Opening an arcade

[JoeyJoeJo]

I've always wanted to own and operate my own arcade.

[paigeoliver]

They buy new machines from distributors, the same ones also sell pins, jukeboxes and usually most vending machines as well.

Classic games DON'T make money on location, with perhaps the exception of Ms. Pac-Man, and even that doesn't make much.

Every year the number of arcades shrinks noticably, and the number of new arcade games shrinks even further. I believe last year saw less than ten new titles at distributors, and there will be even less coming out this year.

There could not be a worse business to get into right now. The guys who have their machines bought and paid for STILL can't turn a profit from them.

It isn't unusual for an operator to come around and take a monthly collection for a game and pull out $20, half of which goes to the location owner, the other half goes to him, leaving him with $10, and that machine needs a $100 tax stamp every year, plus maintenance.

[Chris]

If you look around at what arcades are left, they're all full of redemption games and the giant DDR or dual driving cockpit type games that are huge and expensive.  Games that, for reasons of winning prizes or unusual controllers or giant screens, can't be played at home on a Playstation.  They're also rarely stand-alone; they're in a mall or in a place with some other non-arcade attraction like Chuck E. Cheese.

Where there's an opportunity is to place games where people are forced to wait around, like a pick-up only Pizza Hut or a laundromat.  There's a Ms Pac/Galaga reunion machine in the waiting area of a local Mexican restaurant and it's always got people playing it.  If you can get your hands on a Golden Tee machine, it'll make money.

So a full arcade is probably out of the question, but if you want to be a small-scale operator, cherry-picking these sorts of locations could work.

--Chris

[Ken Layton]

So you want to open your own arcade? Are you crazy?

You'd be throwing your money away.

[LPZ]

I'd have to agree with these guys on this one.  With consoles taking down the arcade market, this is a business that I would stay away from.  I dreamt about it myself, but it's just a bad business decision.  The best way to own an arcade is to collect your own machines for a personal collection and make a gameroom.  Then you have your own arcade. 

[JoeyJoeJo]

Only 10 new arcade games were released last year? Man I didn't know arcades were on a slump like that.  I see your point about games in restaurants.  There is and arcade in the mall I go to that is usually full of people.  I guess if I ever did anything it would be in a mall or similar setting.  Thanks for the tips guys.

[Ken Layton]

A regular shoping mall has outrageously high rents. Look at some of those little "kiosk" style vendors that are set up down the aisleways. You know the ones where some guy is selling cellphones and things like that. Most malls charge $3000 a month rent for those 6 foot by 6 foot "stand" setups. Then they charge you for "mall security fees" AND a percentage of your sales. Then you need to factor in electricity and employee wages. Then you can see why only national chains can afford rents in these places.

You'd do better off to find a small older strip mall somewhere and open a pool hall there. Those make money!

[monkeybomb]

How about an ultracade ? 

[Daniel270]

As a business, I'd have to agree with the majority here... it's a bad investment.  Costs of maintenance, rent, licenses and utilities would eat into what little profit there is to be made with multiple older machines.  I looked into this idea myself as a local option for a nearly optionless town....

Now, as a basement arcade (free play/tokens only), I'd say go for it....

[SirPeale]

Arcades *can* be profitable, IF they're done right.  You can't rely on just the games to bring in the people, you need a hook.

[Fig]

Yeah I too would love to open an arcade but where I live the closest thing to an arcade is the bowling Alley 

[Ken Layton]

An arcade with a food service area (like a sandwich shop) could make money but keep the food & drinks away from the machines. I've seen some arcades with a miniature golf course inside.

[nostrebor]

If you want a current "successful" arcade example, google "the incredible pizza company". That startup company originated right here in my town. Of course they have no typical arcade machines. Only redemption, large-screen, multi-player stuff. + skeeball +go-carts +mini golf+ huge location in high dollar area + ...  It sounds eerily familiar to the above posts.

Arcade cabinets are no longer the draw for these operations. A "total family experience" is the catch for IPC, and it took BIG $$$$$$$ to get it started.

I also suggest a basement home with free-vend cabs.

my$.02

[Wyluli]

They have one of these near me:

http://www.gameworks.com/

Have yet to go and check it out.  Sounds cool though, AND they say they have some of the classic 80's games.

[paigeoliver]

If you would actually like to make MONEY then open a Cici's Pizza Buffet franchise, and buy your own games for the gameroom part. Just set the suckers on free play, then they won't even need tax stamps. The restaurant part will make you money and the free games will be a big family draw. 10 games will be easy enough to keep up with and cheap enough where it won't be a major business expense.

[monkeybomb]

Does anyone know if Dave and Busters or ESPNzone made back those big investments?  Those places are nice, are they getting it done with all that cash?

[paigeoliver]

Dave & Busters is in the restaurant business, not the arcade business. The arcade is merely a draw for restaurant and bar customers. The restaurant and bar is the profitable part of the business, not the arcade.

That is why I suggested opening a Cici's Pizza franchise, they are profitable and it is going to have a much lower cost of entry than a Dave & Buster's or any other game friendly location.

[monkeybomb]

hmm, ESPNzone is also a restaurant so the same probably applies there

[Crazy Cooter]

They have one of these near me:

http://www.gameworks.com/

Have yet to go and check it out.

[M3talhead]

Gameworks went out of business?? I've been to the one in Arizona, but that was like 6 years ago. Damn, I was hoping I'd have something to look forward to if I got stationed in Guam. 

[Crazy Cooter]

I *think* they closed some of them, but the Minneapolis one is still around.  One of those "we're bankrupt, but we're just going to keep doing what we were doing" things.

[MrTroy]

I know it's expensive to run an arcade and all, but i remember when I stopped going it was a matter of playing a game cost $.50 to play after a while. Much too much for my small pockets. Dave and Busters and Gameworks style places charge you almost a dollar and change to play one game. But the local arcade(Perhaps the only true arcade left here in philly) at 40th street is always packed and has $.25 games as well as the redemption things. The also host tournaments and the such. They always keep the latest fighting games in there as well.  They're still in buisness, they've got to be doing something right.

I hate the thought of the arcade dying off.

[richardp171]

I actually have had more success putting games on locations like car washes, pizza places etc. but if you want to make money you can sell your games on location. Just put up a FOR SALE sign, that way you do not have to worry about games getting old and stale. just price them so you can make a decent profit and the 50/50 split is just icing on the cake. so far sold more units to homeowners who want a game or two. they can test it themselves and there is not selling on your part. sold as is. you would often times get repeat business and requests. Unless you have a good supplier it is hard to keep up the pace. some months feast others famine. just do not quit your day job. Your not going to retire from the $$ but it does help pay for the games in my game room. I love my STAR WARS!!!

SHAMELESS PLUG - I have candy cabs for sale.... If you have any requests I can find out prices for you. All games are shipped over from Asia. Prices are much better.

[RayB]

It's funny how the cost of a popsicle has gone from 5 cents in the 70's to what, 50 cents now? Maybe more?  Yet people still expect to pay 25 cents to play a game. No wonder arcades are dying.

[the3eyedblindman]

Youd be better off making a restaurant and putting your arcade games in the back then making a dedicated arcade.

[Dave_K.]

Youd be better off making a restaurant and putting your arcade games in the back then making a dedicated arcade.

Or better yet a nightclub/bar dedicated to gaming...make your money off booze which has a higher markup.  Thats what I'm planning...

[RayB]

Even that's a risky prospect. Sega "Playdium" failed. There was one right smack in downtown Toronto, in the middle of the club/entertainment district. A year or two later it was sold off to another company, and then a year or two after that it closed.

There's one off in the suburbs which is still open today, but it also has go-karts, minigolf, driving range and stuff like that to attract enough people.

[fredster]

The new arcade model is to have a coffee shop, gift shop, old skool machines, and a host of interactive computers playing games like Halo and clans.

There's a site for cybercades, I don't have the link, but that's a cool way.  You pay like $3 an hour and have card readers.  The old games and coffee/pizza shop is for the grownups to eat at and play games.

It could would well in the right area, but the downside is the abuse of the games and the trouble young punks bring with them.

[Wade]

Gameworks might be bankrupt (?) but every one I know of is still open.  The Dave and Busters and Jillian's places are still open too.

The draw for these places is not just the games, but it is the games for me.  The ability to drink, smoke, eat, socialize, AND play games is what does it.  It's the whole experience.

I wouldn't try to open a regular arcade.  The only way I'd try to do it is to have a bar and restaurant that can make money (alcohol = HUGE, easy markup), and have the games just as a bonus.  The games can't really make much money on their own.

A beer bought in a case is what, $0.30 each... at most bars they are $3, at a few of the nicer bars around here they are $6.50.  SIX FIFTY!  For a Thirty Cent bottle of beer.  It's crazy!

That's why I love my gameroom.  I can drink beer cheaply, listen to whatever music I want, watch whatever I want on TV, and play games that work well and are clean.  However, it takes effort to get people around for socializing (read: have to throw a party, or at least invite some people over).  Which I don't like to do all that often, as it takes effort and planning, and I'm hugely non-committal at this point in my life.

Wade

[Ken Layton]

I think you should open up a HOOTERS restaurant. You'd definitely make money.