Are Arcades Profitable 2024?

For many of us, arcades ring a nostalgic and beautiful childhood memory, and if you want to keep living in your golden-days era by starting this business, then you may want to find out: Are arcades profitable?

As cool as it may sound to own a business that encapsulates your childhood, it is important to consider the costs and profits associated with this business.

So keep on reading this guide to find out the nitty-gritty of the Arcade business and if starting this business is for you.

Are Arcades Profitable

Start-Up Cost of an Arcade Business

Starting an Arcade business not only requires a lot of money but also requires you to consider other factors such as the legal requirements, licenses, etc. Here’s how much you can expect to spend to start an arcade business in 2024:

Type of costAverage amount
Gaming machines$2000 per machine
Lease of dedicated space$5000
Arcade furniture & fixtures$2500
Authorizations, licenses & registrations$1000
Point-of-sale system $1000
Security equipment $1000
Wi-Fi network$500
Refreshment Equipment$500
Upgrades of electrical system$500
Total$12,500

The start-up cost for an arcade business can range from anywhere between $50,000 – $200,000 (excluding construction price), and if you also spend on the construction, then you can expect to spend millions.

The biggest cost of investment in this business is the kind and number of gaming machines you buy. The more machines you have, the greater your investment price will be.


Types of Arcade Machines you Can Invest In

Types of Arcade Machines you Can Invest In

The biggest investment in Arcade’s business is the machine itself. So knowing what kind of arcade machines you want is very important. Here are some different types of machines that you can invest in:

Video Arcade Games

Modern arcade games, such as fighting games or racing simulators, allow you to earn more money compared to their classic versions. You can earn between $100 – 300 per week from this.

Classic Arcade Machines

Classic arcade machines offer games like Space Invaders and Pac-Man and hold sentimental value among people. However, such games do not generate that much revenue.

Pinball Machines

Pinball Machines offer both modern and classic games and typically yield weekly profits of $200. A pinball machine can also act as a good addition to modern PC servers for better connectivity capabilities.

Redemption Arcade Machines

A redemption arcade machine ideally rewards players for achieving higher scores. Players play these games to collect tickets and redeem them for high-quality prices at the redemption center.

Family Entertainment Centers

As the name suggests, these games cater to families and include games such as laser tag, mini-golf, etc.


Factors to Consider Before Investing in an Arcade Machine

Before investing in expensive arcade machines randomly, it is very important for you to consider different factors and pick the right gaming machines for your business. Here are some key considerations:

Location

You should consider the location of your arcade business carefully, as this could directly impact your business’s visibility and profits.

For example, having an arcade in a mall or near family dining restaurants could allow parents to keep their kids entertained while they enjoy their meals.

Target Audience

In order to make the most out of your arcade business, it is also very important to think about who your target audience is.

For example, if your target audience is kids from the 90s, then having classic or pinball machines could be great for you.

Space Availability

The next important thing to think about is the availability of space. This is because, due to equipment requirements, arcade games have quite large add-ons. Most devices typically take up 1–2 sqm per device minimum space.

So it is very important for you to find out the kind of games you would keep in your arcade and then look for a space where you can fit them in.


How Much Does an Arcade Business Owner Make?

How Much Does an Arcade Business Owner Make

The income of an Arcade business owner varies depending on the size of their business, the number of machines they have, their location, etc.

However, on average, arcade game revenue generally ranges between $200 to $485 per game per week on an annualized basis.

Now, these numbers are based on the average expected volumes. Many Arcade business owners make far better than this due to high volume.


Are Arcades Profitable?

Yes, arcades are profitable; however, just like any other business, the profitability of an arcade business depends on the size, location, foot-traffic, etc.

Here are some industry basics to help you understand the profitability of this business:

Average Per Game Budget: $12,000-$15,000

Some popular and big-title games can be expensive, causing the average price per game to increase. However, this number is based on a brand-new redemption arcade. You can reduce this cost by buying second-hand machines.

Average Per Game Space Allocation: 70 Square Feet

Because of the increasing size of games, the square footage for games is increasing while the total number of games that you can have is decreasing. So make sure you consider investing in a spacious leasing option to take advantage of keeping more machines.


How To Open an Arcade Business?


Pros And Cons of Starting an Arcade Business

Pros of Starting an Arcade Business

  • Steady Income
  • High-profit potential
  • Connects communities
  • Scalable
  • Low overhead

Cons of Starting an Arcade Business

  • High initial investment
  • Maintenance and repair cost
  • Operational cost

Factors That Affect the Profitability of an Arcade Business

Factors That Affect the Profitability of an Arcade Business

Here are some factors that can affect the profitability of your arcade business:

  • Pricing strategy: Having the right pricing strategy is quite important for the success of your arcade business. Consider charging a game fee or a flat fee. You can also offer packages or discounts to people who come in groups.
  • Equipment: The biggest factor that will affect the profitability of your arcade business is the equipment you have. So invest in good quality gaming machines and keep them well-maintained and updated to keep the customers happy and coming back.
  • Location: Just like for any other business, location plays a very important role in the success of an arcade business as well. Think about opening your business in a shopping center, mall, amusement park, etc., to attract more people.
  • Marketing & Promotion: Make sure you spread the word about your new business by advertising and promoting it on social media channels, newspapers, etc.

Is an Arcade Business a Good Investment?

This business has no one-size-fits-all formula, and the profitability for arcade business owners varies greatly. For each business owner, an arcade business comes with its own set of responsibilities, opportunities, and growth.

Having said that here are a few things that could make an arcade business a good investment for you:

  • Diversification: An advantage of running an arcade business is that you can diversify the kind of games you offer to your customers and make more income.
  • Popularity: Having some of the most popular and loved arcade games can allow you to increase foot traffic and your income.
  • Profitability: If you manage your business well, then you can enjoy a very high-profit margin between 50%-65% in this business.

Wrap Up

Starting an Arcade business can be very daunting, especially if you know nothing about this business.

In such a case, we recommend you do your research properly and come up with a good business plan. This is because, ultimately, the success of an arcade business depends on these things a lot. We hope you found this guide on: “Are Arcades profitable?” useful.


FAQ’s

Is starting an arcade business worth it?

Starting an arcade business might be worth it only if you do the business research and execution properly for the best ROI and profits.

Why do most arcades fail?

The biggest reason why arcades fail is because of poor planning. This includes not doing the market research properly and choosing the wrong target audience and location, among others. Another big reason for the failure of this business is the lack of financial management skills. This includes not framing a realistic budget, not being able to track expenses, etc.

Which kind of arcade is the most profitable?

Many different kinds of arcade games are profitable. For example, you can offer the latest VR arcade games if you want to attract younger customers, or you can offer classic games to attract older crowds who are looking to have a nostalgic experience. Ultimately, the profits you make in this business depend upon your target audience and the kind of games you offer.

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