Playbook #098: Arcade Machines
🖼️ The Big Picture
Pac-Man, Donkey Kong, Space Invaders, Street Fighter… almost every adult can relate on some level to the nostalgia of playing these classic arcade games. However, since their peak in the 1980’s, arcades have been on the decline, shutting down across North America… So why should you care about them?
Well, gaming has certainly changed over the years, but today it’s bigger than ever with the entire video game market projected to eclipse $380 billion in 2023. And as we saw during the pandemic, demand for all collectibles rose as people longed for the good old days.
So if you love games, how can you win with this niche opportunity?
Between virtual reality technology continually improving and the incredible access kids have to games on their phones and at home, it’s hard to imagine old-school arcades coming back in any major way. And while there are some successful people with “arcade routes” (similar to vending machine routes where you place machines in a location and split revenue with the business owner), that’s also a relatively tough nut to crack.
Nonetheless, there are opportunities to get involved in various ways as a collector, investor, and business owner.
One model that’s seen a resurgence in recent years is the “arcade bar," as they provide a unique and nostalgic experience bringing you back to the good old days (and games). Combining these games - and the feeling associated with them - with another model such as a restaurant, bar, or even a candy shop can be a recipe for success.
Family Fun Centers like Dave and Busters — in great locations — can also do well. With all the innovation coming in augmented reality, virtual reality, the growing popularity of eSports, and the cultural trend of millennials having the most spending power and a desire to share the influences of their youth with their kids… there’s a lot of opportunity in this space.