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Are arcade machines a good investment

Arcade halls located in prime locations can earn up to $8000 per month, but arcade maintenance is costly and the market is volatile. Careful site selection and management are necessary to ensure good returns.

Market Demand

The revenue of the American arcade market reached approximately $719 million in 2021. Predictions by Global Industry Analysts suggest that the global arcade market is expected to grow to $1.2 billion by 2026, with an annual growth rate of about 5.5%.

The arcade market in Japan is deeply ingrained, with some arcades in Tokyo earning up to $3000 daily over weekends. The average monthly revenue per arcade machine for shooting and racing games can reach $500. The introduction of Augmented Reality (AR) technology is gradually changing the face of traditional arcade games. For instance, an arcade basketball game that incorporates AR technology has seen an average monthly income increase by 30%.

Revenue Potential

Shooting and racing games can achieve a monthly revenue of $500 per machine. In prime locations, the daily revenue can reach up to $3000 on weekends, and the average investment return period for arcade businesses is between 18 to 24 months.

Location Choice

Setting up an arcade in areas with high foot traffic, such as commercial districts or entertainment centers, can raise the average monthly income to $8000, whereas in more remote or less frequented areas, income might be less than half of that. An arcade located near schools or large office areas can earn about 20% more than one located in a residential area. An arcade in Shibuya, Tokyo, due to its excellent location, attracts over a million visitors annually.

Risks and Volatility

Equipment failure is a significant risk, with repair costs for an arcade machine potentially reaching up to $300. Market trend volatility is also a crucial risk, as the popularity of home consoles and online gaming could reduce the demand for arcade games.

During economic downturns, entertainment expenditures are typically the first to be cut from household budgets. For instance, during the global financial crisis of 2008, the entertainment industry saw an average revenue decline of about 20%. The uncertainty of leasing costs is also a major risk, especially in busy commercial areas where rents can fluctuate significantly due to market conditions.

Adverse geographic factors, such as the emergence of new entertainment facilities near the arcade location, can lead to decreased foot traffic and impact income. In 2019, the opening of a new large shopping center in a city caused a 15% decrease in customer flow to neighboring arcades.

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