Coin-operated Arcade Game Manufacturing Industry
The market size for newly manufactured coin operated arcade games in the United States is estimated to be approximately $2.5 billion. As there are no preexisting market research reports, this number was triangulated using the average number of arcade games released by manufacturers each year, the average price of a single arcade game, and the number of arcade locations in the United States. Below are my assumptions, methodology, and calculations.
Definitions and Assumptions
Arcade: locations with multiple coin operated video games, pinball machines, and redemption games.
FEC: "Big locations with multiple attractions (theaters, laser tag, bumper cars, trampolines, etc, etc.).
Street Locations: "Places that people don’t really think of as being arcades — truck stops, small restaurants, dental offices, waiting rooms, the walkway at the mall, that small spot near the grocery store entrance, a little no name shop at the local Wal-Mart next to the nail salon, and so on." There is likely very little turnover at these locations."
For the purposes of this report, we determined coin operated games to be video games that require some form of payment to play and include games that are located in major arcades like Dave & Busters and Chuck E Cheese restaurants, as well as those that are in smaller venues like bars, strip mall arcades, and bowling alleys. Both redemption games (like Skee-Ball and crane games) and non-redemption games (like Pac Man, racing games, and shooting games) are included in this analysis.
A second assumption is that newly released coin operated video games are the same as newly manufactured coin operated video games since new releases would have to be manufactured. There is no public information available in market research reports or industry publications on the number of older games that arcades purchase each year that may have to be manufactured to order. As such, this brief only takes into account the average number of new arcade games that are manufactured each year.
We also assumed that the larger arcades and "FECs" like Dave & Buster's, would purchase nearly all new arcade arrivals each year to keep their games fresh, while the so-called street locations would purchase no more than one new game per year. This is because street locations only have a few games each and turnover is likely uncommon. This assumption also takes into account new street locations that purchase several new games and those locations that don't purchase any new games on a yearly basis.
Despite searching for research reports, industry studies, and media mentions, we were unable to find a preexisting market size for coin operated arcade games. However, we were able to find information on how many games are manufactured each year, the number of arcades in the United States, and the average cost of a new coin operated arcade game to give us an estimated market size for the manufacture of coin operated arcade games. As such, the following numbers are used in our calculations:
Number of arcades in the United States: 2,520
Number of FECs in the United States: 3,500
Number of street locations in the United States: 160,740
Average cost per game: $7,500
Average number of coin operated games released (manufactured) per year: 28
The number of arcades, FECs, and street locations were taken directly from the "Play Meter: State of the Industry Report," so no calculations were required, but these numbers will be used to triangulate the market size.
The average cost per game was taken from the article "How to Start an Arcade." This source states that ""the biggest portion of an arcade’s startup cost is usually the games themselves... costing anywhere from $6,000 to $9,000." To determine the average cost of a coin operated arcade game, I added $6,000 to $9,000 to get $15,000, then divided by 2 to get the average of $7,500. This cost is confirmed by Arcade Heroes, which noted that arcade operates spend $7,000+ on each arcade game.
The average number of coin operated game releases per year was taken from Arcade Heroes, which covers "every possible arcade release" for North America (along with other regions). As such, I found the number of new arcade releases in North America for each year between 2009 and 2017, and the expected releases for 2018. I then added these numbers together and divided by 10 to get the average number of new coin operated games released (manufactured) each year:
2009: 27 new games
2010: 33 new games
2011: 30 new games
2012: 29 new games
2013: 29 new games
2014: 38 new games
2015: 30 new games
2016: 17 new games
2017: 22 new games
2018: 27 new games (expected)
Average: 28 (282 / 10 = 28.2, rounded to 28)
Using the assumption that the arcades and FECs purchase one of each new game per year, this would mean that arcades and FECs purchase 168,560 total new arcade games per year (3,500 + 2,520 = 6,020, 6,020 x 28 = 168,560). Using the average cost per game of $7,500, this would mean that arcades and FECs spend about $1,254,200,000 each year on coin operated arcade games (6,020 x $7,500 = $1,254,200,000).
Using the assumption that street locations purchase one new arcade game per year, this would mean that street locations purchase 160,740 total new arcade games per year (160,740 x 1 = 160,740). Using the average cost per game of $7,500, this would mean that street locations spend about $1,205,550,000 each year on coin operated arcade games (160,740 x $7,500 = $1,205,550,000).
Adding these two numbers together gives us a total market size for coin operated video games of $2,459,750,000 or rounded to $2.5 billion.
Although this is a very rough estimate, the above calculations show that the coin operated arcade manufacturing market is about $2.5 billion. Arcades, FECs, and street locations purchase about 329,300 (160,740 + 168,560) new arcade units annually. Unfortunately, without more exact details on how many newly manufactured games are sold each year, this is as close as we are able to get to the actual market size.
A total of 166,760 arcades, FECs, and street locations purchase approximately $2.5 billion in newly manufactured and released coin operated arcade games each year.