Back in the Seventies, Eighties and (to a degree) the early Nineties, running an arcade was a viable business and did very well in the West. Why? Well, simply, you could still have experiences in the arcade which were not really possible at home. Back then, arcade machines were things of wonder, filled with impressive tech that kids could only dream of owning at home. If the latest SNES release was considered to be “arcade perfect”, it was a thing to be revered.
Fast forward to 2014, and the phone in your pocket is probably capable of emulating just about every arcade game going. All the kids now have access to an X-Station-U and the ability to play the most beautiful games imaginable, with graphics so realistic they almost look like movies. The only arcades left open are hanging on with an array of crappy parlour games, combined (if you’re lucky) with the sort of games the general user genuinely still cannot play at home; driving and shooting games.
So you have a machine at home that can play graphically awesome games which you can buy for £30 – £40 or so. Would you go and sit in a dingy arcade to play a game which you have to pay 50p, £1 or even £2 to play for two or three minutes? A game which is potentially three, five, ten years old and beginning to show it’s age? Well I would, but then I’m a fan of arcades. I know a lot of people who wouldn’t. For the general public, it just doesn’t seem like a good deal; and do you know what? It’s not.
This is not to say that people don’t want to visit arcades, nor for that matter that they don’t want to play older games, it’s just that, economically, it doesn’t stack up for the consumer, and thus by extension, it doesn’t stack up for the arcade owner either; which is why arcades are dying.
Let’s have a think for a second. What is the main sticking point?
Is it the lack of new games? Possibly, but not exclusively. The release of Street Fighter IV in 2008 represented pretty much the first “stick game” to be released in the West in probably ten years (give or take) and clearly drove a number of people back to arcades to play it. However this resurgence was not to last and was damped down again by the console releases which are these days very much “arcade perfect” and no longer revered.
By their very nature, arcade games have to have a relatively long earning life to justify the investment in the game in the first place. It is understandable that most arcade owners were reluctant to invest in new games over the years as the home console market ate into their user-base; and when you combined that with the fact that the cost of technology and game development keeps going up, you had a situation where you had less people willing to pay to play the new games which were considerably more expensive for the arcade to purchase in the first place.
Is it the equipment available that is causing the death of arcades? Again, not exclusively, but it certainly doesn’t help. Due to years of poor investment due to the above, we see a familiar story, where arcades have fewer and fewer new games, in nasty old chip-board cabinets that get rattier looking by the day due to a lack of financial wherewithal to invest in new equipment, until finally the arcade closes down.
So we have a lack of investment, driven by a lack of revenue due to consumers taking their financial ball away and playing at home instead.
Despite hanging on in Japan for many years longer than in the West, this downwards creep is unfortunately starting to show there too, with arcades closing regularly.
So what do we do? How do we make the arcade “relevant” again? How do we make it viable? Well, we need to change the business model. Pay-per-play is just not gonna cut it in 2014. Come to think of it, limited numbers of games are also not going to do the trick.
What we need is to offer consumers a wide choice of both classic and brand-new games, for a reasonable one-off entry fee, such as has been employed by The Heart of Gaming in London, United Kingdom.
What is more attractive for the consumer? Paying £10 to playing 10 three minute games for £1 a go, or paying £10 to enter the arcade and play as many games as you want, for as long as you want?
“But, the new games will cost too much! The arcade won’t be able to buy new games!” I hear you cry. Well yes, perhaps. With the current business model employed by the arcade developers/manufacturers themselves, it would indeed be difficult to raise the cash to buy new games, but I think it is fair to say that most manufacturers would rather sell lots of games for a small profit on each rather than hardly any games for a large profit. Indeed, an on-going revenue stream, even for games that are years old, would be preferable for the manufacturer. A bigger installed user-base is the key to success and on-going demand for their products. But how can they achieve this?
Take hardware out of the equation.
Much as it pains me as an arcade collector, I think the days of PCBs are already completely numbered. That said, I think it makes sense to abandon the PCB.
All a PCB ever was intended to be was a custom computer; a means of getting the ROM to the end user. The ROM, i.e. game itself, is the important bit. Years ago, PCBs where uniquely designed for different games. After a while, manufacturers started using revisions of the same PCBs for different games. Then they started using cartridge systems, and after home console technology had caught up with the arcade, they started basing their arcade hardware on the consoles themselves. Now, we are handed what are, essentially, just custom PCs, often using off the shelf components. This makes sense though, as it now costs hundreds of thousands of pounds of development to make a good graphics card (for example); so why would arcade manufacturers continue to do this on a custom basis?
With the advent of the Taito Nesica and Sega ALL.net P-ras network systems which can serve games over a network, both new and back catalogue; we may have finally found a way to allow arcades to not only survive, but to thrive. Whilst these systems are currently only available in Japan, with a little enlightenment, they could easily be deployed globally. “But there are not enough arcades globally any more are there?” Well no, not currently, but there could be, with a new business model.
Here is what I envisage for the arcade of 2020:
- Arcade owners can own their own equipment if they wish, or alternatively pay a reasonable monthly lease to have it supplied by the manufacturer (whoever they may be).
- Arcade owners have a game license with the arcade network supplier(s) which is based upon a percentage of location revenue much in the same way as business rent is calculated.
- All machines are served with a large selection of games over the network (like Netflix for Arcade Games!). The arcade owner can adjust which games are available in any given machine depending upon the type of cabinet
- By having the machines leased, the arcade will never suffer from tired old hardware. By having the games paid for by a license fee based upon a percentage of the location revenue (which can be judged by the amount of play from that arcade over the network); the arcade will always have the latest, most up to date games; plus there is the potential for the arcade to “house” a far wider range of games as they are all served over a network.
- Consumer entry cost is a fixed price, regardless of what they play and for how long.
- Consumers will be happy as they are getting quality machines, the latest games, for a reasonable fixed entry cost.
And that, in a nutshell, is how I think we could fix the arcade scene.