Here in the US, as a population we are inherently lazy. Why go out to do something if you can do it here at home? Why go out to dinner when you can order it and have it delivered, or pick it up at the restaurant and bring it home?
Back in the 1980's and early 1990's, arcades still offered something that you couldn't get here at home. That was better graphics, great sound and huge sprites on the screen. The SNES, NES, Genesis, etc. simply couldn't handle what the arcade was bringing out. That all died when the Playstation came out. Suddenly, there was a home console that could pretty much do what the best arcade cabinets out there could do. Now, why the hell would you go out to an arcade and spend money on the arcade game when you could go and pop in your CD into your PS or PS2/XBOX/Dreamcast and play it at home?
When home consoles started to play exactly what the arcades were displaying, or at times playing better than what the arcades could play, the arcade here in the US died. They still exist, but as side-sections of other buildings. (Lobby areas of movie theaters or stores like Wal-Mart/Target, side sections of big restaurants like Dave & Busters, etc.)
Japanese manufacturers would LOVE to bring the arcade back to the USA and start making money there, but the populace as a whole doesn't want them anymore. We'd rather play the more graphically intensive and aurally stunning games on our own 42" TVs or massive computer systems over the internet from our own home. Those of us who would go to an arcade and spend some time are few and far between, and even then we would still be playing arcade games in our own house on our own cabinets.
The USA just isn't a society that would let arcades survive. Those days have indeed died and I saw it happen with my own eyes.