The Future of Arcades:
Profitsharing
It has long been lore that the American arcade experience is dead.
It has also long been lore that this decline is irreversible, and
stems from a cultural shift in players. No longer a place of social
gatherings, the now solitary arcade lacks this soul. None of the
above assertions are correct.
Looked at through less rosy glasses, the strength of arcades has
always been in offering players a new experience, not in offering
a shared one. While there were cultures of PacMan, Super Mario Brothers,
and Q-bert players, arcades have traditionally been a distribution
medium for new software, not a cultural medium facilitating communication.
The lone guy with a row of quarters playing space invaders is a
perfect example of this. Games in those days were single-player
affairs on jamma-compatible boards, utilizing a 4 position joystick
and two or (gasp) three buttons. Because such hardware was so expensive
to own personally, people needed to go to the arcades to have the
best play experience, and to play a wider variety of games.
Thanks to standardization, that is no longer the case.
During the NES / SNES period, arcade conversions were getting to
be "good enough" that one didn't really need to go to
the arcade to play excellent games. While the 2600 may have choked
on Pac Man (and don't even bring up Q-bert), the Genesis could reasonably
approximate NARC, and the SNES did a great job with Teenage Muntant
Ninja Turtles. It was during this time that arcades transitioned
from distribution centers to competition centers, thanks in no small
part to the phenomenon of fighting games. The 4-player TMNT: Turtles
in Time and the 6-player X-Men were all hits in the arcade, as were
a plethora of multiplayer shooting games, fighting games, and car
racing games (polygons were an arcade-exclusive back then).
But that changed with the Voodoo 3dfx and the rise of the computer
as a competitor to the console, as well as the coming of networked
gaming. Not only were computers capable of delivering compelling
realtime 3D to rival (though not, at the time, beat) arcade gaming,
but it also could connect separate players to people across physical
boundaries. At first this led to neighborhood games of Bolo, later
to direct dial-up competitions, and finally to the remote multiplayer
frag-fests and Massively Multiplayer Role Playing worlds we see
today. The anonymous instant competition with strangers of similar
skill levels previously provided by arcades is now available right
at your desk. Likewise, the graphical advantage once held by arcade
machines has eroded to nothingness... To reduce overhead the machines
are based heavily on existing console and computer equipment, which
in turn leads to low acquisition costs and very low porting expenses,
but leaves little to differentiate the two platforms. Add in direct
competition with rental industries, and you have very little reason
to go to the arcade.
The arcade does remain, however, and with one last, best reason.
Hardware. Light-gun games, dance mats, digital batting cages, etc
are prohibitively expensive for the average person to afford, yet
can provide fun and unique experiences. Likewise, they are intuitive
enough to be picked up and used without instruction by the casual
or incidental gamer, the kind that is not likely to have access
to many other distribution options at home (consoles or up-to-date
graphics cards).
Sadly, as a distribution medium the arcade is faltering badly,
in no small part due to the inefficient economic model behind it.
'Core gamers often go to the arcade looking for the "latest
and greatest" in entertainment, but find perhaps one or two
first run games, with a smattering of older games they don't wish
to play. This would be like a movie-goer wanting to see Die Another
Day, but only being able to watch Tomorrow Never Dies because the
movie house couldn't afford to buy a new reel of tape from the studios.
Game distributers still sell boards to the arcade owners, who in
turn try to recoup their investment from the gaming public. This
is a very inefficient way of going about making the highest profit,
as the distributers feed from the arcade owners, who (in their financially
weakened state) attempt to feed upon the customers. But it is the
customers who bring money into the system as a whole, and it is
they whom both the producers and the providers should be focusing
upon.
For example, a Capcom vs. SNK machine may lay dormant in an arcade
for most of a day while a Capcom vs. SNK 2 machine can still attract
many customers per hour. As the difference between the two machines
is largely software, and the software development costs are already
sunk, what advantage does it provide Capcom if the arcade continues
to provide the older game instead of the newer one? If Capcom were
to enter into a profitsharing agreement with the arcade owner, the
difference in the amount of quarters taken by the updated game could
be split between the two parties to the betterment of all. Such
profitsharing agreements are what allows Blockbuster video to have
20 copies of the latest movies available for rent... an arrangement
that would have been impossible under the older 100-dollars-per-rental-movie
paradigm. They realized that they should be looking for ways to
maximize income from the consumer, not the business serving the
consumer, and that they were in a unique position do to so because
they were in an industry, like videogames, with high sunk costs
and low materials costs.
If such an agreement could be struck amongst arcades and gaming
companies, the consumer might return to the arcade as a "latest
and greatest, premium" model showcase, just like theaters are
used for today. Instead of being static, with few games coming in
or going out, arcades could be dynamic new adventures for all comers.
Instead of being irrelevant, arcades could be focal. Instead of
hemmoraging money, arcades and the producers they partner with could
return to profitability.
Are arcades dying out? Obviously. Are they an evolutionary dead
end? Hardly. The next generation arcade needs to better equip itself
to face the realities of business in an entertainment economy. And
with such a change the industry could thrive.
We might even see a return of the great arcade culture.
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