PORTLAND, Ore. (TheStreet) -- For what now looks like a brief window in the 1980s and 1990s, video arcades were as big a part of the summer experience as road trips, warm temperatures and barbecues.
For whole generations, summer excursions to the mall, boardwalk or amusement park usually involved parting with a few quarters to get reacquainted with old friends such as Ms. Pac-Man, Donkey Kong, Tapper, Double Dragon's Billy and Jimmy, the globetrotting Street Fighter crew or that who always took a seat next to you in the Daytona USA machine just long enough to ram your car into every wall in the game. It cramped wrists, blurred vision and kept kids out of the sun they were ostensibly on vacation to enjoy. But it was everything to kids whose ears perked up when they heard the Peter Gunn theme blaring from a Spy Hunter console halfway across the boardwalk.
But former arcade rats with graying or disappearing hair, wedding rings on their joystick hands and, in some cases, kids of their own, know where this story ended. U.S. arcade revenue hit $8 billion during its Pac-Man heyday in 1981, dropped to $2.4 billion in 1991 as kids ran home to their Nintendo Entertainment System and Sega Genesis, but jumped back to $7 billion in 1994 as Street Fighter II, Mortal Kombat, Ridge Racer, NBA Jam, Lethal Enforcers and Area 51 popularized head-to-head multiplayer games and swelled crowds around the machines.
By the end of the '90s, though, even the arcade performance art that was Dance, Dance Revolution couldn't save the day. While arcade games outearned home consoles $7 billion to $6 billion in 1994, the consoles were catching up. By 1998, Sega's Dreamcast featured the first arcade-quality 3-D graphics on a home system and was about to get eaten alive by Sony's (SNE) Playstation 2 and Microsoft's (MSFT) Xbox. Arcade revenue dropped from $1.3 billion in 1999 to $866 million by 2004 as struggling arcades switched off Street Fighter and started stocking more games that spat out tickets customers could redeem for small prizes. Every other arcade was now a version of Chuck E. Cheese or Dave and Buster's and those that weren't were like a 30-something's CD collection post-Napster: Filled with '80s and '90s relics that haven't moved from their spots in ages.So that's it, right? We're more than a decade of "game over" jokes from the death of the arcade, no? Well, funny thing about that console takeover: As it turns out, folks actually get tired of playing sequels to the same game series over and over and grow weary of having slurs flung at them by whatever 12-year-old is playing their online role-playing game or multiplayer shooter. According to market research firm NPD Group, video game sales plummeted 9% last year and have gone through a sustained decline since the recession. While digital game sales increased 16%, sales of game discs tanked 21%. New consoles such as Nintendo's Wii U and Sony's handheld PlayStation Vita haven't spurred sales. Meanwhile, Sony's upcoming Playstation 4 and Microsoft's newly announced Xbox One are less game consoles and more multimedia centers that also happen to play games. Smartphones and tablets, meanwhile, ballooned from 19% of the portable game market in 2009 to 58% in 2011. Somewhere along the line, a whole lot of casual gamers decided that their trial price for a game was closer to $1 or free than it was to $60 for a game that will be obsolete by the same time next year. While that's not going to send Americans streaming back to the arcades and rummaging for quarters, it's exactly the kind of environment where an arcade can thrive. The arcade hasn't come roaring back, but it's refusing to be buried quietly and is adapting to a culture in which star attractions from Dig Dug to Capcom's version of the X-Men are just one mobile device app download away. We've scoured America for places where Tapper still serves Budweiser and Frogger still struggles to get across the street. Our journey ended with five places where childhood summer favorites not only survive, but managed to grow up along with the free-spending gamers who loved them:
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV