The profitability of the arcade business was significant. A medium-sized arcade center for an initial investment of 500000-1 million RMB, including equipment purchase, rent, renovation etc. If 500 people visited the museum daily and each person spent about 50 RMB, earnings would be approximately 25 to at least around 750K on a monthly basis. After expenses break even at 8-6 months, pure cashout net margin of up to the sky: a whooping 40–50%! The margin can be increased even more by optimizing costs and introducing value-added services.
Cost Control
Arcade costs consist of a combination of set-up expenses and permanent operational spending. Research shows that the initial investment of opening a small to medium-sized arcade center is about 500,000 ~1 million RMB. A common arcade machine costs 10,000–30,000 RMB; a high-end VR or larger-scale interactive machine may be priced up to or even beyond 100K. For a medium-sized arcade center with 50 machines, the total equipment cost may range from RMB million to 1.5 million.
The 2 primary expenses elsewhere are renovation rent charging and other basic facilities such as a security system and lighting systems, etc. Renovation expenses can cost anywhere between 200,000 RMB to 500,000+ on the mainland, and you would have to pay rent somewhere else. Rent in the highest population centers could fetch 200 RMB per square meter monthly, while that same property might cost just half as much to rent out in second and third-tier cities.
Common examples of operational costs include payroll, electric and equipment maintenance fees. The daily electricity can be between 5,000 to 8,000 RMB for a medium arcade center and monthly equipment maintenance runs around $10k-20K RMNB as well. Staff wages also vary greatly by city, and total monthly costs are typically 50k-100K RMB. Reducing operational costs by optimizing the cost structure and using green or energy-efficient equipment, effectively scheduling staff etc, can effectively control overall profits.
Revenue Sources
Arcades make money from a variety of revenue streams beyond just direct fees for gaming machines. Each game on an arcade machine costs from 1 to 10 RMB, according to the type and demand of each single stall. Each machine can bring about 200-1,000 RMB of income per day to the owners(daily top-up of around 500 users on average). If there are 50 machines in the arcade center, then they might earn a daily turnover of at least about (10k-50k RMB).
Membership plansIn addition to regular packages arcade centers can also give memberships for stable income. If there are 1,000 people and each pays a monthly fee of 100 RMB — this will translate to a total revenue per month of about 100,000 RMB. Furthermore, arcade centers are also allowed to host competitions or events that can increase the number of visitors and charge customers for the minted fees.
Arcades that enhance experience with amenities such as food and beverage services, retail, or themed events also contribute to the value. If food and beverage sales account for a 30 percent share of total revenue, then at the average daily take per section of approximately 27,000 RMB plus or minus (I just pulled that number out my ass), we get around slightly northward from nine K in F&BSales depending. With additional retail and other value-added services, total revenue can be much more significant.
Market Demand
With online and mobile gaming taking over, arcade centers still fulfill a certain level of demand, but this number is fading. The 1980s and 1990s generations were still particularly passionate about arcade games, according to the “2023 USA Offline Entertainment Market Research Report,” taking up over seven percent. Meanwhile, in the family entertainment market sector, amusement centers have been a quietly popular way for parent-child recreational outlets. Foot traffic on weekends and holidays is usually 2 to 3 times more than the weekdays.
If there is an average daily foot traffic in a medium-sized arcade center of 500 people and each person can spend about 50 RMB, the collector will receive 25,000RMB per day. If we take a weekend and festive foot traffic to be twice the daily number, that would mean our total monthly revenue ranges between 750k RMB ~ and 900K.
Profit Analysis
As seen from the analysis above, arcade businesses can be proven to have large profit margins. Suppose a medium-sized arcade center per month generates revenue of 750,000 RMB, and after deductions to each operating cost, including rent, salaries for staff members, electricity expenses and as well equipment maintenance, the overall monthly operating costs are in the range from 300–400 CNY. Therefore, the monthly net profit may violently approach 350000–450000 RMB, and both profits can sustained at the level of near about (46% — 60%) net percentage.
