arcade business economics

Arcade Business Economics: Worthy Investment?

Arcade cabinets may not typically come to mind in our digital age. But believe me when I say the arcade sector is far from a bygone era. In fact, it continues to thrive and attract both nostalgic gamers and new enthusiasts alike.

Do you remember those late nights spent with friends at your local arcade, battling for high scores on classic games like Pac-Man or Street Fighter? Those were some unforgettable memories that we cherish even today.

While times have changed since then, the spirit of arcade gaming still remains intact. The charm of collaborative gaming experiences and the desire for real interactions make arcades a worthy investment even in this virtual era.

But what are the key drivers behind successful arcade business economics? Let's dive into some essential factors that contribute to their sustained popularity. We'll also answer some important questions and give you ideas if you are interested in owning arcade cabinets and running a business. Stay tuned!

Is Arcade Gaming Still Relevant?

Without a doubt, arcade gaming is still incredibly relevant in today's world. Yes, we have consoles and smartphones now where you can enjoy gaming while at home. But arcades provide something unique that can't be replicated elsewhere.

You will mostly find arcade cabinets in places like kids' trampoline centres or tucked away at the back of bowling alleys. They serve as an exciting add-on to these venues. Interested people try their hand at games if they have some spare time or while waiting for their turn.

Moreover, modern arcade-style cabinets come equipped with steering wheels, handlebars, or gas pedals. These features give players an experience impossible to recreate on home consoles or mobile devices. These engaging setups attract both youngsters and adults who are looking for thrilling gameplay beyond what traditional platforms offer.

What Are the Key Drivers for Arcade Business Economics?

Several important factors impact arcade business economics and contribute to its profitability. Let's go over each of them in detail and discover the keys to success with arcades!

  • Diverse Revenue Streams

The business landscape today is extremely competitive. What will benefit you is diversifying your income stream. Arcade and entertainment complexes are now adopting the concept of multi-use facilities to stay ahead. If you can identify the gaps in your local area, you can fill those needs creatively.

Turning your complex into an event centre opens doors to birthdays, family celebrations, and social gatherings. You can also think of adding activities like bowling, laser tag, or axe throwing that can attract a wider audience. It will eventually boost revenue.

Having an on-site restaurant or bar is another excellent option. Potential sales can increase with snack and beverage offerings. Alcoholic beverage sales contribute the most towards revenue growth for arcade establishments.

  • Online Presence

In today's era, there is no doubt about the positive impact of a strong online presence for arcades. When people are looking for a place to have fun and enjoy some games, they often turn to Google or use maps to find the best options in their area.

You can create a Google My Business page and increase your visibility online. It makes sure that potential customers can easily discover your arcade. With proper optimisation, the process can make you the recommended destination for entertainment seekers in your locality.

Social media platforms like Facebook and Instagram also provide excellent opportunities to connect with your customer base. You need to regularly post about specials or promotions and engage with customers through comments or messages. That helps nurture loyalty among locals, who then become repeat visitors.

Your loyal customers not only generate recurring revenue but also share helpful word-of-mouth recommendations, which leads to new consumers.

Don't overlook the power of good SEO practices, along with establishing a solid online footprint. It is vital if you want sustained success in running an arcade business!

  • Facilities and Maintenance

You want to keep customers coming back for more. So you must provide them with a clean and well-maintained environment. Stay up-to-date with the latest technology trends. Then, invest in new machines that offer exciting gameplay experiences.

Regular tune-ups will help you avoid delays and make sure that all machine parts are functioning properly. This checks two important factors: customer satisfaction and future costly repairs.

You can never underestimate the importance of your staff! Friendly and helpful employees can greatly influence customers' experience at your arcade. If treated with care, customers would want to return for more fun-filled gaming sessions.

  • Current Economic Environment

The current economic environment determines the value and success of an arcade business to a great extent. It's no secret that the COVID-19 pandemic hit many industries hard, and arcades were not exempt. They were categorised as non-essential businesses when the lockdowns were ongoing.

However, since then, the industry has seen a resurgence as people look out for leisure activities to unwind and have fun. The amount of time people spend on leisure pursuits directly influences the growth potential of arcades.

What impacts customer spending habits at these establishments?

  • Employment rates,
  • Disposable income levels,
  • Costs of goods.

In times of economic downturns or recessionary periods, it becomes even more critical to adopt strategies to attract consumers while maintaining profitability.

When the economy changes, arcades and other entertainment centres that can handle the pressure tend to be more valuable, both financially and in terms of competition.

  • Location

When it comes to arcade business economics, one crucial factor that can make or break your success is the location. Choosing a site strategically close to popular areas will help you tap into a larger customer base. You can consider setting up shops near shopping malls, movie theatres or tourist attractions where foot traffic is high.

But it's not just about proximity; you need to understand the local market and cater to their interests. Researching your competition in the surrounding area will also give you an edge when marketing your business.

Remember, densely populated areas usually generate more revenue for arcades and are therefore considered more valuable locations.

  • Marketing Strategies

You have to target different groups with different strategies within the community. That way, you can attract a diverse range of customers. For example, couples may be enticed by “date night promotions”, or “birthday special packages” could appeal to families.

Hosting events and offering group discounts are also creative and impactful ways to draw in college students, high schoolers, and other individuals seeking entertainment options. A solid and thorough marketing plan that hits these target groups can help your arcade business make a lot more money and add great value.

Remember: strategic marketing campaigns aren't just important; they're one of the key drivers for an arcade's success!

arcade game machines

Should You Own or Lease Arcade Game Machines?

That's a major decision to make, and it all depends on your business strategy and financial considerations.

When you own arcade game machines, you get full control over the money earned. Every quarter (or prepaid swipe) goes straight into your pocket. It's mostly the case for larger amusement places with a wide variety of games.

On the other hand, leasing from operators can be beneficial if you're just starting out or have limited space. The revenue is typically split between you and the operator: 50-50 for video games and around 70-30 for redemption games, like claw machines, where prizes are involved.

Leasing also means that maintenance is taken care of by the operator whenever there's an issue, saving both time and money.

Here are the factors that your choice ultimately depends on:

  • Budget constraints
  • Volume of gameplay
  • Popularity of certain games in your location
  • Overall business goals.

How Much Money Does an Arcade Cabinet Bring in?

The returns from an arcade cabinet can vary significantly. There are locations that bring in a notable amount of revenue, but others may not be as lucrative. It all depends on factors such as the popularity of the games, foot traffic at the location, and customer engagement.

For example, if an arcade machine regularly brings in less than $60 a week, business owners might not think it's worth their time and resources to fix it. To make sure the business runs better, it's important to focus on the games and cabinets that can make more money.

Best Places to Set Up an Arcade

Location is everything when it comes to setting up an arcade. You do proper research, assess locations, choose the right place, and make a significant difference in the success of your business. Here are some factors to consider:

  • Understand your target audience and choose a location that aligns with their interests and preferences.
  • Look for areas with high foot traffic.
  • Ensuring easy access for customers is super important. You can select places near public transportation or with ample parking spaces.
  • Analyse existing arcades in the area and evaluate if there is enough demand to support another one without excessive competition.

A few examples of places you can consider:

Shopping Centers: Setting up your arcade in a shopping centre can be advantageous because of high foot traffic. There's also a chance for collaboration with other entertainment or retail establishments.

Restaurants: Guests waiting for their food can often engage in some exciting games to kill off their time!

College Campuses: College campuses offer captive audiences who are often looking for recreational activities during breaks or after class.

Tourist Destinations: If you're located in an area known for its tourism, consider situating your arcade near popular tourist attractions such as beaches, landmarks, or amusement parks.

get funding for an arcade

How to Get Funding for an Arcade

If you don’t have the capital of your own to start an arcade business, where do you look for funding? There are potential investors and sources around; you need to find the right one and make your case for the investment.

  • Bank Loans

Bank loans are always a reliable source of funding for your arcade business. Banks are often willing to lend money to feasible investment opportunities that have the potential for profitable returns.

But keep in mind that banks usually need some kind of financial guarantee from you or your partners before they give you a loan. This means having a starting capital of a certain amount, usually between 20% and 40% of the total amount of money in your business plan.

  • Angel Investors

Angel investors typically look to invest in innovative ventures with possible growth and tangible value. For example, if you have a unique concept or proprietary technology that sets your arcade apart from the competition, angel investors might see it as an exciting opportunity.

Angels don't just provide funds—they often bring their expertise and network to help accelerate the success of your business.

  • Lease Options

You might be able to get the money you need to start your gaming business by looking into lease options. A lot of businesses have lease programmes that help pay for major expenditures like gaming machines.

Their offers differ based on things like credit checks, payment histories, and personal or business financial records. This lets you get the necessary equipment you need without having to pay a lot of money upfront or take out huge loans.

  • Personal Network

Don't overlook the power of your personal network when it comes to funding your arcade venture. Reach out to family and friends who may be interested in supporting your business idea. Their investment can serve as a solid foundation and will allow you to approach banks or other sources for additional funding.

It's a great boost-up if you can start small with the support of loved ones. It will pave the way for bigger opportunities in the future!

Ending Thoughts

We are pretty confident to say that the arcade business can indeed be a worthy investment. The industry has adapted to the changing times and continues to offer unique entertainment experiences that provoke our nostalgia and desire for genuine social interactions.

But, running a successful arcade business is achievable only with the right plans and strategies. It's important to understand all the driving factors and the potential support you can have.

If you're seriously looking toward this adventure or planning to expand your existing arcade enterprise in NSW, Australia, Arcades Australia is the right source for top-quality arcade machines.

We provide arcade systems, including cabinets and classic video game machines, that will truly upgrade the gaming experience for both you as an owner and your customers.

So why wait? If you want to level up, visit our website now or call us for more information on how we can help make your arcade dreams come true!

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