open.

BUT, if you went for something like a Jillians or Dave & Busters, now that might work.  Have an arcade geared toward adults with drinks, food, etc.  There's definitely a draw for places like that, and you're going after a demographic with some significant disposable income.

[Apollo]

If I was going to do it I'd go down the whole retro bar route. A themed bar with decent food available and part of the bar is the arcade, cocktail cabinets are lounge tables etc. Artwork on the walls, old school games like Pacman, Galaga and Joust etc with a couple of old pinballs like Black Knight, F14 Tomcat etc.

[Malenko]

I thought about this too. My idea for running one is a little different then the traditional drop a quarter in arcade it'd be more of a "pay to play for a while thing" as opposed to "drop a quarter in", pay $5 for an hour of unlimited playing or some sort of daily or monthly thing, group rates, things of that nature. of course I think the real money would be in renting the entire place out for birthday parties and stuff and or hosting Tournaments.

Of course this would present problems if for example suits00 and tommy were hoggin the MKII machine and cheffoJeffo wanted to play... maybe some sort of "limit if 2 continues if someone is waiting to play" but that'd make games like golden axe and double dragon tough to beat...but there'd be other games to play.

Im actually building up my personal arcade collection just incase one day I want to open an arcade. I actually have given it alot of thought but the initial investment is a bit overwhelming, so is the rent and licensing feesmetc

[spacies]

Put me down as another who would like to do this.

I think an Arcade that was rented on a per night basis would do OK. Something like work functions, stag parties, a bunch of friends etc.

And maybe open to the general public on Saturday and Sundays.

To attract repeat customers you would run a High Score board for every machine.

Great idea but tons of logistics.

[Ken Layton]

This has been talked to death on this and the KLOV forums. The general concencus is, "are you crazy?". You'll go broke same as all the other arcades have. Even the huge 'Illuzions' arcade up in Renton, Wash (30,000 square feet) went broke.

In order to stay open today you must have a cheap rent building, be able to repair the machines yourself, buy the machines cheap, and have food sales as a hook to keep the customers there.

[ratzz]

I think you need to look at this the other way round.

instead of thinking of an arcade and what else you could do with it, you need to think of a good well established business idea that would have a better chance of working and build an arcade in it.

I would love to own an arcade, but the now grown up business owner thinks it probably wouldn't work.

Very sad ...

[Jeff AMN]

I think you need to look at this the other way round.

instead of thinking of an arcade and what else you could do with it, you need to think of a good well established business idea that would have a better chance of working and build an arcade in it.

I would love to own an arcade, but the now grown up business owner thinks it probably wouldn't work.

Very sad ...

This is true. A media-focused store (books, CDs, DVDs, games, etc.) with arcades near the entrance would probably net you more coins in the ol' bucket rather than a dedicated arcade. Nowadays people are fine dropping in a couple of quarters into an arcade that they come across rather than seeking out a dedicated arcade.

I know a local pizza place still rakes in a few hundred dollars a month on their Asteroids, Area 51, and Flash Gordon pinball machines. Not too shabby for some machines sitting in a corner by the tables.

[88mph]

I will agree with the sentiments of the other posters here.. Arcades (these days anyway) work best as an add on (parasite?) to an existing business. 

In New Haven, several years back there was a very nice retro-80s arcade in the back of Cutler's Music.  (They sold mostly records and CDs.)  The arcade was all in a line on the back wall, so if you were playing their TRON machine or whatever, it had the feel of an 80s arcade.  It was great. 

Then, the college that owned the store decided to move Cutler's to a smaller venue.  They also decided that the arcade machines brought in a 'bad element', so they removed the arcade.  But, the guy who owned the arcade machines slowly added a few back to the new space, but it never had the same splendor as before.  It's a shame really--whenever I saw people playing the games in the original store (which was admittedly rare), it was usually 30 somethings with their little kids, not this mysterious 'bad element'. 

Ah well--it was fun while it lasted. 

I just moved and saw a sign for a video store/arcade--but the place was empty.  Guess I just missed it! 

[spacies]

Great idea tagging it to another business.

But I think a corporate hire instead of quarters would be a sure way to get a few extra dollars from a private collection.

I build and sell Arcade machines so mine will be basically a showroom for hire and if you like the machines, I deliver the next day.

[SavannahLion]

In order to stay open today you must have a cheap rent building, be able to repair the machines yourself, buy the machines cheap, and have food sales as a hook to keep the customers there.

I think that's the rub there. You can't find a place with low enough rent in a high enough traffic area.

In my city, I can name off at least a dozen places with really cheap rent that an arcade can move into. A couple of them are in some really old parts of town (ie tourist traps). Are any of these places ideal enough to attract the kind and type of business a place like that needs to survive? Absolutely not.

I think people just have to come to terms that the 80's arcade is a dead species. Yes, there are few exceptions of successfully operating arcades, but the idea of dropping .25 or more a play, even to the 80's generation really doesn't sit well with most people. And I can't imagine people in many areas accepting the idea of paying a flat fee to play on a regular enough basis to justify operations. Corporate hires? An interesting possibility.

Like vacuum tube radios, LP jukeboxes, and old letters, I think Arcade cabinets true means of survival lay in the hands of earnest private collectors willing to maintain the integrity of the hardware. Japan is still a hot bed of arcades, maybe someday that interest will spread through the West again. Who knows?

[RayB]

I read somewhere... someone was making the point that in the 80's the "50's diner" made a come-back as a viable novelty business, so why not an 80's arcade now?

Welp, I'll answer his question... FOOD is a high-margin product, which EVERYONE needs and wants. So a 50's diner, appeals to everyone, of any age (not just old people who were teens in the 1950's). I don't go to a 50's diner for the cheesy music. I go for a good burger.

An arcade though... you have expensive machines to run, maintain, and the profit margin... well, 25c is nothing. You're better off charging a single admission per person so you at least make a minimum $5-$10 off them. But still.. seems like there are greater challenges in attracting people and getting them to spend money in that type of business.

[DaOld Man]

I was thinking of opening one in a shopping center (or mini mall) with a huge store like Walmart in the center. Parents drop the kids off at the arcade while shopping.
Im not sure about charging a flat rate.
Say if you had a scant 20 games.
If you charged 10 dollars people may think it is too pricey, and we all remember how some of the bigger kids tended to hog the good games. With unlimited play you would have to lay down some rules, such as maximum play time, IMHO. (Another turn off.)
Even at 10 dollars you are looking at each game being played for 50 cents per game, with unlimited times to play.
At 5 dollars, it would be back to the quarter per game.
I think I would rather have some kids with allowances spending until they were out then hit the road, make room for others,  than say, hey, give me your allowance and stay all day.
I can remember thinking I would only let my kids spend 10 bucks each (2 kids) at the arcade, but I would wind up spending at least 10 on myself too. 30 bucks. For about an hour, cause small kids are not going to play a game a long time. (But I could be wrong).
Now the food idea might be good, but then you got the headache that comes with that, health inspections, extra fire insurance, etc.
A 80's style arcade is what I had in mind.
As far as the machines, would you really have to buy them? Cant they be leased? Might cover the headache of repairing them.
Another idea could be to set up booths in the back, with a network set up for people to plug their playstations, or X-boxes into, charge a flat fee for X amount of hours, and host  Halo tournaments after the front arcade closed.
Of course no drugs or alcohol would be allowed.

[bluevolume]

If this is something that you would enjoy doing, and don't care if you lose bags of money on it, then it might be possible.  Other than that, I would look for a much less stressful and difficult way to spend your retirement.

You mentioned renting the games -- that right there would completely squash any hopes of this working.  If you already owned all of the games, then there's that fine margin of maybe being able to pay the rent/utilities.  Sharing the profit with a vendor is not a viable option.

The booth/network plan is actually something that we have in my city.  Its sort of an arcade for gamers, mostly for PC games though.  But, like I said in my previous post, most of the real profit comes from the snacks and power-drinks.

[DaOld Man]

Thanks for all the input..
I guess I have awoken and agree that it would most likely be a very expensive and elusive dream.
No, I do not have bags of money to throw at it.
I would love to do it, but not so much that I could go without eating..
And the real killer... my wife would probably not be as encouraging as you guys..
So I guess it's on to my next dream...
Now where did I put that ad for a tropical island??

[Ken Layton]

I was thinking of opening one in a shopping center (or mini mall) with a huge store like Walmart in the center.

That's a problem right there. Any place with a Wal-Mart in it would automatically want too much for rent.

[ChadTower]

You also want to consider workload.  I know you said you're retiring, but you're looking for a time filler, not a giant anchor of a timesink business.  Arcades have long hours, need to be attended, and really would limit your freedom as a new retiree.  Do you really want to go into retirement only to be completely tethered by a business that at best will break even? 

[BobA]

The food tie in seems to be where the majority of profit is made.  Taking this one step further there are places that hold events where arcade games can be used and rooms and catering are provided for parties.   I found one of these just surfing for a few minutes and I know that I have seen others.

http://riptidearcade.com/games.html

[Jouster]

What about adding a laser tag game...or something else that would draw people...but have plenty of down time (so they can hit the arcades or buy food and drink)?

I looked into a laser tag place about 10 years ago...but I about crapped myself when I saw the pricing...haven't looked at it recently though.

Jouster

[MAME nut]

My business sense tells me that you have to target the people that LOVE arcades.....the people who grew up in them.  (Not the 13-year-old Playstation addict.)  They are now the 35 - 50 crowd.  They will have the money to support an arcade.  Look at Dave & Busters...they combine an arcade with a bar atmosphere.....that's were the success is at.  My idea.....a throw back sports bar called "Back to the 80's".  (A rip off of the Back To the 50's Bars that found success in the 80's.)  Give customers an arcade feel, but also include adult beverages and sports on TV!!   

[SavannahLion]

Look at Dave & Busters...they combine an arcade with a bar atmosphere.....that's were the success is at.  My idea.....a throw back sports bar called "Back to the 80's".  (A rip off of the Back To the 50's Bars that found success in the 80's.)  Give customers an arcade feel, but also include adult beverages and sports on TV!!   

Any idea of the kind of abuse a drunk guy would inflict on a 20 year old cabinet?

[shardian]

What about adding a laser tag game...or something else that would draw people...but have plenty of down time (so they can hit the arcades or buy food and drink)?

I looked into a laser tag place about 10 years ago...but I about crapped myself when I saw the pricing...haven't looked at it recently though.

Jouster

When the local billy Bob's got a big lazer arena, I learned from the owner's daughter that they paid $5000 per vest setup, and they got 30 setups. Yes, they paid $150000 just for the lazer tag gear. Not to mention the computer equipment, the home base units, etc. I believe the entire price for the lazer arena addition was around $250k. And now you know why they charge $6 per person.

[Mattiekrome]

Perhaps an arcade route would be a better option?  10-20 games spread out over a city might fare better, than a full fledged arcade.  I've heard you still have to pay for licenses, taxes, etc. for each machine, but then you get to skirt the cost of renting a building, employees, insurance, etc.  Plus you have the option of rotating machines from place to place to keep them "fresh". 

I dont have any firsthand experience with a route, but researched it at one time.  Lots of good places to put games, laundromat, convienence stores, etc.  And from what I've read, usually you can put a game in an establishment for a share of the profits.  But I've also heard that usually the profits dont come anywhere near the amount of $ required to survive, so it might also be a "side hobby"

[bluevolume]

Perhaps an arcade route would be a better option?  10-20 games spread out over a city might fare better, than a full fledged arcade.  I've heard you still have to pay for licenses, taxes, etc. for each machine, but then you get to skirt the cost of renting a building, employees, insurance, etc.  Plus you have the option of rotating machines from place to place to keep them "fresh". 

I dont have any firsthand experience with a route, but researched it at one time.  Lots of good places to put games, laundromat, convienence stores, etc.  And from what I've read, usually you can put a game in an establishment for a share of the profits.  But I've also heard that usually the profits dont come anywhere near the amount of $ required to survive, so it might also be a "side hobby"

There's plenty of people who are still making money doing this, but its not as lucrative as it used to be.  The hard part is the investment in the games, especially in the bar/club arena.  A new Golden Tee is going to hit you anywhere from $3000 - $6000, and you're of course going to need more than one.  Then plan on hitting each machine once a month to clean the beer out of the trackball and buttons.  And then one month you go to pick up your take, and you find that none of your Golden Tees are making any money.  Why is that?  Oh, well Golden Tee is "so over" now.  Everyone is into bowling games and some new game where the character throws bean bags or something.  Then while you're trying to figure out what you're going to do with all these 'Tees, you get a call that one of your Pirates Of The Carribean pins has had the glass smashed out and playfield all broken -- and not even Jodie Foster has any idea how it happened.

Of course, that's on a bad day.  The good thing here is the modularity of a lot of the modern games, when one stops selling just grab a new PCB, control panel, and marquee and you're up and running with the next big thing.  You can even get to a point where a cabinet more or less becomes a fixture at a location, and you're only carring around conversion kits rather than entire cabs.  Its the specialized games that kill you on both ends (like that soccer ball monstrosity that was popular for like 5 seconds).

 

[knave]

From what I see around my area the idea of an arcade would be a difficult road. I don't think it would be impossible though.  Location and traffic is a huge consideration.  Without pizza or some other type of reseraunt as a draw there won't get the type of traffic needed to turn a profit.

With the right location though:

There was a arcade/game store right across the street from my high school, it had pool, arcades and booths where you could rent time on the then current nintendo and sega consoles. (the city limited them to 8 cabs. They also did game sales and rentals.  They made it for three years until one of the partners left and took the consoles with him.

Me, I'm a selfish bastard when it comes to my arcades.  I don't want the public to touch them.  My own kids are capable of enough damage as it is.  My friends can just continue to drool. 

[MAME nut]

Look at Dave & Busters...they combine an arcade with a bar atmosphere.....that's were the success is at.  My idea.....a throw back sports bar called "Back to the 80's".  (A rip off of the Back To the 50's Bars that found success in the 80's.)  Give customers an arcade feel, but also include adult beverages and sports on TV!!   

Any idea of the kind of abuse a drunk guy would inflict on a 20 year old cabinet?

Not as much damage as 3 teenagers could do to a machine in an unsupervised corner of a 7-11!!!   

[RayB]

Hey Old Man,

You might want to read up on what and how "1984" are doing what they're doing (one of the owners posts on this forum!):

http://forum.arcadecontrols.com/index.php?topic=42319.0

http://forum.arcadecontrols.com/index.php?topic=38646.msg413081#msg413081

Here is a review :
http://forum.arcadecontrols.com/index.php?topic=68068.0

[Shoegazer]

You know, I also thought about this idea too, with great interest.  I am not sure if I want to dissuade anyone from doing this for my own personal, selfish reasons (I want the 80s back!!!  oh...sorry).  However, I'd like to give some practical advice that may be heeded or discarded to anyone seriously considering it, for whatever its worth...

To those of you who have thought of a "pay-per-game" model, here's another angle to look at this situation: plain and simple, 25 cents isn't what it used to be worth.  According to the Consumer Price Index, inflation in the U.S. averages somewhere between 3-4% per year.  It doesn't take a math whiz to realize 25 cents basically amounts to nothing these days.  However, these old games play exactly the same length of time, on average, as they used to back in the 80s (e.g. the average Asteroids game lasts 2.8 minutes, or whatever).  So, demand issues aside, arcade operators are getting increasingly LESS value from their games with each passing year.  Over a 25+ year span, that really adds up!  Of course, you could always ask for more money per game, but nobody remembers putting in a dollar to play Pac-Man, and few probably would.  In fact the whole quarter-per-game idea is part of the nostalgia to begin with!

So it appears the highest value proposition with arcades is the "pay-per-visit" model, which of course is unfortunate since it ruins some of the nostalgia AND is probably not going to net the operator as much income on these merits alone.  So this would almost certainly necessitate being augmented by another source of revenue, such as food-and-drink.  Someone brought up the idea of the 50s diner concept and then shot it down, but actually the way I see it there IS value in the model if you look at it the right way.  What if, for example, you franchised the 80s with a restaurant that featured 80s music, movie posters, old-school MTV on the 25" tube, and guaranteed at least five standup arcade games on free play, just to attract visitors?  I'd think that idea alone would allow the operation to compete fairly well against other family-oriented restaurants.  Toss in a free meal offer to anyone who can beat the local high score on any of the games?  Host local tournaments as well to generate occasional surges in demand?    Maybe its farfetched, but then maybe somewhere in there is an idea...

"Food" for thought.

Shoegazer

[More Cowbell]

Does anyone know how much a broker generally rents games for on a monthly basis?

[knave]

Does anyone know how much a broker generally rents games for on a monthly basis?

I don't know about rentals but the ops I've dealt with in the past split the take.  For us it was 50/50 they provide the games we provide the loc and the power.  Some of the popular games in the early 90's would generate ~300 or more in a week.

I'm pretty sure it would be cheeper in the long run to own your own games.  Who wants to give away half of your income all the time. At least repairs and upgrades are periodic.

I think tournaments are an interesting idea.  I could totaly see groups of college kids or 30 somethings having a MK tournament (or SF or any other game.) Have a ladder and a small entry fee, leading up to some prizes and a sign on the wall announcing the greatness of the top three.

Again I think this works best as part of a restauant. Personally I might hit up some local places that might want some arcades.  Give them a percentage and buisness.  Might work.