The Fate of the Neighborhood Arcade


Black Friday, otherwise known as the day after Thanksgiving. It’s an ominous-sounding term, but all it means is on that day retailers are expected to move from the red to the black; i.e. from debt to profit.

That’s the idea, at any rate. What Black Friday means for certain, however, is a national outbreak of holiday shopping madness. Sales and savings are everywhere as frenzied consumers throng shops, superstores, department stores and shopping malls.

It sounds stressful, and I think we can all agree that it is.

But it’s a good thing for retailers, which makes it a good thing for Nathan Foser, because he’s in the coin-op business, and the video game arcade he manages operates in the Dayton Mall. The arcade is called Pocket Change, and the more people shopping at the mall, the more quarters (or tokens, as the case may be) his machines are liable to eat.

Though he would probably hesitate to agree, you might say what Black Friday means to Foser is job security. With the advent of inexpensive PCs, sophisticated gaming consoles like the Playstation 3 and the XBOX 360 and, most recently, online play, the demand for arcades isn’t what it used to be.

But video games are big business. In 2006, industry revenues from the sale of hardware, software and accessories grew 19 percent -- from $10.5 billion in 2005 to $12.5 billion. This November, revenues surpassed that number, according to market tracking firm The NPD Group.

And December of course was expected to be an especially strong month. In 2006, December alone totaled $3.7 billion.

But these days the industry’s focus is no longer the arcade; it hasn’t been for quite some time. It’s your living room or your bedroom, and that could mean the days of the neighborhood arcade are behind us.

“Fifteen years ago you could walk into any mall in America and find a little arcade by the food court,” said Michael R. Rudowicz, president of the American Amusement Machine Association and former president of Konami Inc.’s coin-op division.

“But the player base has shrunken, the mall is too expensive and the kids are more into other things. Those days are gone.”


In 1983 Dayton played host to a rather unusual event when it served as the first stop on the tour of the U.S. National Videogame team. The team was racking up high scores as it traveled the country in a huge bus filled with video games, and players were taking on all challengers.

One of the players on that bus, a teenager named Billy Mitchell, had just set the world record score of 874,300 points for Donkey Kong. He was profiled that year in Life Magazine. That was the early ‘80s, the Golden Age of video games. It was also the heyday of video game arcades.

Back then the U.S. boasted more than 10,000 arcades, compared to the 3,000 or so around today, according to the AAMA. (BMI Gaming puts the number of arcades at around 5,000 as of 2004).

“In those days there was no other option for playing video games,” says Walter Day, the founder of the U.S. National Videogame Team. “The world of video-gaming was the arcade.”

Day currently runs which tracks and records videogame scores, player rankings and tournament results. The new documentary, King of Kong, in which he and Billy Mitchell appear, chronicles the latest contentious race to set a new Donkey Kong world record. The film will be released Jan. 29 on DVD.

In the early ‘80s, Day himself owned an arcade. His arcade, from which his team -- and later his Web site -- would take their name was called Twin Galaxies, and when Day opened shop in Ottumwa, Iowa it was a boom time for arcades. The same year he brought his team to Dayton, the Nintendo Entertainment System was launched in the U.S.

A year later Day’s arcade went out of business.

“We closed in 1984,” Day said. “The trouble was that more and more arcades were opening up. Everybody thought they were going to make a fortune, but suddenly we were all vying for the same dwindling number of quarters. So we all went out of business together.”


Between 1990 and 2000 the number of coinoperated video games in the U.S. declined from 750,000 to 450,000, according to industry publication Vending Times. By 2004, revenue from coin-op games had gone from $2.3 billion in 1994 to a mere $866 million.

In 2001, video game publisher Midway, responsible for the arcade hits Mortal Combat and Smash TV, completely shut down its arcade division because of heavy financial losses. Two years later, Konami, which introduced Dance Dance Revolution to the U.S., did the same for its American arcade operations.

In the ‘80s and early ‘90s arcades were the province of the best hardware and could provide players with sharper graphics, faster and more innovative game-play than could even the best of the home consoles or PCs. But the industry failed to keep pace with consumer demand.

“When the NES came out, consoles were starting to equal what you could play in the arcade,” said Gary Vincent, co-founder of the American Classic Arcade Museum, a nonprofit organization devoted to preserving coin-operated arcade games.

“That was a contributing factor. But people forget it was a fad to begin with, and like any fad, it was self-limiting.”

Vincent has worked in the industry more than half his life, starting out as summer help in 1981 at Funspot, which today advertises itself as the largest arcade in the world. It’s also where the museum’s video games are located and can be played by the public. A few classic titles are available online at the museum’s Web site:

“Arcades pretty much died,” Vincent said. “Depending on where you were located in the country it happened at different times.”

According to Vincent, Funspot thrived in the early ‘80s and was branching out to new locations. By the mid-‘80s arcades in the west started dying off at an alarming rate and, in 1986, when the trend moved east, Funspot began to sell off its other locations to shore up the original Weirs Beach, New Hampshire location.

In order for Funspot to keep going, the business model had to change. Today, it is no longer an arcade. Like GameWorks and Dave & Busters, it’s an FEC (Family Entertainment Center). Funspot added a 20-lane bowling center, a tavern that seats about 100 and a commercial bingo hall which it rents out to nonprofit organizations to run games.

“We had all our eggs are sitting in one basket,” Vincent said. “We were strictly video games, pinball and prize games, and that was it. If we hadn’t diversified, we probably wouldn’t be here anymore.”


Most of the games at Pocket Change in the Dayton Mall are rather old, and some look it. It takes a while for games to cycle through and generate revenue for the purchase of newer ones.

But Foser has worked there four years now, and he likes his job. He reluctantly admits he owns a Playstation, but says he rarely plays it. He likes the coin-op games and he can play them for free.

Across the hallway from his arcade is a Funcoland, which is owned by GameStop Corp. which also owns the GameStop store on the level below it. Both sell the same video game consoles and video games. Foser says he went in there once to check out the PS3 and see what all the fuss was about.

“It’s true that from a graphics standpoint, you can update your games at home much faster,” he said. “But people don’t come to Pocket Change just for that. They come here to meet people. We have tournaments and birthday parties. People make friends here.”

What Foser, Day and Vincent will tell you is that the allure of the arcade lies not so much in the games themselves as in the arcade’s role as a gathering place. As long as there are players in it, an arcade can provide an atmosphere of friendly competition and camaraderie.

In recent years, video games have moved online, and designers have built vast virtual worlds in which gamers can gather, meet one another and create a sort of community, but players must do so from the confines of their bedrooms or living rooms.

And as social interaction goes, that’s rather limiting.

“People log more hours playing video games today than they did in the Golden Age,” Day said when asked how the gaming experience had changed since the days of the arcade boom.

“Think about it. They play all weekend, all night, all morning, all day, during times when an arcade would be closed, and they don’t have to stop when they run out of quarters. That definitely can’t be completely healthy.”

As for Foser, he says that Pocket Change is here to stay.

Time will tell.