Starting an Arcade: How to Build a Profitable Business

You’re not starting an arcade just to break even—you want to make it thrive.
From the moment you decide to dive into the arcade business, the first question you should ask yourself is not “What games will I offer?” but rather “How do I ensure consistent profits from day one?” The allure of nostalgia is strong, but the arcade business, like any venture, requires strategic planning, understanding market trends, and adapting to changes.

The Key to Success is Location

Location, location, location. It might seem like a cliché, but the importance of where you set up your arcade cannot be overstated. In fact, this is the cornerstone of your success. High foot traffic areas, especially in malls, entertainment districts, or near colleges, can make all the difference. Before you invest in machines, focus on securing a prime spot where people will naturally walk in. Market research shows that arcades in shopping malls or busy downtown areas generate 40% more revenue than those in isolated locations.

Game Selection is More Than Just Nostalgia

When it comes to game selection, many entrepreneurs make the mistake of relying solely on nostalgic games like Pac-Man or Galaga. While these might attract an older crowd, modern arcades need to appeal to today’s gamer. Think about including VR stations, high-end racing simulators, or even e-sports setups. Data from current successful arcades suggests that mixing classic arcade games with modern technology keeps customers coming back for longer sessions, leading to higher profits.

Type of Game	Revenue Potential (per month)
Classic Arcade Games	$3,000 - $5,000
Virtual Reality Stations	$7,000 - $10,000
E-sports and Competitions	$10,000+

Maximizing Revenue Streams: It’s Not Just About Games

To maximize profits, diversify your revenue streams. Food and drink sales, merchandise, birthday parties, and memberships can significantly boost your bottom line. In fact, modern arcades earn up to 50% of their revenue from non-game-related services. Food and beverages can be particularly lucrative, especially if you create themed drinks and snacks. Consider offering event packages for corporate team-building events or hosting local e-sports tournaments.

Here’s a breakdown of potential revenue sources:

Revenue Stream	Contribution to Total Revenue
Game Play	50%
Food and Beverage	20%
Merchandise	10%
Birthday Parties and Events	15%
Memberships	5%

Managing Costs: Where to Cut and Where to Spend

Starting an arcade isn't cheap, but that doesn’t mean you should cut corners in the wrong areas. The bulk of your expenses will go into rent, machines, and staffing. High-quality machines are essential, and while they might come with a hefty price tag, cutting costs here will cost you more in maintenance and customer satisfaction. However, you can save by leasing machines or purchasing second-hand from arcades going out of business.

Smart staffing is another cost-saving measure. Hire passionate employees who can manage not just the machines but also the customer experience. Many arcades offer bonuses to staff who can upsell food and drinks or get customers involved in high-revenue activities like tournaments.

Creating a Unique Experience

In a world of online gaming, why would someone come to your arcade? The answer lies in creating an experience they can’t get anywhere else. This could be through themed nights, unique game offerings, or a stellar atmosphere. Successful arcades often thrive because they’ve created a social hub. Customers should feel like they’re part of a community, whether through monthly tournaments, loyalty programs, or by simply creating a great space to hang out.

Take inspiration from the "barcade" trend—arcades combined with bars—that has swept across the U.S. These venues not only attract gamers but also socializers, making it a double-revenue business model.

Arcade Feature	Customer Attraction
Themed Nights (80s, Anime)	25% more walk-ins
Bar Area with Arcade Setup	30% revenue increase
Monthly Tournaments	Retains long-term customers

Marketing: How to Get People Through the Door

Even with the best games, location, and atmosphere, you need a solid marketing plan. Social media is your best friend here, and targeted ads can get people excited about your arcade long before it opens. Focus on Instagram, TikTok, and YouTube, where you can post video teasers, showcase game setups, and highlight events like tournaments. Offering discounts to those who engage with your posts or refer friends is another proven strategy.

Leverage local influencers or streamers to boost visibility, especially if your arcade offers e-sports or VR gaming. Also, never underestimate the power of a grand opening event. A well-publicized launch with discounted or free plays can bring in a large crowd and create buzz.

Challenges and How to Overcome Them

Every business has hurdles, and starting an arcade is no different. The biggest challenges you’ll face are high initial costs, competition, and the ever-evolving gaming landscape. High startup costs are inevitable, but careful budgeting and a well-thought-out business plan can mitigate risks. Arcade competition may be stiff, but focusing on niche markets—like e-sports, VR, or retro gamers—can give you an edge.

The gaming world is always evolving, and arcades must evolve with it. Stay ahead of trends by regularly updating your game offerings, adding new features like escape rooms, or incorporating the latest in gaming technology like augmented reality.

Conclusion: Your Arcade, Your Vision

Starting an arcade is a blend of nostalgia and innovation. It’s about creating a space where people can enjoy the past while experiencing the future of gaming. If done right, an arcade can be both a profitable business and a community hub where people gather for entertainment, competition, and social interaction. Focus on strategic location, modern and classic game variety, diversified revenue streams, and a strong marketing plan. Success in the arcade business is more achievable than ever if you build it smart from the ground up.