Money In vs. Playtime
Back in the early 1980's the average game cost between $2500 and $3000, average employee wage in an arcade: $3.25/hour. Videogames were a fairly new concept in the 1980's, although they had been around since the early 1970's, their popularity didn't really take hold until Pac-Man came out. Like the game or not, Pac-Man really started the videogame boom years. Back in those days, arcades were popping up everywhere and in any place that had a vacancy. For those of you who remember, you know what I'm talking about. It was crazy to watch, but if it had a monitor and a coin slot, people would play it. At that time, there were many operators who were new to the business and relatively few people were paying attention to the amount of time players were spending on a game. All that mattered was how much money was cashed out at the end of the day. The guy playing Asteroids for 5 hours straight on a quarter wasn't drawing too much attention.
Fast forward a few years to the mid 1980's. Now the industry as a whole is starting to decline. Players are getting more particular about what they want to play and they want better graphics, better gameplay and so on. That, coupled with the decline, weeded out some of the lesser game manufacturers. Now you're left with a few major game makers who have less competetion than they did a few years back. The game graphics do get better but the game prices go up also. With prices going up and the arcade industry in a slump, operators start to carefully analyze their income potential. A few years back, that guy playing Asteroids for 5 hours on a quarter wasn't drawing much attention but now he is. Operators were getting scared and they relayed their concerns to the manufacturers. This is when you started to see games that would either have a set ending point, or would allow you to continue if you inserted more money. Operators needed to maximize their income to survive.
Fast forward again to the relatively recent time. The 1990's brought some good games to the industry that have been mentioned here before; Daytona USA, The Cruisin' series, Star Wars Trilogy and so on. Now things have really changed since the early 1980's. We bought four sets of Daytona USA which are still linked as an 8-player unit. Cost? $17,500 per pair for a total cost of $70,000 for the 8-player setup! Star Wars Trilogy with the 50" monitor; $17,000. Top Skater; $16,000. Two Hydro Thunder deluxes, $20,000. Tsumo deluxe simulator; $25,000. You can see where I'm going with this one. With game prices like that, there has to be some way to be sure that you'll make your money back before the popularity of the piece wears off. Obviously, big games like the ones I've just mentioned have more staying power than say the Street Fighter series that had to have a new version every 4 months. I'm not even going to get into that whole series of unimaginative garbage.
Yes, the big games will continue to earn money for some time but we're now faced with a higher up-front cost and all of our operating expenses have soared in 20 years. The kid who started at $3.25 20 years ago now starts at $6.25. By the time you're done with all the extras such as unemployment taxes, state taxes, workman's comp, liability and so on, that person really costs you about $8.25 per hour. Not that any of that interests the average player, but it does affect them since those costs have to be passed on to them. I know it would be nice to have games again that you could stick a quarter in and play for an hour but times have changed. If your business has seasonal cycles like ours does, that one guy who used to play for 5 hours straight can really have an effect your income, especially on a busy rainy day when you stand the best chance to make money. Arcades are a business and just like any other business, they need to turn a profit or they won't stay in business.
This article was originally written by Gary Vincent who is an arcade manager in New Hampshire. This was reposted with his permission. You can view the original article on the klov.com message board.