It's a great concept.
Things you may want to think about:
The colors on the characters are different. Mario is the wrong color, Pac-Man and Ms. Pac-man are diffferent shades of yellow. Also the sizes of the characters don't really conincide with each other which makes it look kinda odd. For example, Pac-Man is as big as the entire pic in the lower right corner and Pac is even bigger than DK.
I do like the water background and ya gotta love the name (I'm a big fan of personalizing your arcade). Maybe a drop shadow to make the name stand out a bit, but that's about it.
You're on the right track, you just may want to tweak a few things.