Business Overview

Arcades are still a popular business type, because many customers enjoy an in-person social gaming experience. Even though online gaming is more popular than ever, playing games with others virtually via home-entertainment consoles or smartphones can still feel like an isolating experience. An arcade provides a physical space where fun gaming experiences can be shared with family and friends.

Who is this business right for?

Obviously, you should be a big fan of arcade games. This business includes the purchasing, maintenance and advertising of arcade games — and you’ll be surrounded by games all day, every day — so a passion for gaming is vital. You must also be a people person, as the job involves frequent interaction with customers. Also, if you’re handy enough to repair and restore games yourself, this is an environment where these skills can save you money.

What happens during a typical day at an arcade?

One of the most important daily activities at an arcade is inspection and upkeep of machines. Nothing is more disappointing to your customers than games being out of order, so it’s important to repair malfunctioning units immediately. There’s also quite a bit of cleaning to do, both regarding your games and the arcade itself. You’ll also need to frequently think about buying new machines, whether you get them from the manufacturer, or second-hand through eBay/Craigslist, or from other arcades. Finally, you should spend some time each day considering marketing strategies to help your arcade stand out from the competition.

What is the target market?

Your preferred customer will vary depending on what type of arcade you run. Traditional arcades are frequented by families and children; families can use arcade gaming as a bonding experience, while kids occupy the sweet spot of having disposable income without many entertainment options to spend it on. Meanwhile, “barcades” market to retro-loving hipsters who like to pair craft beer with vintage pinball. Finally, arcade/restaurant combos like Dave and Buster’s appeal to a variety of customers, from families to business people looking to blow off steam after work.

How does an arcade make money?

The standard model is charging customers to play your games, but there are a number of ways to do this. The old-school method of having your customers insert coins or tokens into the machines is still around, but there are some licensing and taxation issues that make this method less profitable than it may seem. Also, many people don’t carry cash at all any more, not to mention quarters. Another popular model involves charging an upfront fee for a certain time period of free play, such as $5 for 30 minutes. The model popularized by Dave and Buster’s has customers purchase gaming “points” on a swipeable card, which allows you to charge more for certain games.

What is the growth potential for an arcade?

Your growth potential will be determined by your game selection and client base. For example, one study estimates that you can net an average of around $200 per game, per week. However, complex modern games can cost nearly $10,000 each, so it can take almost a full year to recoup your expenses on a new game. Still, considering most machines are investments that will be in your arcade for years to come, each new purchase has the potential to be quite lucrative.