How Arcades Really Make Money

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The 1980s was the golden age of arcades as games like Space Invaders and Pac-Man captured the attention of millions in the U.S. But since the 2000s, arcades have been disappearing across the U.S. Customers have shifted their spend to home and handheld consoles which outclass arcades in convenience, value, and entertainment.

Through the 90s, arcades were essential establishments for children and adults alike. Nowadays, the few still hanging on rely on alcohol and nostalgia to make ends meet. On paper, the broader physical entertainment industry seems doomed. Retail has been trending down since 2010 and the only sustainable businesses are big-name roller coasters and theme parks. But if we look beyond the numbers, arcades aren’t going extinct. Market transformation takes time and what’s happening now is a changing of the guard.

There’s a new generation of companies that have shed the opportunistic, turnkey economics of the past and are building original entertainment experiences not replicable by any console or PC. In this Modern MBA Original, we’re diving into the futuristic business of arcades from the macro-to-micro, starting with the biggest arcade chains in Chuck E. Cheese and Dave & Buster’s all the way to two innovative startups in New York City who have made very different bets on the future of physical and digital entertainment.

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Featured Businesses
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👾 OS NYC (Samer)
https://www.os-nyc.com/
  / os_newyorkcity  

👾 1,000 BOXES (Gabe & Dave)
https://1000boxes.game
  / 1000boxes  

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