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Arcade game
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An arcade game or coin-op game is a coin-operated entertainment machine typically installed in public businesses such as restaurants, bars and amusement arcades. Most arcade games are presented as primarily games of skill and include arcade video games, pinball machines, electro-mechanical games, redemption games or merchandisers.[1]
Types
[edit]Broadly, arcade games are nearly always considered games of skill, with only some elements of games of chance. Games that are solely games of chance, like slot machines and pachinko, often are categorized legally as gambling devices and, due to restrictions, may not be made available to minors or without appropriate oversight in many jurisdictions.[2]
Arcade video games
[edit]
Arcade video games were first introduced in the early 1970s, with Pong as the first commercially successful game. Arcade video games use electronic or computerized circuitry to take input from the player and translate that to an electronic display such as a monitor or television set.
Carnival games
[edit]
Coin-op carnival games are automated versions or variations of popular staffed games held at carnival midways. Most of these are played for prizes or tickets for redemption. Common examples include Skee-Ball and Whac-A-Mole.
Electro-mechanical games
[edit]Electro-mechanical games (EM games) operate on a combination of some electronic circuitry and mechanical actions from the player to move items contained within the game's cabinet. Some of these were early light gun games using light-sensitive sensors on targets to register hits. Examples of electro-mechanical games include Periscope and Rifleman from the 1960s.
EM games typically combined mechanical engineering technology with various electrical components, such as motors, switches, resistors, solenoids, relays, bells, buzzers and electric lights.[3] EM games lie somewhere in the middle between fully electronic games and mechanical games.
EM games have a number of different genres/categories. "Novelty" or "land-sea-air" games refer to simulation games that simulate aspects of various vehicles, such as cars (similar to racing video games), submarines (similar to vehicular combat video games), or aircraft (similar to combat flight simulator video games). Gun games refer to games that involve shooting with a gun-like peripheral (such as a light gun or similar device), similar to light gun shooter video games. "General" arcade games refer to all other types of EM arcade games, including various different types of sports games.[4] "Audio-visual" or "realistic" games referred to novelty games that used advanced special effects to provide a simulation experience.[5]
Merchandiser games
[edit]
Merchandiser games are those where the player attempts to win a prize by performing some physical action with the arcade machine, such as claw crane games or coin pusher games.
Pachinko
[edit]Pachinko is a type of mechanical game originating in Japan. It is used as both a form of recreational arcade game and much more frequently as a gambling device, filling a Japanese gambling niche comparable to that of the slot machine in Western gambling.
Photo booths
[edit]Coin-operated photo booths automatically take and develop three or four wallet-sized pictures of subjects within the small space, and more recently using digital photography. They are typically used for licenses or passports, but there have been several types of photo booths designed for amusement arcades.
At the Amusement & Music Operators Association (AMOA) show in October 1975, Taito introduced an arcade photo booth machine that combines closed-circuit television (CCTV) recording with computer printing technology to produce self-portrait photographs. Two other arcade manufacturers introduced their own computerized arcade photo booth machines at the same show.[6]
A specific variety designed for arcades, purikura, creates selfie photo stickers. Purikura are essentially a cross between a traditional license/passport photo booth and an arcade video game, with a computer which allows the manipulation of digital images.[7] Introduced by Atlus and Sega in 1995, the name is a shortened form of the registered trademark Print Club (プリント倶楽部, Purinto Kurabu). They are primarily found in Asian arcades.
Pinball machines
[edit]Pinball machines are games that have a large, enclosed, slanted table with a number of scoring features on its surface. Players launch a steel ball onto the table and, using pinball flippers, try to keep the ball in play while scoring as many points as possible. Early pinball games were mostly driven through mechanical components, while pinball games from the 1930s onward include electronic components such as lights and sensors and are one form of an electro-mechanical game.
Slot machines
[edit]In limited jurisdictions, slot machines may also be considered an arcade game and installed alongside other games in arcades. However, as slot machines are mostly games of chance, their use in this manner is highly limited. They are most often used for gambling.
Sports games
[edit]
Sport games are indoor or miniaturized versions of popular physical sports that can be played within an arcade setting often with a reduced ruleset. Examples include air hockey and indoor basketball games like Super Shot. Sports games can be either mechanical, electro-mechanical or electronic.
Redemption games
[edit]A general category of arcade games are those played for tickets that can be redeemed for prizes. The gameplay itself can be of any arcade game, and the number of tickets received are proportional to the player's score. Skee ball is often played as a redemption game, while pachinko is one of the most popular redemption games in Japan. Another type of redemption game are medal game, popular in Japan and southeast Asia, where players must convert their money into special medal coins to play the game, but can win more coins which they can redeem back into prizes. Medal games are design to simulate a gambling-like experience without running afoul of Japan's strict laws against gambling.[8]
"Game of skill" versus "game of chance"
[edit]Arcade games have generally struggled to avoid being labelled wholly as games of chance or luck, which would qualify them as gambling and require them to be strictly regulated in most government jurisdictions.[9] Games of chance generally involve games where a player pays money to participate for the opportunity to win a prize, where the likelihood to win that prize is primarily driven by chance rather than skill.[9] Akin to sweepstakes and lotteries, slot machines are typically cataloged as games of chance and thus not typically included in arcades outside of certain jurisdictions.[9]
Pinball machines initially were branded as games of chance in the 1940s as, after launching the ball, the player had no means to control its outcome.[10] Coupled with fears of pinball being a "tool of the devil" over the youth of that time period, several jurisdictions took steps to label pinball as games of chance and banned them from arcades. After the invention of the electric flipper in 1947, which gave the player more control on the fate of the ball after launching, pinball manufacturers pushed to reclassify pinball as games of skill. New York City's ban on pinball was overturned in 1976 when Roger Sharpe, a journalist, demonstrated the ability to call a shot to a specific lane to the city's council to prove pinball was a game of skill.[10]
Prize redemption games such as crane games and coin drop games have been examined as a mixed continuum between games of chance and skill. In a crane game, for example, there is some skill in determining how to position the crane claw over a prize, but the conditions of the strength and condition of the claw and the stacking of the prize are sufficiently unknown parameters to make whether the player will be successful a matter of luck.[9] The Dominant Factor Test is typically used to designate when arcade games are games of chance and thus subject to gambling laws, but for many redemption games, its application is a grey area.[11]
Nearly all arcade video games tend to be treated as games of skill, challenging the player against the pre-set programming of the game. However, arcade video games that replicate gambling concepts, such as video poker machines, had emerged in the 1980s. These are generally treated as games of chance, and remained confined to jurisdictions with favorable gambling laws.[9]
History
[edit]Skee-Ball and carnival games (late 19th century to 1940s)
[edit]
Game of skill amusements had been a staple of fairs since the 19th century. Further, the invention of coin-operated vending machines had come about in the 19th century.[12] To build on this, coin-operated automated amusement machines were created, such as fortune telling and strength tester machines as well as mutoscopes, and installed along with other attractions at fairs, traveling carnivals, and resorts. Soon, entrepreneurs began housing these coin-operated devices in the same facilities which required minimal oversight, creating penny arcades near the turn of the 20th century, the name taken from the common use of a single penny to operate the machine.[13]
Penny arcades started to gain a negative reputation as the most popular attraction in them tended to be mutoscopes featuring risqué and softcore pornography while drawing audiences of young men. Further, the birth of the film industry in the 1910s and 1920s drew audiences away from the penny arcade.[13] New interactive coin-operated machines were created to bring back patrons to the penny arcades, creating the first arcade games. Many were based on carnival games of a larger scope, but reduced to something which could be automated. One popular style were pin-based games which were based on the 19th century game of bagatelle.[10] One of the first such pin-based games was Baffle Ball, a precursor to the pinball machine where players were given a limited number of balls to hit certain targets with only a plunger.[13] Skee-Ball became popular after being featured at an Atlantic City boardwalk arcade. The popularity of these games was aided by the impact of the Great Depression of the 1930s, as they provided inexpensive entertainment.[13]
Abstract mechanical sports games date back to the turn of the 20th century in England, which was the main manufacturer of arcade games in the early 20th century. The London-based Automatic Sports Company manufactured abstract sports games based on British sports, including Yacht Racer (1900) based on yacht racing, and The Cricket Match (1903) which simulated a portion of a cricket game by having the player hit a pitch into one of various holes. Full Team Football (1925) by London-based Full Team Football Company was an early mechanical tabletop football game simulating association football, with eleven static players on each side of the pitch that can kick a ball using levers.[14] Driving games originated from British arcades in the 1930s.[5]
Shooting gallery carnival games date back to the late 19th century.[15] Mechanical gun games had existed in England since the turn of the 20th century.[16] The earliest rudimentary examples of mechanical interactive film games date back to the early 20th century, with "cinematic shooting gallery" games. They were similar to shooting gallery carnival games, except that players shot at a cinema screen displaying film footage of targets. They showed footage of targets, and when a player shot the screen at the right time, it would trigger a mechanism that temporarily pauses the film and registers a point. The first successful example of such a game was Life Targets, released in the United Kingdom in 1912. Cinematic shooting gallery games enjoyed short-lived popularity in several parts of Britain during the 1910s, and often had safari animals as targets, with footage recorded from British imperial colonies. Cinematic shooting gallery games declined some time after the 1910s.[17]
The first light guns appeared in the 1930s, with Seeburg Ray-O-Lite (1936). Games using this toy rifle were mechanical and the rifle fired beams of light at targets wired with sensors.[18] A later gun game from Seeburg Corporation, Shoot the Bear (1949), introduced the use of mechanical sound effects.[19] Mechanical maze games appeared in penny arcades by the mid-20th century; they only allowed the player to manipulate the entire maze, unlike later maze video games which allowed the player to manipulate individual elements within a maze.[20]
Pinball (1930s to 1960s)
[edit]
Coin-operated pinball machines that included electric lights and features were developed in 1933, but lacked the user-controlled flipper mechanisms at that point; these would be invented in 1947.[21] Though the creators of these games argued that these games were still skill-based, many governments still considered them to be games of luck and ruled them as gambling devices. As such, they were initially banned in many cities.[22] Pinball machines were also divisive between the young and the old and were arguably emblematic of the generation gap found in America at the time. Some elders feared what the youth were doing and considered pinball machines to be "tools of the devil." This led to even more bans.[23] These bans were slowly lifted in the 1960s and 1970s; New York City's ban, placed in 1942, lasted until 1976,[22] while Chicago's was lifted in 1977.[24] Where pinball was allowed, pinball manufacturers carefully distanced their games from gambling, adding "For Amusement Only" among the game's labeling, eliminating any redemption features, and asserting these were games of skill at every opportunity.[22] By the early 1970s, pinball machines thus occupied select arcades at amusement parks, at bars and lounges, and with solitary machines at various stores.[22]
Pinball machines beyond the 1970s have since advanced with similar improvement in technology as with arcade video games. Past machines used discrete electro-mechanical and electronic componentry for game logic, but newer machines have switched to solid-state electronics with microprocessors to handle these elements, making games more versatile. Newer machines may have complex mechanical actions and detailed backplate graphics that are supported by these technologies.[22]
Electro-mechanical games (1940s to 1970s)
[edit]

Alternatives to pinball were electro-mechanical games (EM games) that clearly demonstrated themselves as games of skill to avoid the stigma of pinball. The transition from mechanical arcade games to EM games dates back to around the time of World War II, with different types of arcade games gradually making the transition during the post-war period between the 1940s and 1960s.[26] Some early electro-mechanical games were designed not for commercial purposes but to demonstrate the state of technology at public expositions, such as Nimatron in 1940 or Bertie the Brain in 1950.
In 1941, International Mutoscope Reel Company released the electro-mechanical driving game Drive Mobile, which had an upright arcade cabinet similar to what arcade video games would later use.[3] It was derived from older British driving games from the 1930s. In Drive Mobile, a steering wheel was used to control a model car over a road painted on a metal drum, with the goal being to keep the car centered as the road shifts left and right. Kasco (short for Kansai Seisakusho Co.) introduced this type of electro-mechanical driving game to Japan in 1958 with Mini Drive, which followed a similar format but had a longer cabinet allowing a longer road.[5] By 1961, however, the US arcade industry had been stagnating. This in turn had a negative effect on Japanese arcade distributors such as Sega that had been depending on US imports up until then. Sega co-founder David Rosen responded to market conditions by having Sega develop original arcade games in Japan.[27]
From the late 1960s, EM games incorporated more elaborate electronics and mechanical action to create a simulated environment for the player.[5] These games overlapped with the introduction of arcade video games, and in some cases, were prototypical of the experiences that arcade video games offered. The late 1960s to early 1970s were considered the "electro-mechanical golden age" in Japan,[28] and the "novelty renaissance" or "technological renaissance" in North America.[29][5] A new category of "audio-visual" novelty games emerged during this era, mainly established by several Japanese arcade manufacturers.[5] Arcades had previously been dominated by jukeboxes, before a new wave of EM arcade games emerged that were able to generate significant earnings for arcade operators.[30]
Periscope, a submarine simulator and light gun shooter,[31] was released by Nakamura Manufacturing Company (later called Namco) in 1965[32] and then by Sega in 1966.[33] It used lights and plastic waves to simulate sinking ships from a submarine,[34] and had players look through a periscope to direct and fire torpedoes,[27] which were represented by colored lights and electronic sound effects.[35][36] Sega's version became a major success worldwide.[37] It was the first arcade game to cost a quarter per play,[33] and was a turning point for the arcade industry.[27] Periscope revived the novelty game business, and established a "realistic" or "audio-visual" category of games, using advanced special effects to provide a simulation experience.[5] It was the catalyst for the "novelty renaissance" where a wide variety of novelty/specialty games (also called "land-sea-air" games) were released during the late 1960s to early 1970s, from quiz games and racing games to hockey and football games, many adopting the quarter-play price point.[29][4] These "audio-visual" games were selling in large quantities that had not been approached by most arcade machines in years.[5] This led to a "technological renaissance" in the late 1960s, which would later be critical in establishing a healthy arcade environment for video games to flourish in the 1970s.[5] Periscope also established a trend of missile-launching gameplay during the late 1960s to 1970s.[26] In the late 1960s, Sega began producing gun games which resemble shooter video games, but which were EM games that used rear image projection to produce moving animations on a screen.[38] It was a fresh approach to gun games that Sega introduced with Duck Hunt, which began location testing in 1968 and released in January 1969.[39][40][41] Missile, a shooter and vehicular combat game released by Sega in 1969, may have been the first arcade game to use a joystick with a fire button, leading to joysticks subsequently becoming the standard control scheme for arcade games.[30]
A new type of driving game was introduced in Japan, with Kasco's 1968 racing game Indy 500,[5][28] which was licensed by Chicago Coin for release in North America as Speedway in 1969.[42] It had a circular racetrack with rival cars painted on individual rotating discs illuminated by a lamp,[5] which produced colorful graphics[5] projected using mirrors to give a pseudo-3D first-person perspective on a screen,[26][43][44] resembling a windscreen view.[45] It had collision detection, with players having to dodge cars to avoid crashing, as well as electronic sound for the car engines and collisions.[26] This gave it greater realism than earlier driving games,[5] and it resembled a prototypical arcade racing video game, with an upright cabinet, yellow marquee, three-digit scoring, coin box, steering wheel and accelerator pedal.[3] Indy 500 sold over 2,000 arcade cabinets in Japan,[5] while Speedway sold over 10,000 cabinets in North America,[28] becoming the biggest arcade hit in years.[5] Like Periscope, Speedway also charged a quarter per play, further cementing quarter-play as the US arcade standard for over two decades.[5] Atari founder Nolan Bushnell, when he was a college student, worked at an arcade where he became familiar with EM games such as Speedway, watching customers play and helping to maintain the machinery, while learning how it worked and developing his understanding of how the game business operates.[46][47]
Following the arrival of arcade video games with Pong (1972) and its clones, EM games continued to have a strong presence in arcades for much of the 1970s.[28][5] In Japan, EM games remained more popular than video games up until the late 1970s.[28] In the United States, after the market became flooded with Pong clones, the Pong market crashed around the mid-1970s, which led to traditional Chicago coin-op manufacturers mainly sticking to EM games up until the late 1970s.[5] EM games eventually declined following the arrival of Space Invaders (1978) and the golden age of arcade video games in the late 1970s.[28][48] Several EM games that appeared in the 1970s have remained popular in arcades through to the present day, notably air hockey, whac-a-mole and medal games. Medal games started becoming popular with Sega's Harness Racing (1974), Nintendo's EVR Race (1975) and Aruze's The Derby Vφ (1975). The first whac-a-mole game, Mogura Taiji ("Mole Buster"), was released by TOGO in 1975.[49] In the late 1970s, arcade centers in Japan began to be flooded with "mole buster" games.[50] Mogura Taiji was introduced to North America in 1976, which inspired Bob's Space Racers to produce their own version of the game called "Whac-A-Mole" in 1977.[51] Sega released an EM game similar to air hockey in 1968, MotoPolo, where two players moved around motorbikes to knock balls into the opponent's goal; it also used an 8-track player to play back the sounds of the motorbikes.[52] Air hockey itself was later created by a group of Brunswick Billiards employees between 1969 and 1972.[53] EM games experienced a resurgence during the 1980s.[54][55] Air hockey, whac-a-mole and medal games have since remained popular arcade attractions.[49]
Arcade video games (1970s to present)
[edit]
After two attempts to package mainframe computers running video games into a coin-operated arcade cabinet in 1971, Galaxy Game and Computer Space, Atari released Pong in 1972, the first successful arcade video game. The number of arcade game makers greatly increased over the next several years, including several of the companies that had been making EM games such as Midway, Bally, Williams, Sega, and Taito.[56] As technology moved from transistor-transistor logic (TTL) integrated circuits to microprocessors, a new wave of arcade video games arose, starting with Taito's Space Invaders in 1978 and leading to a golden age of arcade video games that included Pac-Man (Namco, 1980), Missile Command (Atari, 1980), and Donkey Kong (Nintendo, 1981). The golden age waned in 1983 due to an excess number of arcade games, the growing draw of home video game consoles and computers, and a moral panic on the impact of arcade video games on youth.[22][57] The arcade industry was also partially impacted by the video game crash of 1983.
The arcade market had recovered by 1986, with the help of software conversion kits, the arrival of popular beat 'em up games (such as Kung-Fu Master and Renegade), and advanced motion simulator games (such as Sega's "taikan" games including Hang-On, Space Harrier and Out Run). However, the growth of home video game systems such as the Nintendo Entertainment System led to another brief arcade decline towards the end of the 1980s.[58] Fighting games like Street Fighter II (1991) and Mortal Kombat (1992) helped to revive it in the early 1990s, leading to a renaissance for the arcade industry.[22] 3D graphics were popularized in arcades during the early 1990s with games such as Sega's Virtua Racing and Virtua Fighter,[59] with later arcade systems such as the Sega Model 3 remaining considerably more advanced than home systems through the late 1990s.[60][61] However, the improved capabilities of home consoles and computers to mimic arcade video games during this time drew crowds away from arcades.[22]
Up until about 1996, arcade video games had remained the largest sector of the global video game industry, before arcades declined in the late 1990s, with the console market surpassing arcade video games for the first time around 1997–1998.[62] Arcade video games declined in the Western world during the 2000s, with most arcades serving highly specialized experiences that cannot be replicated in the home, including lines of pinball and other arcade games, coupled with other entertainment options such as restaurants or bars. Among newer arcade video games include games like Dance Dance Revolution that require specialized equipment, as well as games incorporating motion simulation or virtual reality.[63] Arcade games had remained popular in Asian regions until around the late 2010s as popularity began to wane; when once there were around 26,000 arcades in Japan in 1986, there were only about 4,000 in 2019. The COVID-19 pandemic in 2020 and 2021 also drastically hit the arcade industry, forcing many of the large long-standing arcades in Japan to close.[63]
Trade associations
[edit]American Amusement Machine Association
[edit]The American Amusement Machine Association (AAMA) is a trade association established in 1981.[64] It represents the American coin-operated amusement machine industry,[65] including 120 arcade game distributors and manufacturers.[66]
Amusement & Music Operators Association
[edit]The Amusement & Music Operators (AMOA), a trade founded in 1948. It was composed by 1,700 members up to 1995.[67] In music industry, forged license-compliance programs with right groups ASCAP, BMI or SESAC,[68] and it represented the United States' licensed jukebox owners.[69]
Japan Amusement Machine and Marketing Association
[edit]References
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Arcade game
View on GrokipediaAn arcade game is a typically coin-operated entertainment machine designed for play in public venues such as amusement arcades, restaurants, and bars, encompassing games of skill like video games, pinball, and electromechanical simulations.[1] These machines originated in the late 19th century with early coin-operated devices in amusement parks and public spaces, evolving from mechanical oddities to sophisticated electronic systems.[2] The modern era began in 1971 with Computer Space, the first commercially available video arcade game, developed by Nolan Bushnell and Ted Dabney, which laid the groundwork for the industry despite limited initial success.[3][4] The golden age of arcade gaming in the late 1970s and early 1980s, propelled by hits like Pong (1972) and Pac-Man (1980), transformed arcades into cultural hubs, generating billions in revenue and influencing the broader video game industry through fast-paced, replayable gameplay mechanics optimized for short sessions and high scores.[5][6] Despite the 1983 video game crash that diminished arcade dominance due to home console competition, the format persists in niche venues and inspires mobile and emulation revivals, prized for its tactile controls and communal social experience.[4]
Definition and Characteristics
Core Elements and Distinctions
Arcade games consist of coin-operated entertainment machines engineered for installation in public venues, including amusement arcades, restaurants, bars, and family entertainment centers, where users insert coins, tokens, or equivalent currency to initiate play.[7] These devices encompass a range of formats, such as video displays paired with electronic controls or mechanical components, but share a foundational design centered on delivering immediate, skill-dependent amusement without requiring prior setup or ownership. Essential hardware elements typically include a sturdy cabinet enclosing input mechanisms like joysticks, buttons, or flippers; a visual output via cathode-ray tube monitors in early models or modern equivalents; and coin validation systems to meter access, ensuring operational self-sufficiency in commercial settings.[8] At their core, arcade games prioritize concise gameplay loops characterized by accessible rules, rapid progression, and high replayability driven by escalating difficulty and score-based feedback, fostering brief sessions—often lasting 1-5 minutes per credit—that incentivize iterative skill refinement over narrative depth.[9] This structure derives from economic imperatives: machines generate revenue through frequent, low-cost plays, with mechanics calibrated to terminate sessions at critical moments, prompting additional investments.[10] Empirical data from operational analyses indicate that over 80% of arcade titles employ intuitive controls and straightforward objectives to minimize learning curves, enabling broad demographic engagement while maximizing throughput in high-traffic locations.[10] Distinctions from home video games lie primarily in deployment and economics: arcade machines demand physical placement for on-site monetization via per-play payments, contrasting with one-time purchases or subscriptions for personal consoles, which permit unlimited sessions without recurrent fees.[11] Whereas home systems emphasize persistence—such as save states, expansive campaigns, and private play—arcade formats enforce ephemerality and competition, often with venue-specific hardware exceeding contemporaneous domestic capabilities in resolution, speed, or specialized effects to captivate crowds.[12] They further diverge from non-coin-operated amusements by integrating location-based social dynamics, where communal observation and rivalry amplify engagement, a factor absent in solitary home setups.[13] Unlike general-purpose computers, arcade hardware remains dedicated to singular titles or limited suites, optimizing for durability under continuous public use rather than versatility.[14]Economic and Operational Model
The operational model of arcade games centers on independent operators or venue owners acquiring hardware from manufacturers, such as electro-mechanical, video, or redemption machines, and deploying them in high-traffic public locations like dedicated arcades, family entertainment centers, restaurants, or bars.[15] Operators typically purchase machines outright, with costs historically ranging from $2,000 to $3,000 per unit in the early 1980s for video games, though modern equivalents often exceed $5,000 depending on technology and features.[16] Placement agreements involve revenue-sharing arrangements, where locations receive 30-50% of coin or token intake, or flat rental fees, incentivizing operators to route-service multiple sites for economies of scale in collection, maintenance, and restocking.[17] This "route operation" model minimizes fixed overhead by leveraging existing foot traffic, with operators performing weekly cash collections, diagnostics, and repairs to sustain uptime above 90%.[18] Revenue derives primarily from per-play payments, evolving from quarter-operated systems (25 cents per game in the 1980s) to higher denominations (2) or card-based systems today, yielding average weekly earnings of 485 per machine in well-trafficked venues, concentrated on weekends and holidays when play volume spikes.[19] [15] Redemption and merchandiser games, such as claw cranes, outperform traditional video games in margins due to low prize costs (often imported plush toys valued under $1 despite $5+ play fees) and psychological hooks like variable rewards, comprising the bulk of profits in contemporary operations.[20] Overall industry revenue reflects this shift; the global arcade gaming market reached $4.25 billion in 2024, with U.S. arcade-food-entertainment complexes numbering 6,159 businesses and growing at 0.8% CAGR through 2025, buoyed by experiential entertainment demand amid home gaming saturation.[21] [22] Profitability hinges on location quality, machine novelty, and cost controls, with net margins targeting 15-30% after deducting acquisition (amortized over 3-5 years), maintenance ($1,500 monthly per 100 machines for parts and labor), electricity, and location splits.[23] [24] Standalone arcades face higher risks from fluctuating attendance, often requiring hybrid models integrating food, events, or alcohol sales (e.g., Dave & Buster's) to achieve ROI within 2-3 years, as pure coin-drop revenue has declined since the 1980s video game boom due to home console competition.[16] Operators mitigate downturns by refreshing inventories with licensed titles or VR integrations, though empirical data underscores that high-traffic, family-oriented sites yield the most stable returns over low-volume alternatives.[25]Types of Arcade Games
Electro-Mechanical Games
Electro-mechanical arcade games employed electrical circuits to power mechanical components, including motors, solenoids, relays, and lamps, enabling animated physical elements such as moving targets, rotating drums, and light-based scoring displays, without digital computation or raster video screens. These games emerged as a bridge between purely mechanical coin-op devices and later electronic innovations, gaining prominence in amusement arcades from the 1940s onward as alternatives to pinball, which faced legal restrictions in many U.S. jurisdictions due to associations with gambling.[26][27] Technologically, EM systems relied on step-up transformers for voltage regulation, electromagnetic relays for logic sequencing, and physical mechanisms like belts or cams for simulation of motion, often against painted backdrops or projected scenery to create immersive effects such as simulated driving or combat. An early example is Drive Mobile (1941), which featured a player-controlled miniature car advancing along a scrolling drum backdrop to mimic road travel. By the 1960s, advancements incorporated sound effects and multi-player setups, with Japanese manufacturers like Sega leading in exportable designs; Sega began EM production in the early 1960s, culminating in Periscope (1966), a submarine warfare simulator where players peered through a periscope to target illuminated enemy ships using fired "torpedoes" that triggered mechanical explosions and depth-charge sounds, marking the first EM game with integrated special effects and electronic audio.[26][28][29] U.S. firms like Williams contributed shooters such as Arctic Gun (1967), involving pneumatic guns to hit moving mechanical targets in a polar-themed cabinet, and Ambush (1973), a combat simulation with relay-driven enemy advances. Other notable Sega titles included Duck Hunt (1969), which introduced rudimentary video projection for animated duck targets alongside mechanical shotguns, and later efforts like Plinker's Canyon (1976). These games emphasized skill-based targeting and chance elements via randomized mechanical paths, typically costing a dime or quarter per play and yielding tickets or free games as rewards.[28][30][28] EM arcade games peaked in the late 1960s, filling arcades with bulky, interactive cabinets that provided tactile feedback superior to early video prototypes, but their complexity limited scalability and maintenance compared to solid-state electronics. The introduction of affordable video games, starting with Computer Space (1971) and accelerating with Pong (1972), displaced EM designs by offering programmable variety, smaller footprints, and vivid on-screen action, rendering mechanical animations obsolete by the late 1970s; Sega, for instance, shifted fully to video titles like Space Invaders ports by 1978.[26][28][27]Arcade Video Games
Arcade video games emerged as a distinct category of coin-operated entertainment in the early 1970s, utilizing electronic circuitry and video displays to deliver interactive gameplay, unlike earlier electro-mechanical games that relied on physical simulations. The first commercial arcade video game, Computer Space, released in 1971 by Nutting Associates and designed by Nolan Bushnell and Ted Dabney, featured a black-and-white cathode-ray tube (CRT) monitor displaying vector graphics of space combat against flying saucers.[3] This title, though commercially modest with around 1,500 units sold, established the core model of player input via controls like joysticks and buttons translating to on-screen action.[4] Technological foundations included discrete logic circuits for early titles, transitioning to microprocessors by 1975 with Midway's Gun Fight, which enabled more complex programming and sprite-based raster graphics.[27] Gameplay emphasized short, intense sessions—typically lasting 1-3 minutes per coin—to maximize revenue, with escalating difficulty, high-score tables, and limited lives encouraging repeated plays. Genres proliferated in the late 1970s "golden age," including shooters like Taito's Space Invaders (1978), which sold over 360,000 cabinets worldwide and reportedly caused a coin shortage in Japan due to its popularity.[6] Maze-chase games such as Namco's Pac-Man (1980) introduced character-driven narratives and power-ups, amassing billions in quarters and influencing global pop culture.[31] By the mid-1980s, advancements like color graphics, stereo sound, and specialized hardware—such as Capcom's CPS system for beat 'em ups—pushed visual fidelity, but the sector peaked at $5 billion in U.S. revenue in 1981 before declining sharply.[32] The 1983 video game crash, exacerbated by market saturation and the rise of affordable home consoles like the Atari 2600 and Nintendo Entertainment System, eroded arcade exclusivity as superior graphics and save features became accessible domestically.[33] Arcade video games persisted in niches like fighting titles (Street Fighter II, 1991, generating over $10 billion in lifetime revenue) and racing simulators, but overall installations dropped from hundreds of thousands to under 10,000 by the 2000s, shifting focus to redemption games in family entertainment centers.[34] Despite this, their legacy endures in emulation and retro revivals, underscoring a causal link between hardware-driven scarcity and the addictive loop of skill progression.[35]Pinball Machines
Pinball machines are electromechanical amusement devices consisting of a slanted playfield within a cabinet, where players launch a steel ball using a spring-loaded plunger and control its path with batter-operated flippers to strike bumpers, targets, and ramps that trigger scoring via mechanical switches and relays.[36] The core objective involves maximizing points by guiding the ball to high-value areas while preventing it from falling into drain holes at the playfield's base, with gameplay enhanced by features such as multiball sequences, where additional balls are released, and tilt penalties that end play if excessive nudging is detected through a pendulum mechanism.[36] The modern pinball machine traces its origins to 1931, when D. Gottlieb & Company released Baffle Ball, the first successful coin-operated version, which lacked flippers and depended largely on chance, prompting bans in places like New York City in the 1940s for resembling gambling.[37] [38] Flippers, invented by Harry Williams and first implemented in Gottlieb's Humpty Dumpty in 1947, shifted emphasis to player skill, catalyzing widespread adoption in arcades during the post-World War II era.[39] Major manufacturers including Gottlieb, Bally, and Williams dominated production through the 1970s, releasing themed machines with intricate artwork and escalating complexity, such as multi-player variants introduced in 1953.[40] In arcade environments, pinball machines formed a revenue cornerstone alongside other coin-operated games from the 1930s to the 1970s, but their popularity waned in the late 1970s and 1980s as video games like Pong and Space Invaders offered interactive visuals and novel experiences that drew crowds away.[39] By 1999, Williams had exited the market, reducing active production to Stern Pinball alone, with arcade installations diminishing further due to home consoles and digital entertainment proliferation.[41] A resurgence emerged in the 2000s, fueled by collector demand and modern hybrids incorporating digital scoring, LED effects, and licensed themes, with Stern reporting 15-20% annual sales growth as of 2023 amid renewed arcade and home interest.[42]Redemption and Merchandiser Games
Redemption games constitute a category of arcade amusements where players accumulate tickets or points through skill-based challenges, such as rolling balls into targets or shooting hoops, which are subsequently redeemable for non-cash prizes like small toys, candy, or novelty items.[43] These games emphasize performance metrics, with ticket payouts scaled to scores—for instance, higher accuracy in a basketball shooting game yielding more tickets—distinguishing them from fixed-outcome amusements.[44] Originating with early 20th-century innovations like Skee-Ball, introduced in 1908 by Joseph Fourestier Simpson, which pioneered ticket redemption mechanics by awarding wooden balls exchangeable for rewards, this format laid groundwork for performance-driven prize systems in arcades.[45] The redemption model gained prominence in the 1980s, particularly post-1983, as arcades shifted from video games amid market saturation and home console competition; manufacturers rapidly developed ticket-dispensing machines, revitalizing operator revenues through repeated play and prize merchandise sales.[46][47] Common examples include coin-operated basketball shooters, where players insert tokens to launch balls at hoops for ticket tallies, or stacker games requiring timed block alignment for escalating rewards.[48] Prize values are tiered by ticket cost, with inexpensive items like erasers requiring 10-50 tickets and larger plush toys demanding thousands, incentivizing prolonged engagement.[43] Legally, these games operate under skill-over-chance classifications in most U.S. jurisdictions, prohibiting cash equivalents and capping prize values—such as New Jersey's restriction to merchandise excluding alcohol—to evade gambling statutes.[49][50] ![Claw crane game machine with unicorn plushes][float-right]Merchandiser games, a variant of redemption-style play, bypass tickets by directly dispensing merchandise upon successful completion, often via mechanical manipulation rather than scored performance.[51] Claw machines, the archetype of merchandisers, feature a joystick-controlled grapple that players maneuver to capture prizes like stuffed animals from a glass-enclosed bin; success hinges on precise timing and positioning, though operators calibrate claw strength and drop rates to modulate win probabilities.[52] These devices trace to late-19th-century prototypes inspired by steam shovels used in canal construction, with mass-produced models emerging in the 1920s as glass-encased "diggers" and evolving into the 1930s Erie Digger by the Northwestern Corporation, which simulated excavation for coin prizes.[53] By the 1960s, Japanese manufacturers like Sega and Taito refined overhead trolley-style claws, dubbing them "UFO Catchers" for their saucer-like grabs, boosting global arcade integration.[54] Regulations mirror redemption games, mandating skill elements and non-cash outputs to maintain legal amusement status, with some states scrutinizing payout ratios to prevent effective lotteries.[49] Other merchandisers include coin pushers, where inserted tokens propel metal discs to nudge prizes over edges, generating direct wins without intermediary tickets.[51]