Did Arcades fail because the did not adopt the Hollywood Cinema business model?

Video game Arcades were a big hit in the 1970's 80's and even 90's they used to be like the cinema where you would go to see the latest games.

Unlike Cinema video games did not have time to set up a Silicon Valley version of Hollywood. The technology moved too fast with companies rising and falling within years (e.g. Atari, Moores Law).

What if video games had adopted the Hollywood Cinema option, where the only place (for at least a few months) where you can play the latest games is in the Arcades. Then they are released onto platforms globally.

What impact would this have had on the industry and types of games we would be making and playing?

 

There would be only one type of games: games that make money and they all would look alike... like all the films we can see today.

 

What a terrible idea.

 

Arcades are still extremely popular in Japan aren't they?

 

This approach is used... or has been used to an extent in japan, for certain fighitng games (Guilty Gear?, also IIRC Street Fighter/Tekken)

We had this discussion a while ago. Arcade format is not suitable for many game genres. (How many quarters would it take to finish Witcher 3: arcade edition?).

For arcades to actually work, the arcade should offer something people can't experience at comfort (?) of their own home. For example:

 

Arcades simply moved into the home when home hardware became more cost effective and could match arcade visuals. They're called consoles.

If you feel like correlating, look at the spikes in console sales along with reduction in arcade games released by well known manufacturer/developers in the west. The east does not count because by large, arcades are still going strong over there due to cultural differences, but also were impacted by console sales. So this observation that there's this major decline is (mostly) western specific.

8 bit computers weren't able to impact arcade sales. They did try with various grand claims of "arcade perfect" but fell way short of the market. We needed 16 bit to start driving nails into the arcade coffin.

The Snes and Megadrive hit arcades hard because the killer app of the time was Street Fighter 2, and this came pretty close for those humble machines at home. Close enough to stop pumping quarters.

The consoles that made major shifts were the Nes, Snes, Megadrive (genesis), Playstation. After Playstation it was pretty much the final nail in the coffin. You didn't need to go to the arcades for ridge racer and friends.

Cinema business model:

There is a similar correlation for cinema, but cinema fought back. It can fight back because it has 3D, it has a time limit on when the film can be released for home viewing, and there are of course the food sales. These practises allow cinema to remain viable for profits.

Mostly though, it's the time difference. If you could buy the film at home on cinema release day, cinema would die overnight. No question. It's been proven with trials. Netflix also does limited releases on the cinema but that's so they can qualify for awards. They do not make any money with theatrical releases.

 

Yep. Pokken was also Arcade first in terms of updates, and Dissidia NT has been in the arcade for years but only recently got announced for PS4

 

Does the cinema business model work for TV? Would soap opera's (literally named for the items they advertise) work on the silver screen?

There is as much of a difference between TV and cinema as there is console and arcade (not to mention mobile). What works on one platform might not work at all on another.

 

Fixed that for you. You can purchase the equipment necessary for at home viewing of 3D movies but between the cost of the 3D DLP projector (average of $600), cost of the 3D supporting Blu-ray player (up to $150), cost of the projector screen ($60), cost of the active shutter glasses supporting 3D DLP projectors (about $25 each) it's not exactly cheap.

https://www.amazon.com/BenQ-DLP-1080p-Projector-W1070/dp/B00A2T6X0K/ - $650
https://www.amazon.com/Optoma-HD142X-Lumens-Theater-Projector/dp/B01HQCF6R6/ - $550

https://www.amazon.com/LG-BPM55-2D-MultiZone-012345678/dp/B0166ZLE1Q/ - 3D supporting disc player - $150

https://www.amazon.com/Best-Choice-Products-Projector-Projection/dp/B0057AGM5K/ - $60

https://www.amazon.com/Ultra-Clear-Rechargeable-Shutter-Glasses-Projectors/dp/B00KUIYUP8 - $25

If you can afford the cost of the equipment though the movies themselves sell for the same prices as normal movies and come in both 2D and 3D form in the same package just in case you don't want to play it in 3D.

 

I thought about it but home 3D didn't take off so I felt it was useless to include it in the conversation.

 

Yep.
Moreso because of the fighting games and virtual pachinko games etc.

 

Arcades are still plausible for experiences to expensive to get at home. For example there plenty of VR arcades around my area.

The internet/gaming cafe is also still pretty popular. It's a cost effective way for young people to play the latest games.

I'm not sure the Hollywood 'new release only' model would work for games. Very few top tier games these days can be properly played and enjoyed in 1-2 hours. So releasing them in an arcade format wouldn't work. And second rate games wouldn't have the draw power to bring people in.

 

So a modern Arcade game could not have a save to USB stick feature, with loads costing credits?

Or some other kind of smart card system, to save on having to have all the coin slots.

 

Ed Logg created Atari's arcade classics Asteroids, Centipede, Gauntlet, and others and he has a good discussion of the arcade industry business model in the first 5 minutes of the GDC Guantlet talk. See the video here for reference.

With regards to Cinema I thought they already tried that in some degree with laser disc games. Sega's Astron Belt, and Atari's FireFox come to mind (which were in the 1983-1984 time period).

 

Arcades were the central hub of the latest greatest custom hardware and games. Once games spread and became much more available on better and better hardware, particularly PC, it just wasn't necessary to go to the arcade anymore. Their entire centralized model of being cutting edge and trendy was replaced with commonplace, affordable hardware at home. There is no going back unless the arcade would suddenly have fantastically powerful hardware again and absolutely extraordinary games the likes of which you cannot play anywhere else.

That said I always thought it would be cool to go to like a gaming lounge or something which has big screens and high-end hardware to play cool games and eat food as a group/family or whatever.

 

The key "business feature" about arcades was to give short burst of expensive intense gameplay. Very short learning curves, instant audiovisual rewards.

For it to work again, I think it's theoretically possible, but not by keeping traditional tech. It needs, much like before, to possess unmatched graphics, sound, and game controllers.
You can't compete with people's big screen tvs and PCs with just a screen and basically PC wrapped in wood that works with coins ... you'll need a monster rig, a screen that almost surrounds the player, maybe something with short throw projectors, 7.1 dolby, and a well built infrastructure, something you can't have at home. Arcades used to be something hard to access, uncommon technology, so only something hard to access can perpetuate the business.

Get a hold of this chair:

And never forget arcade multiplayer ... as often it's a chance for people to do something when they get together, for many people it's unlikely to plan an online match, so casually play an arcade together is a new experience.
In any case, arcade multiplayer is different than "multiplayer from home" experience.

Arcade still has the magic, it's just a market got overwhelmed and replaced too fast to adapt.

 

There are plenty of arcades left in malls, or combined into larger experience like PlayTime or Dave and Busters...

 

Arcades wouldn't work with the same business model as cinemas. Largely due to the fact that most arcade games are designed to be experienced with only 1-4 players at a time. A film is shown to hundreds of consumers at a time. Charging for an arcade similar to how you charge for a film wouldn't be financially efficient.

 

On the surface that seems like a good argument, however...

Say a Cinema charges $5 (1980's cinema ticket) a person and can seat 200 people that's $1,000 per movie or $10 per minute (100 minutes).

For argument sake you need 200 m.sq to accommodate those people your now at $0.05 per m.sq per minute.

An arcade machine takes $0.25 on average every 2 minutes ($0.125) and occupies 2 m.sq so can take in $0.0625.

So in 100 minutes over 200m an arcade could take in $1,250. With modern flat screens you could get their footprint down to 1 m.sq doubling this.

Like films arcades would only work if they had new games before general release.

Additional benefits to game companies an extended beta/gamma test window, funded by players.

 

Nope. People don't get magically teleported into your arcade box to throw money at it.

So a lone arcade machine will generate you zero dollars.

You need:
1. A building.
2. A reason for people to be in that building.
3. An arcade that looks sufficiently interesting.
4. And an atmosphere that encourages the people to try the arcades out.

And let's not forget that the building should be located near some busy street with lot of traffic.

Also, movie theaters have multiple sources of income, and not just tickets:
http://www.slate.com/articles/arts/the_hollywood_economist/2006/01/the_popcorn_palace_economy.html
Food, tickets, Ads.

 

Null argument, an empty seat in a cinema generates zero dollars (and buys no popcorn nor watches ads).

Mind you a VR camera in an empty seat could earn more than an empty seat online!

I think if the games industry or even indie game developers setup Arcades to promote/trial and pre-release their games it could work.

Our economy is on a decline, and hardware prices are rising, high end gaming hardware is becoming out of reach for most gamers. Gamers can get powerful mobile devices and laptops that are way beyond yesterdays arcade machines in performance but nowhere near high end hardware.

Note: Arcade Cabinets used to cost thousands of dollars and be unique to a game.

Imagine if Nintendo, Xbox, EA, Blizzard or Unreal / Unity got together with a Starbucks or Weatherspoons (bars) and started setting up high quality Arcades.

And like you say the Arcade would probably earn most of it's money from food and merchandising sales.

Arcades like Cinemas could provide a low volume test outlet for products or hubs for fringe/independent/explorative workshops.

Also people like events and socialising with people who like what they like, it's a cultural thing.

And by now we should be over the Arcade/Video Game stigma's of previous decades as games are in our homes and on our mobile devices.

Maybe we need fun zones in society, now more than ever.

 

Even if a seat is empty, you still get Ad revenue.

Start your arcade business, see how it goes, report back.

I'm not sure where you got that idea from.

 

A modern arcade could provide VR cinemas as a feature or VR sports or music events only with super high end VR rigs.

 

Try it. Start your own arcade. See how it goes. Report back.

 

No. This is a discussion thread where we talk about things, not do them.

You should know that most of the forum works this way, we can argue for hours over silly details and no one actually tries or tests anything.

Mind you if I win the lottery I think I will setup an Indie game Arcade/Maker hub.

 

What's the point of talking about it if absolutely nobody is going to do anything?

 

What is the point of any idea or discussion but a way to explore or play with something that is not real. In a way it's like the most virtual/abstract game you can play.

 

Arguing that VR rigs are a solution is pointless. The hardware and software for VR is more expensive than standard hardware for a basic arcade machine. Arcade machines are also constant drains on resources, as they have to be kept on constantly. (while a movie theater seat is just a seat) The maintenance and up-front cost of an arcade will always be greater than that of a movie theater, even with modern pricing and hardware. And the only way to avoid up-front licensing costs for games is to make them all yourself. And the efficiency of space for a movie theater is also always going to be greater, as you can pack movie theater seats a lot tighter than arcade machines.

The simple fact of the matter is that the traditional arcade model is obsolete, and far more difficult to monetize in this day and age. This is why you see bar-cades, and not dedicated arcades. Selling booze, with the arcade machines mainly serving as ambience, is much more manageable business model. Booze sells, and people are willing to pay for it.

If you want to cultivate an arcade-style experience in the modern day, you have to flip your thinking a bit in order to make it both efficient and profitable. You have to find other sources of monetization, ones that people would be willing to pay for. And you have to re-think the experience that people are having at the arcade, and why they would want to come back. It's not impossible, but it is challenging.

 

Arcades died because they were more expensive, less convenient, and made games focused on eating up quarters in short play cycles rather than allowing any sort of progress. This is EXACTLY why NES was so successful, because Nintendo shifted the focus of games from being quarter eaters into making experiences.

And movies are actually dying BIG TIME for the exact same reasons. More expensive, less convenient, and they are catering to an out dated experience. Netflix can tell a story as long as it needs to be and is okay with reaching a conclusion.

Meanwhile Hollywood wants me to go cram into a theater for $16 next to a bunch of cretins who have no sense decency to watch Fast and the Furious 10, which in turn was cranked out by a writer's mill and packed full of special effects added by the lowest bidder.

 

Theater revenue is going as strong as ever, and movie revenue is constant increasing.
Also, theaters make very little on ticket sales, they used to make almost nothing, and had to pay for the print (film) a decade or so ago. Their revenue is in popcorn and soda.

 

I don't know, man ticket sales may be going down, but box office is still climbing (albeit terrain is getting rocky)
http://www.the-numbers.com/market/

 

Movie ticket sales are going down.


Also keep in mind that that's also not accounting for inflation, which has gone up by 21% since 2006.

Which means that 4.4 in 2006 is more like 5.324, which means sales have dropped almost 30%.

Sure, movies like Avengers and Star Wars are making bank. But over all across the board Hollywood is hurting.

 

Count as decreased slightly in the last decade, there was an increase in attendance in -2005, so if you start there it looks worse, if you look at the overall trend it is pretty flat. Difference between the 2005 peak is less than 10%, about same it increased between 1995 and 2005. Full picture shows not a decline, just a small boom 10 years ago.

But box office revenue had another record setting year this year, revenue has increased. (Even when adjusted). But even that isn't the full picture, as secondary market revenue has dramatically increased for distributors. And still that isn't complete, as theatres are doing better than ever because of alternate revenue streams live rentals and live shows / special events and premium pricing / broader sale items and optioned process. (Reserved seating has reduced seat count, but increase sales). Ever played Halo on the big screen? It's wicked fun. And expensive.

Seat count may not be as high as it's peak a decade ago, but theaters are making much more money as are distributors/producers. Its not remotely dying, it's thriving. But it is also evolving a bit, it's becoming more of a premium experience.

It's like saying video games are dying because of a constant decline in sales of physical distribution.

 

Those numbers are for ticket sales (how many tickets were sold). Not sales revenue, so inflation doesn't apply.
That graph shows ticket sales were 1.4b in 2006, 1.3b in 2016. (1.3b in 1996). That's only number of seats. Less than 10% change. While ticket prices have doubled since 1996, and gone up nearly 50% since 2006. (Not counting premium pricing... which generally goes to the theaters)

 

Plus its only US and Canada. I'm not sure this trend holds globally.

Hollywood might be hurting (citation needed). But if it is, its likely because the rest of the world can also make good movies these days. We can do some pretty spectacular movies here in Australia/NZ. And I'm sure the rest of the world can do the same thing.

 

I know that East Asia has become a major player when it comes to ticket sales. Like, it's one of the reasons we're starting to see a lot more East Asian celebrities show up in movie casting lately. ID4-2 and the latest Transformers movie both come to mind as examples.

 

You make some good points @zombiegorilla.

I suppose I'm just repeating what I've read on face value.

I stand corrected. Thank you.

 

I'm just kind of a movie geek, and my sister ran a megaplex for 15 years. Some people dig baseball stats, I dig cinema stats. . It's my nerdy thing. Also it's a fascinating industry because it is so very odd how it works.

 

What I don't understand is that given how much their margins supposedly come from popcorn and soda, why the heck don't my local cinemas make that a positive experience?

 

Same. Honestly I'd be much happier if gestapo didn't check me for snacks and WATER when I entered. I am training to become a professional smuggler every time freinds drag me to see a movie.

 

Try going to a "brew and view" sometime.

MUCH better experience.

 

They don't do that here. My issue is that they also don't appear to clean the candy shop area. The floor is visibly filthy because of the combination of sticky self-serve drinks, loose self-serve popcorn, many feet and obviously few mops.

 

Only one on google maps.
Other side of the world.
Thanks for crushing my hopes.

 

I have generally been preferring the sit-down-and-eat style theaters that have been opening up. I don't even mind buying some of their food. One of the places near me does some pretty good chicken strips, and even puts out a solid hamburger. A different theater near me is extremely ritzy, and has expensive, but very tasty food. Most of these places allow you to reserve your seat on-line ahead of time, so you don't have to go to the theater early in order to claim a decent viewing angle. You can just show up when the show is about to start, and order a tasty meal.

For these experiences, I generally prefer to see films that don't require quite as much active thought, as at least some portion of my attention has to be devoted to eating. Big-budget action films are usual candidates for this type of movie-going experience.

 

My local cinemark is fantastic, always clean, reserved, big comfy recliner chairs, great sound proofing and fewer seats so every seat in the houses are good. Plus beer, wine and a decent menu. Other ones around town aren't as nice yet, but most are renovating.

Also, up in the city we have a d-box theater, I haven't been yet, waiting for the right flick.

 

Totally. Love those. And to bring it back around, most of the local arcades are like that. I go to the arcade about once a month, and those are dinner, drinks and lots of big multiplayer games. Arcades seem to be doing pretty well, as more keep popping up, but the all seem to be that full experience.

 

There's nothing wrong with trying to monetize that sort of experience with food and drink. People like to eat and drink together.

I actually think that some arcades might do better by charging a cover charge instead of charging per-game. Treat it like a club, where you go in, hang out, eat, drink, and play games. Charge $10-$20 to get people through the door, and charge for food and drink, but the games would be free, play as much as you like.

The thing with arcades, and classic arcade games, is that they are all built around their original monetization model. In order to adapt them to a new environment with different monetization models, you can't just recycle the same old games with the same old designs. You have to develop and design new games that aren't geared toward shoveling quarters into a slot. If you are going to focus a modern arcade around social interaction and a more multi-player mentality, you need to design the games with those focuses in mind.

 

I guess at the theatre end, a lot more revenue comes from snacks than tickets? at least in the UK where the food will cost much more than the price of admission!

 

Theater bookings are bidded on by buyers. So a theater will pay xx amount to the distributor which is based on weeks of selling out. (Though it varies a lot for a variety of reasons.). So the theater won't make any money on film till after a point. (If ever in some cases). But popcorn and soda is all the theater. And the markup is insane. It is very nearly pure profit. A large soda is a few cents, including cup, and often ad space is sold on the cup, driving the cost below zero. Popcorn is even more so, at a fraction of cent. Which is sold at 5-7 bucks. So yea, a popcorn and drinks is where the money is for theaters.

 

So true. They charge you $7 - $10 for a bag of popcorn, and that stuff is pennies on the dollar to produce at the theater. The popcorn makers themselves aren't that expensive these days, and the overhead to operate them is negligible. Clean one of those things out every couple of weeks, and they can run for years with little to no maintenance. The kernels can be bought in bulk. Even after the initial investment in hardware, they're spending no more than 20 - 30 cents for each bag of popcorn, and selling them for WAAAAYYY more than that. The markup on the candy isn't quite as good, but anyone who's been to a grocery store knows that they're charging twice or more what that stuff is worth anywhere else.

Soda fountains have always been a racket, no matter where you go. They can produce that stuff for cents, and sell it for dollars. And you've got to have it, or at least something to drink to quench your thirst from that salty popcorn.

This is part of why I like the dine-in movies so much more. Yeah, I might spend a dollar or two extra to get a meal instead of a bag of popcorn. But it is an actual meal, that will satisfy my stomach, and isn't the theater gouging me on a snack.