This is quite possibly the hardest post I will have to write during my venture to start an arcade. The truth is, the current economy is not too friendly towards the small business owner. The risk of start up businesses are high in general, throw in money issues, unemployment, and other economic hardships and the risk becomes even greater. Now add trying to start something that has become niche, the arcade into the mix and you have a huge risk of a business. But why?
This is where the whole "economic climate" conversation gets sticky. I have read quite a few times over at Arcade Heroes and other sites how arcades tend to do ok during recessions. This is because an arcade can offer a fun family experience at the fraction of the cost of oh, going to the movies or going out to an expensive family dinner. Arcades also provide a nice diversion from any stress or problems one might be facing. The only problem with this is, while arcades did well in the past, they didn't have to compete with the increasingly anti social aspect of staying at home and playing a game online. online gaming and improved powerful consoles have taken a huge chunk out of the arcade market. Tie this in with the recession and what will a gamer facing any economic problems do? Probably download a copy of Marvel Vs. Capcom 2 on the 360.
Wait, what about how the arcade industry is showing an increase in sales? While this is true, can you name any arcade only operations where you've seen newer games like Terminator salvation, H2Overdrive, Tank! Tank! Tank!, or any other new games? You tend to find these newer games mainly at movie theaters and family fun centers. Also, there have been a few arcades fairly recently that had to close their doors, or are on life support with the fear of closing becoming more of a reality. Usually, truly dedicated arcade only operations have a sort of "gimmick" that keeps them going. And there lies the key.
Based on some conversations with arcade operators and from what I've seen personally first hand, the arcade industry has gone through yet another shift. No more are the mall arcades of the late 90's and early 2000's. Arcades have continued to survive through some ingenuity of the operators. Here are some examples of successful arcades in the current economic climate.
1.) Family Fun Centers These include everything from Chuck E Cheese, to Dave and Busters, to even Funspot. The key with these places is that they offer something for everyone. Take Funspot. Convincing a significant other that a weekend trip up north to New Hampshire to play some video games from the 70's and 80's is pretty tough. Throw in miniature golf, full size bowling alley, bingo, bar, kid fun center, and the indoor driving range (during the winter) with tax free shopping, at Tanger Outlets and the beautiful area of Lake Winnipesaukee and you might have a convincing reason. This alone is why Gary Vincent insisted on including a "what to do in the area" section on Funspot's website. Family fun centers offer a little of everything and location can be key. Again, knowing what your people want is important, as well as redemption games for income. I can't even begin to imagine the amount of money and work it takes to open and run a family fun center, but the positives are there for anyone who is willing. I strongly suggest if you are thinking about opening a large family fun center that you at least talk to someone who runs one, or work at one for awhile to see what is required.
2.) Arcade + (or + Arcade) Can't think of anything else to call these arcades, but they are literally arcades "plus" something else. Barcade located in Brooklyn comes to mind. Barcade is a great bar that serves excellent micro brewed beer at decent prices and that also has a great classic arcade. Castle video is an example of a "+ arcade." Who would ever think that they'd find a pinball arcade located in a video/bookstore that also has storage and uhaul rentals? Sometimes an outright arcade is just not enough so you have to find what works. Also, you might be able to avoid some zoning issues (towns tend to hate arcades and entertainment zoning). Think about Richie Knucklez. His place is what I would call a "+ Arcade." He runs an arcade showroom that is open once a week from 6-10 on Fridays as an arcade. 10 bucks, all you can play, 6pm-10pm. Based on joining a few Flashback Fridays at Richie's, I can say it looks like he draws a decent enough crowd for increased income.
3.) Niche Arcades My personal favorite. These are arcades with what I like to call a "gimmick." I use the word gimmick in a positive way for this. A straight up arcade alone is not good enough in most areas to make it. This is why you need something unique to provide your customers. First, think about some games that provide a unique experience that can not be had at home on your couch. These are what can pull people out to the arcades. I had a great conversation with Andy (who started and ran TGA with his wife Chie and is now the star of the Japanese Dead Rising 2 commercial) via e-mail and he said that you will have to provide a unique experience to get the people to travel to your arcade. What that unique experience is will depend on your community/customer survey. Check around your area and see what is missing. Andy filled me in on the complete lack of Bemani games in the New england area. Games like DDR, Beatmania, and Pop'n Music can be great for drawing a crowd if you keep up on the maintenance. Pinball can also provide a great unique gaming experience. Hosting tournaments, events, gatherings, all of these are great ideas to promote your niche arcade and try to build a community around your business. Again, you want to make sure you know what your possible customers want. Creating a nice mix like 8 on the Break in New Jersey has can prove to be vital. 8 on the Break offers a mix of everything, pinball, Bemani, driving games, fighters, shooters, pool, food, and the occasional classic game. People are willing to travel if you provide them with what they want.
4.) Beach Arcades These I would imagine would be hard to get into. Basically what I know about these arcades are from visiting them. They seem to draw a rather huge crowd during the summer due to the foot traffic on the boardwalks in the area. Provide some AC and you have a nice cool down place for people to get out of the sun. My one big question about beach arcades has always been, "what do you do during the off season?" Some beach areas shutdown for the season. this means you have to bring in enough profit during two months to last the year. To me, this sounds very risky. On one hand you are almost guaranteed foot traffic, while on the other you have 2 months of key business, possibly 2 months of slow business,, and then 8 months of nothing.
5.) Museum Arcades These can be a pain to start and can be quite risky while also offering some tax benefits. These have also become more popular recently. Funsopt has ACAM, New Jersey and Vegas have Pinball Museums, and upstate New York use to have a retro museum with pinball. Key word is use to. Unfortunately the owner was forced to close due to some antiquated laws in New York against Pinball. A month (or two) later, the mayor of the town rode in on his fame white horse with a new law saying "games between ______ and ______ years are now legal to operate" only to find that sometimes forcing a business to close for a month or two is enough to kill it. Way to go New York. So museum arcades are a viable option under the right context. weigh the pro's and con's. I'd imagine if you owned the building and had another source of income that this would be more likely to work out.
Well there's my take. The current climate is very bleak for the stand alone arcade, but getting a little creative, offering an experience that can not be replicated at home, and providing a niche group with what they want can get people out of their homes and traveling to your arcade. There are quite a few people out there who love the arcade experience and are willing to travel as long as you provide them with what they want. Stay tuned as I find out more as I continue to work on opening an arcade of my own.
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