View source for History of arcade video games

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[[File:Retrovolt Arcade 2017 - Arcade Machines 1.jpg|300px|thumb|right|A video game arcade in 2017 featuring a number of arcade games]]
{{VG history}}
An [[arcade video game]] is an [[arcade game]] where the player's inputs from the game's controllers are processed through electronic or computerized components and displayed to a video device, typically a monitor, all contained within an enclosed [[arcade cabinet]]. Arcade video games are often installed alongside other arcade games such as [[pinball]] and [[redemption game]]s at [[amusement arcades]]. Up until the late 1990s, arcade video games were the largest<ref name="vgmarket"/> and most technologically advanced<ref name="VF3"/><ref name="THG" /> sector of the [[video game industry]].

The first arcade game, ''[[Computer Space]]'', was created by [[Nolan Bushnell]] and [[Ted Dabney]], the founders of [[Atari, Inc.]], and released in 1971; the company followed on its success the next year with ''[[Pong]]''. The industry grew modestly until the release of [[Taito]]'s ''[[Space Invaders]]'' in 1978 and [[Namco]]'s ''[[Pac-Man]]'' in 1980, creating a [[golden age of arcade video games]] that lasted through about 1983. At this point, saturation of the market with arcade games led to a rapid decline in both the arcade game market and arcades to support them. The arcade market began recovering in the mid-1980s, with the help of software conversion kits, new genres such as [[beat 'em ups]], and advanced [[motion simulator]] cabinets. There was a resurgence in the early 1990s, with the birth of the [[fighting game]] genre with [[Capcom]]'s ''[[Street Fighter II]]'' in 1991 and the emergence of [[3D graphics]], before arcades began declining in the West during the late 1990s. After several traditional companies closed or migrated to other fields (especially in the West), arcades lost much of their relevance in the West, but have continued to remained popular in [[East Asia|Eastern]] and [[Southeastern Asia]].

==Early arcade games==
{{Main|History of arcade games}}

Since the early 20th century, [[skee ball]] and other pin-based games had been a popular arcade game. The first [[pinball]] machines had been introduced in the 1930s but gained a reputation as [[game of chance|games of chance]] and had been banned from many venues from the 1940s through the 1960s. Instead, newer coin-operated [[electro-mechanical game]]s (EM games), classified as [[game of skill|games of skill]] took their place in amusement arcades by the 1960s.<ref name="verge history"/>

Following the arrival of [[Sega]]'s EM game ''[[Periscope (arcade game)|Periscope]]'' (1966), the arcade industry was experiencing a "technological renaissance" driven by "audio-visual" EM novelty games, establishing the arcades as a healthy environment for the introduction of commercial video games in the early 1970s.<ref name="Smith">{{cite book |last1=Smith |first1=Alexander |title=They Create Worlds: The Story of the People and Companies That Shaped the Video Game Industry, Vol. I: 1971–1982 |date=19 November 2019 |publisher=[[CRC Press]] |isbn=978-0-429-75261-2 |pages=119–20, 188–91 |url=https://books.google.com/books?id=Cxy_DwAAQBAJ&pg=PT119}}</ref> In the late 1960s, a college student [[Nolan Bushnell]] had a part-time job at an arcade where he became familiar with EM games through watching customers play and helping to maintain the machinery, while learning how it worked and developing his understanding of how the game business operates.<ref name="NGen23">{{cite magazine |title=The Great Videogame Swindle? |magazine=[[Next Generation (magazine)|Next Generation]] |issue=23 |publisher=[[Imagine Media]] |date=November 1996 |pages=211–229 |url=https://archive.org/details/NextGeneration23Nov1996P2/page/n72}}</ref>

==Arrival of arcade video games (1971−1977)==
{{See also|1970s in video games}}
[[File:Nutting_ComputerSpace-Blue.JPG|thumb|left|upright|''[[Computer Space]]'', the first commercial arcade video game]]

While [[early history of video games|early video games]] running on computers had been developed as far back as 1950, the first video game to spread beyond a single computer installation, ''[[Spacewar!]]'', was developed by students and staff at [[MIT]] on a [[PDP-1]] mainframe computer in 1962. As the group that developed it migrated across the country to other schools, they took ''Spacewar!''{{'}}s source code to run on other mainframe machines at those schools. It inspired two different groups to attempt to develop a coin-operated version of the game.<ref name="VGHnutty">{{cite web |url=https://videogamehistorian.wordpress.com/2015/09/03/a-nutty-idea/ |title=A Nutty Idea |work=They Create Worlds |last=Smith |first=Alexander |date=2015-09-03 |access-date=2016-03-12 |archive-url=https://web.archive.org/web/20170920164355/https://videogamehistorian.wordpress.com/2015/09/03/a-nutty-idea/ |archive-date=2017-09-20 |url-status=live }}</ref>

Around 1970, [[Nolan Bushnell]] was invited by a colleague to see ''Spacewar!'' running on [[Stanford University]]'s [[PDP-6]] computer. Bushnell got the idea of recreating the game on a smaller computer, a [[Data General Nova]], connected to multiple coin-operated terminals. He and fellow [[Ampex]] employee [[Ted Dabney]], under the company name Syzygy, worked with [[Nutting Associates]] to create ''[[Computer Space]]'', the first commercial arcade game, with location tests in August 1971 and production starting in November.<ref name="verge history">{{cite web | url = https://www.theverge.com/2013/1/16/3740422/the-life-and-death-of-the-american-arcade-for-amusement-only | title = For Amusement Only: the life and death of the American arcade | first= Laura | last = June | date = January 16, 2013 | access-date = August 13, 2020 | work = [[The Verge]] }}</ref> More than 1300 units of the game were sold, and while not as large of a hit game as hoped, it proved the potential for the coin-operated computer game.<ref name="verge history"/> At [[Stanford University]], students Bill Pitts and Hugh Tuck used a [[PDP-11]] mainframe to build two prototypes of ''[[Galaxy Game]]'', which they demonstrated at the university starting in November 1971, but were unable to turn into a commercial game.<ref name="VGHnutty"/>

Bushnell got the idea for his next game after seeing a demonstration of a table tennis game on the [[Magnavox Odyssey]], the first [[home video game console]] that was based on the designs of [[Ralph H. Baer]]. Deciding to go on their own, Bushnell and Dabney left Nutting and reformed their company as [[Atari Inc.]], and brought on [[Allan Alcorn]] to help design an arcade game based on the Odyssey game. After a well-received trial run of a demo unit at Andy Capp's Tavern in San Jose, California in August 1972,<ref>{{cite web|url=https://www.metroactive.com/features/columns/pong-40th-anniversary-rooster-t-feathers.html|title=Pong 40th anniversary - Rooster T. Feathers - Features & Columns|website=www.metroactive.com|access-date=9 May 2017|archive-url=https://web.archive.org/web/20170709091930/http://www.metroactive.com/features/columns/pong-40th-anniversary-rooster-t-feathers.html|archive-date=9 July 2017|url-status=live|df=dmy-all}}</ref> ''[[Pong]]'' was first released in limited numbers in November 1972 with a wider release by March 1973. ''Pong'' was highly successful, with each machine earning over {{USD|40}} a day, far greater than most other coin-operated machine at the time.<ref name="verge history"/>

With ''Pong''{{'s}} success, numerous other coin-operated manufacturers, most who were making [[electro-mechanical game]]s and [[pinball]] machines, attempted to capitalize on the success of arcade games; such companies included [[Bally Manufacturing]], [[Midway Manufacturing]], and [[Williams Electronics]], as well as Japanese companies [[Taito]] and [[Sega]]. Most took to trying to copy the games that Atari had already made with small alterations, leading to a wave of [[video game clone|clones]]. Bushnell, having failed to patent on the idea, considered these competitors "jackals" but rather than seeking legal action, continued to have Atari devise new games. Separately, Magnavox and [[Sanders Associates]], through which Baer had developed the basics of the Odyssey, sued Atari, among the other manufacturers, for patent violations of the basic patents behind the electronic game concepts. Bushnell opted to settle out of court, negotiating for perpetual licensing rights to Baer's patents for Atari as part of the settlement fee, which allowed Atari to pursue the development of additional arcade games and bringing ''Pong'' in a home console form, while Magnavox continued legal against the other manufacturers. It is estimated that Magnavox collected over {{USD|100 million}} in awards and settlements from these suits over the Baer patents.<ref name="Ultimate-Legal">{{cite book| title = [[Ultimate History of Video Games]]| first = Steven| last = Kent | authorlink = Steven L. Kent| pages = 45–48| chapter = And Then There Was Pong| publisher = Three Rivers Press| isbn = 0-7615-3643-4| year = 2001}}</ref>

[[File:Musée_Mécanique_221.JPG|thumb|right|upright|''[[Death Race (1976 video game)|Death Race]]'' was one of the first video games to be criticized for its violence.]]
By the end of 1974, more than fifteen companies, both in the United States and Japan, were in the development of arcade games.<ref name="verge history"/> A key milestone was the introduction of [[microprocessor]] technology to arcade games with Midway's ''[[Gun Fight]]'' (an adaptation of Taito's ''Western Gun'' as released in Japan), which could be programmed more directly rather than relying on the complex interaction of integrated circuitry (IC) chips.<ref name="verge history"/>

Video games were still considered to be adult entertainment at this point, and treated as with pinball machines as games of skill, "For Amusement Only", and placed in locations that children would likely not be at such as bar and lounges. However, the same stigma that pinball machines had seen in the prior decades became to appear for video games. Notably, the release of ''[[Death Race (1976 video game)|Death Race]]'' in 1976, which involved driving over [[gremlin]]s on screen, drew criticism in the United States for being too violent, and created the first major debate on [[violence and video games]].<ref name="verge history"/><ref name="death race game studies">{{cite journal | title = The Agony and the Exidy: A History of Video Game Violence and the Legacy of Death Race | first = Carly | last = Kocurek | journal = Game Studies | volume = 12 | issue = 1 | date= September 2012 | url = http://gamestudies.org/1201/articles/carly_kocurek | access-date = August 11, 2020 }}</ref>

After the "paddle game" trend came to an end around 1975, the arcade video game industry entered a period of stagnation in the "post paddle game era" over the next several years up until 1977.<ref name="RePlay80">{{cite magazine |title=Special Report: Tom Petit (Sega Enterprises) |magazine=RePlay |date=January 1991 |volume=16 |issue=4 |pages=80, 82 |url=https://archive.org/details/re-play-volume-16-issue-no.-4-january-1991-600dpi/RePlay%20-%20Volume%2016%2C%20Issue%20No.%204%20-%20January%201991/page/44}}</ref>

==Golden age of arcade games (1978–1983)==
{{Main|Golden age of arcade video games}}

In 1978, Taito released ''[[Space Invaders]]'', first in Japan, followed by its North American release.<ref name="verge history"/> Among its novel gameplay features that drove its popularity, the game was the first to maintain a persistent [[high score]].<ref>{{cite web |title=The Definitive Space Invaders |url=http://www.nowgamer.com/features/894697/the_definitive_space_invaders_part_1.html |work=NowGamer |access-date=September 30, 2011 |date=January 19, 2009}}</ref> and though simplistic, used an interactive audio system that increased with the pace of the game.<ref>{{Cite book |title=From Pac-Man to pop music: interactive audio in games and new media |first=Karen |last=Collins |publisher=[[Ashgate Publishing|Ashgate]] |year=2008 |isbn=978-0-7546-6200-6 |url=https://books.google.com/books?id=lFEYAQAAIAAJ |access-date=April 8, 2011 |page=2}}</ref> The game was extremely popular in both regions. In Japan, specialty arcades were established that featured only ''Space Invaders'' machines, and Taito estimated that they had sold over 100,000 machines in the country alone by the end of 1978,<ref name="eg_1_31">{{cite journal |title=Can Asteroids Conquer Space Invaders? |journal=Electronic Games |date=Winter 1981 |volume=1 |issue=1 |pages=30–33 [31] |url=http://www.digitpress.com/library/magazines/electronic_games/electronic_games_winter81.pdf |access-date=February 1, 2012 |archive-url=https://web.archive.org/web/20120319212242/http://www.digitpress.com/library/magazines/electronic_games/electronic_games_winter81.pdf |archive-date=March 19, 2012 |url-status=live }}</ref> while in the United States, over 60,000 machines had been sold by 1980.<ref name="Peterson-175">{{citation |title=Genesis II, creation and recreation with computers |first=Dale |last=Peterson |publisher=[[Prentice Hall|Reston Publishing]] |year=1983 |isbn=0-8359-2434-3 |url=https://books.google.com/books?id=DL1YAAAAMAAJ |access-date=May 1, 2011 |page=175 |quote=By 1980, some 300,000 Space Invader video arcade games were in use in Japan, and an additional 60,000 in the United States.|author-link=Dale Peterson }}</ref> The game was considered the [[List of best-selling video games|best-selling video game]] and [[List of highest-grossing arcade games|highest-grossing]] "entertainment product" of its time.<ref name="CBC-1982">{{cite web|date=November 23, 1982|title=Making millions, 25 cents at a time|url=https://www.cbc.ca/archives/entry/video-games-making-millions-25-cents-at-a-time|url-status=live|archive-url=https://web.archive.org/web/20081222152117/http://archives.cbc.ca/arts_entertainment/media/clips/15869/|archive-date=December 22, 2008|access-date=April 30, 2011|work=[[The Fifth Estate (TV)|The Fifth Estate]]|publisher=Canadian Broadcasting Corporation}}</ref> Many arcade games since then have been based on "the multiple [[Life (video games)|life]], progressively difficult [[Level (video games)|level]] paradigm" established by ''Space Invaders''.<ref>{{cite book |last1=Hague |first1=James |chapter=Eugene Jarvis |title=Halcyon Days: Interviews with Classic Computer and Video Game Programmers |title-link=Halcyon Days (book) |date=1997 |publisher=Dadgum Games |chapter-url=https://dadgum.com/halcyon/BOOK/JARVIS.HTM |url-status=live |archive-url=https://web.archive.org/web/20020622145031/http://dadgum.com/halcyon/BOOK/JARVIS.HTM |archive-date=22 June 2002 |access-date=18 May 2021 }}</ref>

''Space Invaders'' led to a string of popular arcade games over the next five years that are considered the "Golden Years" for arcade games. Among these titles include:<ref name="verge history"/>
{{div col|colwidth=22em}}
* ''[[Asteroids (video game)|Asteroids]]'' (Atari, 1979)
* ''[[Galaxian]]'' ([[Namco]], 1979)
* ''[[Berzerk (video game)|Berzerk]]'' ([[Stern (game company)|Stern Electronics]], 1980)
* ''[[Missile Command]]'' (Atari, 1980)
* ''[[Battlezone (1980 video game)|Battle Zone]]'' (Atari, 1980)
* ''[[Pac-Man]]'' (Namco, 1980)
* ''[[Rally-X]]'' (Namco, 1980)
* ''[[Centipede (video game)|Centipede]]'' (Atari, 1980)
* ''[[Defender (video game)|Defender]]'' ([[WMS Industries|Williams Electronics]], 1981)
* ''[[Donkey Kong (1981 video game)|Donkey Kong]]'' ([[Nintendo]], 1981)
* ''[[Frogger]]'' ([[Konami]], 1981)
* ''[[Galaga]]'' ([[Namco]], 1981)
* ''[[Scramble (video game)|Scramble]]'' (Konami, 1981)
* ''[[Tempest (video game)|Tempest]]'' (Atari, 1981)
* ''[[Zaxxon]]'' (Sega, 1981)
{{div col end}}

Of these, ''Pac-Man'' had an even larger impact on [[popular culture]] when it arrived in 1980; the game itself was popular but people took to [[Pac-Man (character)|Pac-Man]] as a mascot, leading to merchandise and an [[Pac-Man (TV series)|animated series]] of the same name in 1982. The game also inspired the Gold-certified song "[[Pac-Man Fever (song)|Pac-Man Fever]]" by [[Buckner & Garcia]].<ref name="verge history"/> ''Pac-Man'' sold about 400,000 cabinets overall by 1982.<ref name="kao45">{{cite book |last=Kao |first=John J. |title=Entrepreneurship, creativity & organization: text, cases & readings |year=1989 |publisher=[[Prentice Hall]] |location=Englewood Cliffs, NJ |isbn=0-13-283011-6 |url=https://books.google.com/books?id=P-MJAQAAMAAJ |author-link=John Kao |access-date=February 12, 2012 |page=45 |quote=Estimates counted 7&nbsp;billion coins that by 1982 had been inserted into some 400,000 Pac Man machines worldwide, equal to one game of Pac Man for every person on earth. US domestic revenues from games and licensing of the Pac Man image for T-shirts, pop songs, to wastepaper baskets, etc. exceeded $1&nbsp;billion. |url-status=live |archive-url=https://web.archive.org/web/20160418072829/https://books.google.com/books?id=P-MJAQAAMAAJ |archive-date=April 18, 2016}}</ref> ''Donkey Kong'' was also significant as not only being the first recognized [[platform game]] but also bringing a cute, more fantastical concept that was well-founded in Japanese culture but new to Western regions, compared to prior arcade games. Western audiences became accustomed to this level of abstraction, making later Japanese-made arcade games and titles for the [[Nintendo Entertainment System]] easily accepted by these players.<ref name="i am error naming">{{cite book | first = Nathan | last = Altice | title = I Am Error: The Nintendo Family Computer / Entertainment System Platform | chapter = Chapter 2: Ports | pages =53–80 | isbn = 9780262028776 | publisher = [[MIT Press]] | date = 2015 }}</ref>

These games, along with numerous others, created [[video game arcade]]s around the world. The construction boom of [[shopping mall]]s in the United States during the 1970s and 1980s gave rise to dedicated arcade storefronts such as Craig Singer's [[Tilt (arcade)|Tilt Arcades]].<ref name="mallrats">{{cite journal | title = Arcade Addicts And Mallrats: Producing And Policing Suburban Public Space In 1980s America | first1 = Kyle | last1 = Riismandel | journal = Environment, Space, Place | volume = 5 | issue = 2| pages = 65–89 | date = 2013 | doi = 10.7761/ESP.5.2.65 }}</ref> Other arcades were featured in bowling alleys and skating rinks, as well as standalone facilities, such as Bushnell's chain of [[Chuck E. Cheese]] pizzerias and arcades.<ref name="verge history"/>  ''[[Time (magazine)|Time]]'' reported in January 1982 that there were over 13,000 arcades in the United States, with the most popular machines bringing in over $400 in profit each day.<ref name="verge history"/> [[Twin Galaxies]], an arcade opened by [[Walter Day]] in [[Ottumwa, Iowa]], became known for tracking the high scores of many these top video games, and in 1982, ''[[Life (magazine)|Life]]'' featured the arcade, Day, and several of the top players at the time in a cover story, bringing the idea of a professional video game player to public consciousness.<ref name="egm">{{cite magazine | url = https://egmnow.com/the-split-screen-man/ | title = The Split-Screen Man | first=  Josh | last =Harmon | date = September 30, 2019 | access-date = November 14, 2019 | magazine = [[Electronic Gaming Monthly]] }}</ref><ref name="verge history"/> The formation of video game tournaments around arcade games in the 1980s was the predecessor of modern [[esports]].<ref>{{cite journal | title = Pioneering E-Sport: The Experience Economy and the Marketing of Early 1980s Arcade Gaming Contests | first1 = Michael | last1 = Borowy | first2 = Dal Yong | last2 = Jin | journal = International Journal of Communication | volume = 7 | date = 2013 | pages = 2254–2274 | issn = 1932-8036 }}</ref>

Arcade machines also found their way into any area where they could be placed and would be able to draw children or young adults, such as supermarkets and drug stores.<ref name="verge history"/> The Golden Age was also buoyed by the growing home console market which had just entered the [[second generation of video game consoles|second generation]] with the introduction of [[game cartridge]]s. Atari had been able to license ''Space Invaders'' for the [[Atari 2600]] which became the system's [[killer application]].<ref name="verge history"/> Similarly, [[Coleco]] beat Atari in licensing ''Donkey Kong'' from Nintendo, and among other ports, included their conversion of the game as a pack-in for the [[ColecoVision]], which helped to boost sales of the console and compete against the Atari 2600.<ref>{{cite news |last1=McFerran |first1=Damien |title=Feature: How ColecoVision Became the King of Kong |url=https://www.nintendolife.com/news/2010/09/feature_how_colecovision_became_the_king_of_kong |access-date=2 April 2021 |work=[[Nintendo Life]] |date=18 September 2010}}</ref> Licensing of arcade hits became a major business for the home markets, which in turn spurred further growth in the arcade field.<ref name="verge history"/> By 1981, the US arcade game market had an estimated value of {{US$|8 billion|long=no}}.<ref>{{cite news |title=Can Lasers Save Video Arcades?|url=http://nl.newsbank.com/nl-search/we/Archives?p_product=PI&s_site=philly&p_multi=PI&p_theme=realcities&p_action=search&p_maxdocs=200&p_topdoc=1&p_text_direct-0=0EB29715971BCAA2&p_field_direct-0=document_id&p_perpage=10&p_sort=YMD_date:D&s_trackval=GooglePM|newspaper=[[The Philadelphia Inquirer]] |date=3 February 1984 |quote=Last year, arcade game revenues were approximately $5&nbsp;billion, compared to $8&nbsp;billion in 1981 and $7&nbsp;billion in 1982.}}</ref>

Jonathan Greenberg of ''[[Forbes]]'' predicted in early 1981 that Japanese companies would eventually dominate the North American video game industry, as American video game companies were increasingly licensing products from Japanese companies, who in turn were opening up North American branches.<ref name="Greenberg">{{Cite magazine|last=Greenberg|first=Jonathan|date=April 13, 1981|title=Japanese invaders: Move over Asteroids and Defenders, the next adversary in the electronic video game wars may be even tougher to beat|url=https://jonathangreenberg.com/wp-content/uploads/2018/01/Japanese-Invaders-April-13-1981.pdf|magazine=[[Forbes]]|volume=127|issue=8|pages=98, 102}}</ref> By 1982–1983, Japanese manufacturers had captured a large share of the North American arcade market, which Gene Lipkin of [[Data East|Data East USA]] partly attributed to Japanese companies having more finances to invest in new ideas.<ref>{{cite magazine |title=Special Report: Gene Lipkin (Data East USA) |magazine=RePlay |date=January 1991 |volume=16 |issue=4 |page=92 |url=https://archive.org/details/re-play-volume-16-issue-no.-4-january-1991-600dpi/RePlay%20-%20Volume%2016%2C%20Issue%20No.%204%20-%20January%201991/page/92}}</ref>

{{Image frame |caption=Global revenue estimates of the arcade video game industry from 1971 to 2018, according to market research firm Pelham Smithers.<ref name="vgmarket">{{cite web | url = https://www.bloomberg.com/news/articles/2019-01-23/peak-video-game-top-analyst-sees-industry-slumping-in-2019 | title = Peak Video Game? Top Analyst Sees Industry Slumping in 2019 | first=  Yuki | last = Naramura | date = January 23, 2019 | access-date = January 29, 2019 | work = [[Bloomberg L.P.]] | url-access = subscription | archive-url = https://web.archive.org/web/20190130053850/http://www.bloomberg.com/news/articles/2019-01-23/peak-video-game-top-analyst-sees-industry-slumping-in-2019 | archive-date = 30 January 2019 | url-status=live}}</ref> | align=center | content= {{Graph:Chart|width=1000|height=200|xAxisTitle=Year|yAxisTitle=BillionsUSD
|type=stackedrect
|units prefix=$
|xAxisAngle = -45
|x=1971,1972,1973,1974,1975,1976,1977,1978,1979,1980,1981,1982,1983,1984,1985,1986,1987,1988,1989,1990,1991,1992,1993,1994,1995,1996,1997,1998,1999,2000,2001,2002,2003,2004,2005,2006,2007,2008,2009,2010,2011,2012,2013,2014,2015,2016,2017,2018
|y1=1,2,3,5,10,15,15,10,15,25,26,27,20,15,9,10,11,12,13,15,14,13,14,15,14,11,9,7,6,5,5,5,4.5,4.5,4,4,4,3.5,3.5,3,3,3,3,3,3,3.5,3.5,3.5
|y1Title=Arcade
}} }}

==End of the golden age (1984)==
Though 1982 was recognized as the height of success of the video game arcade, many in the industry knew the success could not last too long. Walter Day had commented in 1982 that there were "too many arcades" by that point for what was really needed.<ref name="verge history"/> Additionally, players required novelty and new games, and thus required older games to be discontinued and replaced with new ones, but not all new games were as successful as those at the height of the Golden Age. Knowing that players were seeking more challenge, game manufacturers designed the newer games to be harder, but this caused less-skilled mainstream players to be turned away.<ref name="verge history"/>

Coupled with this was an increased pressure on possible harmful impacts of video games on children. Arcades had taken steps to make their venues as "family fun centers" alleviate some concerns, but parents and activists still saw video games as potentially addictive and leading to aggressive behavior. The [[Surgeon General of the United States|U.S. Surgeon General]] [[C. Everett Koop]] spoke in November 1982 about the potential addiction of video game by young children, as part general moral concerns around youth in the early 1980s. These fears not only affected video game arcades, but other places where youth would normally be able to hang out without adult supervision such as shopping malls and skating rinks. There were also reports of increased crime associated with arcades due to lack of adult supervision. Many cities and towns implemented bans on arcades or limiting businesses to only a few machines by the mid-1980s.<ref name="verge history"/><ref name="mallrats"/> Several of these bans were challenged by arcade owners on [[First Amendment to the United States Constitution|First Amendment]] grounds, asserting [[video games as an art form|video games merits protection as an art form]], but the bulk of these cases ruled against arcades, favoring local regulations that were limiting conduct rather than restricting speech.<ref>{{cite journal | title = The First Amendment Side Effects of Curing Pac-Man Fever | journal = [[Columbia Law Review]] | volume = 84 | issue = 3 | date = April 1984 | pages = 744–774 | last = Goroff | first =  David B. | doi = 10.2307/1122504 | jstor = 1122504 }}</ref> Further impacting the arcades, the rising popularity of home consoles threatened the arcades, since players did not have to repeatedly spend money to play at arcades when they could play at home. But with the [[1983 video game crash]] which drastically affected the home console market, the arcade market also felt its impact as it was already waning from oversaturation, loss of players, and the moral concerns over video games, all stressed by [[Early 1980s recession in the United States|the early 1980s recession]].<ref name="verge history"/>

Arcade games became relatively dormant in the United States for a while, declining from the peak financial success of the golden age.<ref name="verge history"/> The US arcade industry had declined from a peak of {{US$|8.9 billion|long=no}} in 1982 down to {{US$|4.5 billion|long=no}} in 1984.<ref>{{cite magazine |title=1984—Even Orwell Couldn't Predict How Bad It Was |magazine=[[Play Meter]] |date=December 1984 |volume=10 |issue=23 |pages=23–8 |url=https://archive.org/details/play-meter-volume-10-number-23-december-15th-1984/Play%20Meter%20-%20Volume%2010%2C%20Number%2023%20-%20December%2015th%201984/page/23}}</ref> The US arcade video game market was sluggish in 1984, but Sega president [[Hayao Nakayama]] was confident that good games "can surely be sold in the U.S. market, if done adequately." Sega announced plans to open a new US subsidiary for early 1985, which ''[[:ja:ゲームマシン|Game Machine]]'' magazine predicted would "most probably enliven" the American video game business.<ref name="GM252">{{cite magazine|date=15 January 1985|title=Overseas Readers Column|url=https://onitama.tv/gamemachine/pdf/19850115p.pdf#page=15|magazine=[[:ja:ゲームマシン|Game Machine]]|publisher=[[:ja:アミューズメント通信社|Amusement Press, Inc.]]|issue=252|page=28|lang=ja|archive-url=https://web.archive.org/web/20191120031821/https://onitama.tv/gamemachine/pdf/19850115p.pdf|archive-date=20 November 2019|url-status=live}}</ref> Despite the downturn in 1984, John Lotz of Betson Pacific Distributing predicted that another arcade boom could potentially happen by the early 1990s.<ref>{{cite magazine |last1=Kurtz |first1=Bill |title=The Coin-Op Industry in 1994 |magazine=[[Play Meter]] |date=December 1, 1984 |volume=10 |issue=22 |pages=74–6 |url=https://archive.org/details/play-meter-volume-10-number-22-december-1st-1984/Play%20Meter%20-%20Volume%2010%2C%20Number%2022%20-%20December%201st%201984%20%28Compressed%29/page/74/mode/2up}}</ref>

==Market recovery (1985−1990)==
{{See also|1980s in video games}}

The arcade industry began recovering in 1985 and made a comeback by 1986,<ref name="replaymag">{{cite web |title=Coin-Op history – 1975 to 1997 – from the pages of RePlay |url=http://replaymag.com/history.htm |website=RePlay |year=1998 |url-status=dead |archive-url=https://web.archive.org/web/19980428063132/http://replaymag.com/history.htm |archive-date=April 28, 1998 |access-date=April 21, 2021}}</ref> with the arcade industry experiencing several years of growth during the late 1980s.<ref name="RePlay80"/> A major factor in its recovery was the arrival of software [[Arcade conversion|conversion kit]] systems, such as [[Sega]]'s [[List of Sega arcade system boards|Convert-a-Game]] system, the [[Atari System 1]], and the [[Nintendo VS. System]], the latter being the Western world's introduction to the [[Famicom]] (NES) hardware in 1984, prior to the official release of the NES console; the success of the VS. System in arcades was instrumental to the release and success of the NES in North America.<ref name="Horowitz">{{cite book |last1=Horowitz |first1=Ken |chapter=The Vs. System (1984) |title=Beyond Donkey Kong: A History of Nintendo Arcade Games |date=July 30, 2020 |publisher=[[McFarland & Company]] |isbn=978-1-4766-4176-8 |pages=119–28 |chapter-url=https://books.google.com/books?id=UXD0DwAAQBAJ&pg=PA119}}</ref> Other major factors that helped revive arcades were the arrival of popular [[martial arts]] [[action games]] (including [[fighting games]] such as ''[[Karate Champ]]'' and ''[[Yie Ar Kung-Fu]]'', and [[beat 'em ups]] such as ''[[Kung-Fu Master (video game)|Kung-Fu Master]]'' and ''[[Renegade (video game)|Renegade]]''),<ref name="replaymag"/> advanced [[motion simulator]] games<ref name="replaymag"/> (such as Sega's "taikan" games including ''[[Hang-On]]'', ''[[Space Harrier]]'' and ''[[Out Run]]''),<ref name="SAH">{{cite book|author=Famitsu DC|author-link=Famitsu DC|url=https://retrocdn.net/index.php?title=File:Sega_Arcade_History_JP_EnterBrain_Book.pdf&page=14|title=Interview: Akira Nagai — SEGA REPRESENTATIVE|work=セガ・アーケード・ヒストリー (Sega Arcade History)|series=Famitsu Books|publisher=[[Enterbrain]]|date=15 February 2002|pages=20–23|language=ja|isbn=9784757707900|access-date=15 August 2020|archive-date=20 August 2020|archive-url=https://web.archive.org/web/20200820193203/https://retrocdn.net/index.php?title=File%3ASega_Arcade_History_JP_EnterBrain_Book.pdf&page=14|url-status=live}} ([http://shmuplations.com/akiranagai/ Translation] by Shmuplations. {{Webarchive|url=https://web.archive.org/web/20200807024817/http://shmuplations.com/akiranagai/ |date=7 August 2020 }}).</ref><ref name="RePlay80"/> and the resurgence of [[sports video games]] (such as ''[[Track & Field (video game)|Track & Field]]'', ''[[Punch-Out!! (arcade game)|Punch-Out]]'' and ''[[Tehkan World Cup]]'').<ref name="Lendino">{{cite book |last1=Lendino |first1=Jamie |title=Attract Mode: The Rise and Fall of Coin-Op Arcade Games |date=27 September 2020 |publisher=Steel Gear Press |pages=272, 334 |url=https://books.google.com/books?id=d6wCEAAAQBAJ}}</ref>
[[File:US Marine playing Defender.jpg|thumb|A US Marine playing Defender in the [[USS America (CV-66)|USS America]], 1982]]
By 1985, the arcade industry was largely dominated by Japanese manufacturers, with the number of American manufacturers having declined.<ref>{{cite magazine|title=Overseas Readers Column: AMOA Expo '86 Participated By Many Japanese Videos|magazine=[[:ja:ゲームマシン|Game Machine]]|issue=297|publisher=[[:ja:アミューズメント通信社|Amusement Press, Inc.]]|date=15 December 1986|page=26|lang=ja|url=https://onitama.tv/gamemachine/pdf/19861215p.pdf#page=14|archive-url=https://web.archive.org/web/20191102030943/https://onitama.tv/gamemachine/pdf/19861215p.pdf|archive-date=2 November 2019|url-status=live}}</ref><ref>{{cite magazine |title=1985 |magazine=[[Play Meter]] |date=December 1994 |volume=20 |issue=13 |page=74 |url=https://archive.org/details/play-meter-volume-20-number-13-december-1994/Play%20Meter%20-%20Volume%2020%2C%20Number%2013%20-%20December%201994/page/74}}</ref> By 1988, annual US arcade video game revenue had increased to {{US$|5,500,000,000|long=no|year=1988|round=-8}}.<ref>{{cite magazine |last1=Cook |first1=John |title=Coin-Op City |magazine=[[Computer + Video Games]] |date=16 October 1989 |issue=96 (November 1989) |pages=100–1, 103 |url=https://archive.org/details/cvg-magazine-096/page/n99/mode/2up}}</ref>  However, competition from new [[home consoles]], like the [[Nintendo Entertainment System]] (NES) that had revitalized the home video game industry, were drawing players away from the arcades.<ref name="verge history"/> After the NES took off in North America, home consoles kept many children at home and under parental supervision, keeping them away from arcades.<ref name="mallrats"/> The US arcade video game market experienced another decline from 1989.<ref name="replaymag"/><ref>{{cite magazine |title=Editorial |magazine=RePlay |date=February 1990 |volume=15 |issue=5 |page=6 |url=https://archive.org/details/re-play-volume-14-issue-no.-5-february-1990-600dpi/RePlay%20-%20Volume%2014%2C%20Issue%20No.%205%20-%20February%201990/page/6}}</ref> ''RePlay'' magazine partly attributed the decline to the rise of home consoles following the success of the NES.<ref>{{cite magazine |title=Machines & Markets |magazine=RePlay |date=January 1991 |volume=16 |issue=4 |pages=44–55 |url=https://archive.org/details/re-play-volume-16-issue-no.-4-january-1991-600dpi/RePlay%20-%20Volume%2016%2C%20Issue%20No.%204%20-%20January%201991/page/44}}</ref> In Japan, on the other hand, the arcade market grew while home video game sales declined.<ref>{{cite magazine |title=News Digest: Japan's Coin-Op Video Up, Reports Say |magazine=RePlay |date=February 1990 |volume=15 |issue=5 |page=13 |url=https://archive.org/details/re-play-volume-14-issue-no.-5-february-1990-600dpi/RePlay%20-%20Volume%2014%2C%20Issue%20No.%205%20-%20February%201990/page/13}}</ref> Overall, the worldwide arcade market continued to grow, remaining larger than the console market.<ref name="vgmarket"/>

Various technological advances were made in arcades during this era. Sega's ''[[Hang-On]]'', designed by [[Yu Suzuki]] and running on the [[Sega Space Harrier]] hardware, was the first of Sega's [[16-bit computing|16-bit]] "[[Sega Super Scaler|Super Scaler]]" [[arcade system boards]] that pushed [[2.5D|pseudo-3D]] [[Sprite (computer graphics)#Move to 3D|sprite-scaling]] at high [[frame rates]].<ref>[http://uk.retro.ign.com/articles/974/974695p3.html IGN Presents the History of SEGA: World War], [[IGN]]</ref><ref name=suzuki>{{cite web |url=http://www.1up.com/features/disappearance-suzuki-part-1?pager.offset=2 |title=Web.archive.org |access-date=2018-01-08 |url-status=bot: unknown |archive-url=https://web.archive.org/web/20160602020558/http://www.1up.com/features/disappearance-suzuki-part-1?pager.offset=2 |archive-date=2 June 2016 }}</ref> ''Hang-On'' also used a [[Motion controller|motion-controlled]] arcade cabinet that included a mounted [[motorbike]]-like control unit on a hydraulic system, which the player used to control the game by tilting their body to the left or right, two decades before motion controls became popular on consoles. This game began the "taikan" ("body sensation") trend, the use of [[motion simulator]] arcade cabinets in many arcade games of the late 1980s, such as Sega's ''[[Space Harrier]]'' (1985), ''[[Out Run]]'' (1986) and ''[[After Burner]]'' (1987).<ref>{{cite web |url=http://www.1up.com/features/disappearance-suzuki-part-1?pager.offset=1 |title=Web.archive.org |publisher=Archive.is |access-date=2018-01-08 |url-status=bot: unknown |archive-url=https://archive.today/20131113173854/http://www.1up.com/features/disappearance-suzuki-part-1?pager.offset=1 |archive-date=13 November 2013 }}</ref> [[SNK]] also launched its [[Neo Geo (system)|Neo Geo]] line in 1990 to try to bridge the arcade and home console gap. The launch consisted of the Neo Geo Multi Video System (MVS) arcade system and the Neo Geo Advanced Entertainment System (AES). Both units shared the same game cartridges, with the MVS able to support up to six different games at the same time selectable by the player. Further, players could use a [[memory card]] to transfer save game information from the MVS to their home AES and back.<ref>{{cite journal | title = Bridging the Gap: The Neo Geo, the Media Imaginary, and the Domestication of Arcade Games | first = Benjamin | last = Nicoll | journal = [[Games and Culture]] | volume = 12 | issue = 2 | date = 2017 | pages = 200–221 | doi = 10.1177/1555412015590048 | s2cid = 147981978 }}</ref> Arcade systems dedicated to [[Flat shading|flat-shaded]] [[3D computer graphics|3D polygon graphics]] also began emerging, with the [[Namco System 21]] used for ''[[Winning Run]]'' (1988) and the related [[Atari Games]] hardware for ''[[Hard Drivin']]'' (1989),<ref>{{cite magazine |title=Arcades: Namco's Winning Streak |magazine=[[Commodore User]] |date=August 1989 |issue=72 (September 1989) |pages=90–1 |url=https://archive.org/details/commodore-user-magazine-72/page/n89/mode/2up}}</ref> as well as the Taito Air System used for [[amateur flight simulation]]s such as ''[[Landing (series)|Top Landing]]'' (1988) and ''[[Air Inferno]]'' (1990).<ref>{{cite book |last1=Arsenault |first1=Dominic |title=Super Power, Spoony Bards, and Silverware: The Super Nintendo Entertainment System |date=2017 |publisher=[[MIT Press]] |isbn=978-0-262-03656-6 |page=129 |url=https://books.google.com/books?id=DPsMEAAAQBAJ&pg=PA129}}</ref><ref>{{cite news |title=Looking At Taito's history As They Turn 60 |url=https://arcadeheroes.com/2013/08/27/taito-turns-60/ |access-date=19 May 2021 |work=Arcade Heroes |date=2013-08-27}}</ref>

One format of arcade video games that briefly expanded during this period were quiz-style or trivia-based arcade games. Besides the other avenues of technical advances, the hardware for arcade machines had shrunk small enough that the core electronics could be fitted into cocktail-style cabinets or half-height bartop or countertop versions, making them ideal for placement in more adult venues. Coupled with waning interest in traditional arcade games due to the 1983 video game crash and the rising popularity of the board game ''[[Trivial Pursuit]]'' first introduced in 1981, several manufacturers turned to quiz style games to be sold to bars in these smaller formats, including more risque titles. Manufacturers also saw similar opportunities to promote these games for family-oriented entertainment and potential use as educational tools. The rush of arcade-based trivia games waned around 1986 as the general interest in trivia waned, but arcades and other entertainment businesses managed to find ways to keep trivia-style games going within arcades since, often based on multiplayer trivia challenges played out on multiple screens. These trivia games also influenced the creation of trivia games on consoles and computers such as the ''[[You Don't Know Jack (franchise)|You Don't Know Jack]]'' series of games and ''[[Trivia HQ]]''.<ref>{{cite web | url = https://www.vice.com/en/article/how-the-video-game-crash-lead-to-a-golden-age-of-trivia-games/ | title = How the Video Game Crash Lead to a Golden Age of Trivia Games | first = Michael | last =Bentley |date = September 27, 2021 | access-date = September 28, 2021 | work = [[Vice (magazine)|Vice]] }}</ref>

==Resurgence and 3D revolution (1991−1999)==
{{See also|1990s in video games}}

===Fighting game boom===
Arcade games gained a resurgence with the introduction of ''[[Street Fighter II]]'' by Capcom in 1991. The original ''[[Street Fighter (video game)|Street Fighter]]'' in 1987 had already introduced a [[fighting game]] game format that allowed two players to challenge each other, but the characters were generic combatants. ''Street Fighter II'' introduced modern elements to the genre and created the fundamental one-on-one fighting game template, featuring numerous characters with backgrounds and personalities to select from and a wide range of special moves to use.<ref name="verge history"/> ''Street Fighter II'' sold more than 200,000 cabinets worldwide,<ref name="usgamer">{{cite web|title=Top 10 Biggest Grossing Arcade Games|website=[[US Gamer]]|url=http://www.usgamer.net/articles/top-10-biggest-grossing-arcade-games-of-all-time|access-date=January 25, 2013|archive-url=https://web.archive.org/web/20131231034753/http://www.usgamer.net/articles/top-10-biggest-grossing-arcade-games-of-all-time|archive-date=2013-12-31}}</ref> and drew other arcade manufacturers to make similar fighting games,<ref name="verge history"/> including ''[[Mortal Kombat (1992 video game)|Mortal Kombat]]'' in 1992, ''[[Virtua Fighter]]'' in 1993, and ''[[Tekken]]'' in 1994.<ref name="verge history"/> The period was referred to as a "boom"<ref name="Boom">{{cite magazine |title=The Arcade Boom – big firms move into the most profitable operating sector: Namco, Sega, Blockbuster, and well-heeled entrepreneurs |magazine=RePlay |date=January 1994 |volume=19 |issue=4 |pages=65–6 |url=https://archive.org/details/re-play-volume-19-issue-no.-4-january-1994/RePlay%20-%20Volume%2019%2C%20Issue%20No.%204%20-%20January%201994/page/65}}</ref> or "renaissance" for the arcade industry,<ref name="verge history"/><ref name="GW">{{cite magazine |last1=Perry |first1=Dave |author1-link=Dave Perry |title=Arcades: Ready for a Renaissance? |magazine=[[Games World]] |date=November 1994 |issue=7 (January 1995) |publisher=[[Paragon Publishing]] |page=6 |url=https://archive.org/details/games-world-07/page/n5}}</ref> with the success of ''Street Fighter II'' drawing comparisons to that of arcade golden age blockbusters ''Space Invaders'' and ''Pac-Man''.<ref>{{cite magazine |title=The making of Street Fighter 2 - a video game legend |magazine=[[Mega (magazine)|Mega]] |date=17 June 1993 |issue=10 (July 1993) |pages=14-35 (18-21) |url=https://retrocdn.net/images/0/07/Mega_UK_10.pdf#page=18 |archive-url=https://web.archive.org/web/20210429083203/https://retrocdn.net/images/0/07/Mega_UK_10.pdf |archive-date=29 April 2021 |url-status=live }}</ref><ref name="GW"/>

By 1993, arcade games in the United States were generating an annual revenue of {{US$|7,000,000,000|long=no|year=1993|round=-8}}, larger than both the home video game market ({{US$|6 billion|long=no}}) as well as the film [[box office]] market ({{US$|5 billion|long=no}}).<ref name="business_1994">{{cite journal|title=Business Week |journal=[[Bloomberg Businessweek]]|year=1994|issue=3392–3405|url=https://books.google.com/books?id=kAseAQAAMAAJ|page=58|publisher=[[Bloomberg L.P.|Bloomberg]]|quote=Hollywood's aim, of course, is to tap into the $7&nbsp;billion that Americans pour into arcade games each year – and the $6&nbsp;billion they spend on home versions for Nintendo and Sega game machines. Combined, it is a market nearly 2 ½ times the size of the $5&nbsp;billion movie box office.}}</ref> Worldwide arcade video game revenue also maintained its lead over consoles.<ref name="vgmarket"/> In 1993, ''[[Electronic Games]]'' noted that when "historians look back at the world of coin-op during the early 1990s, one of the defining highlights of the video game art form will undoubtedly focus on fighting/martial arts themes" which it described as "the backbone of the industry" at the time.<ref>{{cite web |title=Insert Coin Here: Getting a Fighting Chance|first=Jay|last=Carter|magazine=[[Electronic Games]]|date=July 1993|issue=10|url=https://archive.org/stream/Electronic-Games-1993-07/Electronic%20Games%201993-07#page/n15/mode/2up}}</ref> ''Mortal Kombat'', however, led to further controversy over violence in video games due to its gruesome-looking finishing moves. When the game was ported to home consoles in 1993, it led to [[1993 congressional hearings on video games|U.S. Congressional hearings]] on violence in video games, which resulted in the formation of the [[Entertainment Software Ratings Board]] (ESRB) in 1994 to avoid government oversight in video games.<ref name="verge history"/> Despite this, fighting games remained the dominant style of game in arcades through the 1990s.

===3D revolution===
[[File:Daytona_Twin.jpg|thumb|right|A twin-racer model of ''[[Daytona USA (video game)|Daytona USA]]'']]

Another factor that contributed to the arcade "renaissance" was increasingly realistic games,<ref name="GW"/> notably the "3D Revolution" where arcade games made the transition from [[2D graphics|2D]] and [[pseudo-3D]] graphics to true [[Real-time computer graphics|real-time]] [[3D computer graphics|3D polygon graphics]],<ref name="Williams">{{cite book |last1=Williams |first1=Andrew |title=History of Digital Games: Developments in Art, Design and Interaction |date=16 March 2017 |publisher=[[CRC Press]] |isbn=978-1-317-50381-1 |pages=143–6, 152–4}}</ref><ref name="tao2">{{cite web | last = Spencer | first =  Spanner | url = http://www.eurogamer.net/articles/a_taoofbeatemups_pt2_retro | title =  The Tao of Beat-'em-ups (part 2) | archive-url=https://web.archive.org/web/20110715094144/http://www.eurogamer.net/articles/a_taoofbeatemups_pt2_retro | archive-date=July 15, 2011 |  work = [[Eurogamer]]  | date = February 12, 2008 | access-date =  March 18, 2009}}</ref> largely driven by a technological [[arms race]] rivalry between [[Sega]] and [[Namco]].<ref name="RG127">{{cite magazine |last1=Thorpe |first1=Nick |title=The 90s: The Decade of Rivalries |magazine=[[Retro Gamer]] |date=March 2014 |issue=127 |pages=32–5 |url=https://archive.org/details/retro_gamer/RetroGamer_127/page/34/mode/2up}}</ref><ref>{{cite news |last1=Horowitz |first1=Ken |title=The History Of Virtua Racing, One Of The Most Influential Coin-Ops Of All Time |url=https://www.nintendolife.com/news/2019/05/feature_the_history_of_virtua_racing_one_of_the_most_influential_coin-ops_of_all_time |access-date=29 September 2021 |work=[[Nintendo Life]] |date=6 May 2019}}</ref> The [[Namco System 21]] which was originally developed for racing games in the late 1980s was adapted by Namco for new 3D [[action games]] in the early 1990s, such as the [[rail shooters]] ''[[Galaxian 3]]'' (1990) and ''[[Solvalou]]'' (1991).<ref name="Williams"/> Sega responded with the [[Sega Model 1]],<ref name="RG127"/> which further popularized 3D polygons with [[Sega AM2]] games including ''[[Virtua Racing]]'' (1992) and the fighting game ''[[Virtua Fighter (video game)|Virtua Fighter]]'' (1993),<ref name=vracing>{{cite web|title=Virtua Racing – Arcade (1992) |url=http://www.gamespot.com/gamespot/features/video/15influential/p13_01.html |work=15 Most Influential Games of All Time |publisher=[[GameSpot]] |date=14 March 2001|url-status=dead |archive-url=https://web.archive.org/web/20111213013602/http://www.gamespot.com/gamespot/features/video/15influential/p13_01.html |archive-date=13 December 2011}}</ref><ref name="tao2"/> which popularized 3D polygon human characters.<ref name="1UP">{{cite web|title=Classic 1UP.com's Essential 50|url=http://www.1up.com/features/essential-50-virtua-fighter|website=[[1UP.com]]|access-date=24 July 2015}}</ref> Namco then responded with the [[Namco System 22]],<ref name="RG127"/> capable of 3D polygon [[texture mapping]] and [[Gouraud shading]], used for ''[[Ridge Racer (video game)|Ridge Racer]]'' (1993).<ref>{{cite magazine |title=Prescreen: Ridge Racer |magazine=[[Edge (magazine)|Edge]] |date=27 January 1994 |issue=6 (March 1994) |pages=22–3 |url=https://archive.org/details/EDGE.N006.1994.03/page/n21/mode/2up}}</ref> The [[Sega Model 2]] took it further with 3D polygon [[texture filtering]], used by 1994 for racers such as ''[[Daytona USA (video game)|Daytona USA]]'',<ref>{{cite web |last1=Fahs |first1=Travis |title=IGN Presents the History of SEGA |url=https://www.ign.com/articles/2009/04/21/ign-presents-the-history-of-sega |website=[[IGN]] |access-date=29 April 2021 |date=14 June 2012}}</ref> fighting games such as ''[[Virtua Fighter 2]]'',<ref>{{cite web|url=http://www.1up.com/features/disappearance-suzuki-part-1?pager.offset=2 |title=The Disappearance of Yu Suzuki: Part 1 from |website=1UP.com |access-date=2016-03-11 |url-status=dead |archive-url=https://web.archive.org/web/20131113174154/http://www.1up.com/features/disappearance-suzuki-part-1?pager.offset=2 |archive-date=2013-11-13 }}</ref> and [[light gun shooter]]s such as ''[[Virtua Cop]]''.<ref name="flyer">{{cite web |title=Virtua Cop: The World's First Texture Mapped, Polygon Action Game With New "Model 2" 3-D Computer Graphics! |url=https://flyers.arcade-museum.com/?page=flyer&db=videodb&id=2207&image=1 |publisher=[[Sega Enterprises]] |website=The Arcade Flyer Archive |access-date=24 April 2021}}</ref><ref>{{cite news |title=Virtua Cop: SEGA's arcade shooter franchise makes a surprise appearance on N-Gage |url=https://www.ign.com/articles/2004/07/08/virtua-cop |access-date=23 April 2021 |work=[[IGN]] |date=8 July 2004}}</ref> Namco responded with 3D fighters such as ''[[Tekken]]'' (1994) and 3D light gun shooters such as ''[[Time Crisis]]'' (1995),<ref name="Williams"/> the latter running on the [[Super System 22]].<ref name="RG127"/>

Other arcade manufacturers were also manufacturing 3D arcade hardware by this time, including Midway, [[Konami]], and [[Taito]],<ref>{{cite news |last1=Thorpe |first1=Nick |title=A New Dimension: 3D Games Take Over |url=https://www.pressreader.com/uk/retro-gamer/20191031/285271734321557 |access-date=23 May 2021 |work=[[Retro Gamer]] |via=[[PressReader]] |date=31 October 1999}}</ref> as well as Mesa Logic with light gun shooter ''[[Area 51 (1995 video game)|Area 51]]'' (1995).<ref name="NGen12">{{cite magazine|date=December 1995|title=Area 51|url=https://archive.org/details/nextgen-issue-012/page/n201/mode/2up|magazine=[[Next Generation (magazine)|Next Generation]]|publisher=[[Imagine Media]]|issue=12|page=201}}</ref> The new, more realistic 3D games gained considerable popularity in arcades, especially in more family-family fun centers.<ref name="Boom"/><ref name="GW"/> [[Virtual reality]] (VR) also began appearing in arcades during the early 1990s. The Amusement & Music Operators Association (AMOA) in the United States held its second largest AMOA show ever in 1994, after the 1982 AMOA show.<ref>{{cite magazine |title=AMOA '94 – "Mortal" Madness: redemption, VR and video boost U.S. factory strength |magazine=RePlay |date=March 1994 |volume=19 |issue=6 |page=64 |url=https://archive.org/details/re-play-volume-19-issue-no.-6-march-1994/RePlay%20-%20Volume%2019%2C%20Issue%20No.%206%20-%20March%201994/page/n63}}</ref>

===Home console competition===
Around the mid-1990s, the [[History of video game consoles (fifth generation)|fifth-generation]] home consoles, [[Sega Saturn]], [[PlayStation (console)|PlayStation]], and [[Nintendo 64]], also began offering true 3D graphics, along with improved sound and better 2D graphics than the previous [[fourth generation of video game consoles]]. By 1995, [[personal computers]] followed, with [[3D accelerator]] cards. While [[Arcade system board|arcade systems]] such as the [[Sega Model 3]] remained considerably more advanced than home systems in the late 1990s,<ref name="VF3">{{cite journal|title=News: Virtua Fighter 3|journal=[[Computer and Video Games]]|date=May 1996| issue=174|pages=10–1}}</ref><ref name="THG">{{cite web |url=http://www.thg.ru/smoke/19991022/print.html |title=Second Hand Smoke – One up, two down |publisher=[[Tom's Hardware Guide]] |date=October 22, 1999 |access-date=2018-01-08 |archive-date=2015-02-22 |archive-url=https://web.archive.org/web/20150222220103/http://www.thg.ru/smoke/19991022/print.html |url-status=dead }}</ref> the technological advantage that arcade games had, in their ability to customize and use the latest graphics and sound chips, slowly began narrowing, and the convenience of home games eventually caused a decline in arcade gaming. [[Sega]]'s [[History of video game consoles (sixth generation)|sixth generation]] console, the [[Dreamcast]], could produce 3D graphics comparable to the [[Sega NAOMI]] arcade system in 1998, after which Sega produced more powerful arcade systems such as the [[Sega NAOMI|Sega NAOMI Multiboard]] and [[Sega Hikaru]] in 1999 and the [[Sega NAOMI 2]] in 2000, before Sega eventually stopped manufacturing expensive proprietary arcade system boards, with their subsequent arcade boards being based on more affordable commercial console or PC components.

During the late 1990s, arcade video games declined, while console games overtook arcade video games for the first time around 1997–1998. Up until then, the arcade video game market had larger revenue than consoles.<ref name="vgmarket"/> In 1997, [[Konami]] began releasing a number of music-based games that used unique peripherals to control the game in time to music, including ''[[Beatmania]]'' and ''[[GuitarFreaks]]'', culminating in the 1998 release of ''[[Dance Dance Revolution (1998 video game)|Dance Dance Revolution]]'' (''DDR'') in Japan, a new style of arcade game that used a [[dance pad]] and required players to tap their feet on appropriate squares on the pad in time to notes on screen in synchronization to popular music. ''DDR'' later released in the West in 1999, and while it did not enjoy the same popularity in Japan initially, it led the trend of [[rhythm game]]s in arcades.<ref name="verge history"/>

==Regional divergences (2000−2019)==
{{See also|2000s in video games|2010s in video games}}

Worldwide arcade video game revenue stabilized in the early 2000s after years of declining revenue in the late 1990s, during which time it had been surpassed in revenue by the console, [[Handheld console|handheld]] and [[PC game]] industries.<ref name="vgmarket"/> Arcade video games continue to be a thriving industry in Eastern Asian countries such as Japan and China, where arcades are widespread across the region.<ref>{{cite web|last=Jou |first=Eric |title=The Wonderful and Seedy World of Chinese Arcades |url=http://kotaku.com/5894415/the-wonderful-and-seedy-world-of-chinese-arcades/gallery/1 |publisher=Kotaku |date=19 March 2012|url-status=dead |archive-url=https://web.archive.org/web/20120322011403/http://kotaku.com/5894415/the-wonderful-and-seedy-world-of-chinese-arcades/gallery/1 |archive-date=22 March 2012}}</ref>

===United States===
Since the 2000s, arcade games and arcades in the United States have generally had to continue as [[niche market]]s to adapt to remain profitable, competition against the allure of home consoles. Most arcades were unable to sustain on operating arcade games alone, and have since added back redemption systems for prizes along with non-arcade games for these, such as [[Dave & Busters]].<ref name="verge history"/> Arcade games were developed to try to create experiences that could not be had via home consoles, such as [[motion simulator]] games, but their expense and space required was difficult to justify over more traditional games.<ref>{{cite web | url = https://abcnews.go.com/Lifestyle/death-resurgence-arcades-america/story?id=24970591|  title = The Death and Resurgence of Arcades in America | first=Rheana | last=  Murray | date= August 15, 2014 | access-date = August 13, 2020  |work  = [[ABC News (United States)|ABC News]] }}</ref> The US market has experienced a slight resurgence, with the number of video game arcades across the nation increasing from 2,500 in 2003 to 3,500 in 2008, though this is significantly less than the 10,000 arcades in the early 1980s. As of 2009, a successful arcade game usually sells around 4000 to 6000 units worldwide.<ref>{{cite book|title=Digital sport for performance enhancement and competitive evolution : intelligent gaming technologies|year=2009|publisher=Information Science Reference|location=Hershey, PA|isbn=978-1-60566-406-4|url=https://books.google.com/books?id=kags8xC1xzsC&pg=PA260|editor1=Nigel K. Li Pope |editor2=Kerri-Ann L. Kuhn |editor3=John J.H. Forster|page=260}}</ref> Since around 2018, arcades specializing in [[virtual reality]] games have also become popular, allowing players to experience these games without the hardware investment in VR headsets.<ref>{{cite web | url = https://www.cnbc.com/2018/02/10/vr-arcades-are-gaming-centers-of-the-future.html | title = Most teens can't afford a virtual reality headset, so they're going to VR arcades instead | first=  Michelle | last = Castello | date = February 10, 2018 | access-date = October 8, 2020 | work = [[CNBC]] }}</ref>

The relative simplicity yet solid gameplay of many of these early games has inspired a new generation of fans who can play them on mobile phones or with [[emulator]]s such as [[MAME]]. Some classic arcade games are reappearing in commercial settings, such as Namco's ''Ms. Pac-Man/Galaga: Class of 1981'' two-in-one game,<ref name="Ms._Pac-Man">{{cite web|url= http://www.klov.com/game_detail.php?game_id=8784|title= Ms. Pac-Man/Galaga&nbsp;– Class of 1981|access-date=10 September 2006|publisher= [[Killer List of Videogames|KLOV]]}}</ref> or integrated directly into controller hardware (joysticks) with replaceable flash drives storing [[ROM image|game ROMs]]. Arcade classics have also been reappearing as [[mobile game]]s, with ''Pac-Man'' in particular selling over 30&nbsp;million downloads in the United States by 2010.<ref>{{cite news|title=Namco Networks' Pac-Man Franchise Surpasses 30 Million Paid Transactions in the United States on Brew |url=http://www.allbusiness.com/technology/software-services-applications-internet/14737270-1.html|agency=[[AllBusiness.com]] |year=2010 }}{{dead link|date=June 2016}}{{cbignore|bot=medic}}</ref> Arcade classics also began to appear on replica multi-game arcade machines for home users, using emulation on modern hardware.<ref name="wsj">{{cite web | archiveurl = https://web.archive.org/web/20191026032728/https://www.wsj.com/articles/vintage-arcade-cabinets-can-cost-thousands-build-a-replica-for-249-11571245523 | archivedate = October 26, 2019 | url = https://www.wsj.com/articles/vintage-arcade-cabinets-can-cost-thousands-build-a-replica-for-249-11571245523 | title = Vintage Arcade Cabinets Can Cost Thousands. Build a Replica for $249.  | first=  Matthew | last = Kitchen | date = October 29, 2019 | accessdate = April 13, 2021 | work = [[The Wall Street Journal]] }}</ref>

===Japan===
{{Main|Video games in Japan}}
[[File:GitarFreaks and DrumMania V cabinets and player.jpg|thumb|A man playing a drumming arcade game (''[[Drummania]]'') in [[Tsukuba, Ibaraki]], 2005]]
[[File:Girls playing video games in Japan.jpg|thumb|Girls playing ''[[The House of the Dead III]]'' in an [[amusement arcade]] in Japan, 2005]]

In the Japanese gaming industry, arcades have remained popular since the 2000s. Much of the consistent popularity and growing industry is due to several factors such as support for continued innovation and that developers of machines own the arcades. Additionally, Japan arcade machines are notably more unique as to US machines, where Japanese arcades can offer experiences that players could not get at home. This is constant throughout Japanese arcade history.<ref>{{Cite web|url=https://kotaku.com/why-arcades-havent-died-in-japan-1792338461|title=Why Arcades Haven't Died in Japan|last=Ashcraft|first=Brian|website=Kotaku|date=15 February 2017 |language=en-US|access-date=2019-05-16}}</ref> As of 2009, out of Japan's US$20&nbsp;billion gaming market, US$6&nbsp;billion of that amount is generated from arcades, which represent the largest sector of the Japanese video game market, followed by home [[console game]]s and [[mobile game]]s at US$3.5&nbsp;billion and US$2&nbsp;billion, respectively.<ref>{{cite book|last=Sambe|first=Yukiharu|title=Entertainment Computing – ICEC 2009 |chapter=Japan's Arcade Games and Their Technology |series=Lecture Notes in Computer Science |year=2009|volume=5709|doi=10.1007/978-3-642-04052-8_62 |page=338|isbn=978-3-642-04051-1|doi-access=free}}</ref> According to in 2005, arcade ownership and operation accounted for a majority of [[Namco]]'s for example.<ref>{{cite web|last=Carless|first=Simon|title=Namco, Bandai To Merge|url=https://www.gamedeveloper.com/game-platforms/namco-bandai-to-merge|website=[[Gamasutra]]|date=2 May 2005}}</ref> With considerable withdrawal from the arcade market from companies such as [[Capcom]], [[Sega]] became the strongest player in the arcade market with 60% marketshare in 2006.<ref>{{cite web|title = Video Games Daily {{!}} Yu Suzuki: The Kikizo Interview (Page 2)|url = http://archive.videogamesdaily.com/features/sega_yu_suzuki_iv_feb06_p2.asp|website = archive.videogamesdaily.com |access-date=28 June 2015}}</ref> Despite the global decline of arcades, Japanese companies hit record revenue for three consecutive years during this period.<ref>https://www.segasammy.co.jp/english/ir/library/pdf/printing_annual/2008/e_2008_annual.pdf
({{webarchive |url=https://web.archive.org/web/20121021050716/https://www.segasammy.co.jp/english/ir/library/pdf/printing_annual/2008/e_2008_annual.pdf |date=21 October 2012 }})
Page 16: "The domestic market has continued to expand for five years and has set new records for three consecutive years."
</ref> However, due to the country's [[Great Recession|economic recession]], the Japanese arcade industry has also been steadily declining, from [[Japanese yen|¥]]702.9&nbsp;billion (US$8.7&nbsp;billion) in 2007 to ¥504.3&nbsp;billion (US$6.2&nbsp;billion) in 2010.<ref name="capcom_market">{{cite web|title=Market Data|url=http://www.capcom.co.jp/ir/english/business/market.html|website=[[Capcom]] Investor Relations|date=14 October 2011}}</ref> In 2013, estimation of revenue is ¥470&nbsp;billion.<ref name="capcom_market"/>

The layout of an arcade in Japan greatly differs from an arcade in America. The arcades of Japan are multi-floor complexes (often taking up entire buildings), split into sections by game types. On the ground level the arcade typically hosts physically demanding games that draw crowds of onlookers, like music rhythm games. Another floor is often a maze of multi-player games and battle simulators. These multi-player games often have online connectivity tracking rankings and reputation of each player; top players are revered and respected in arcades. The top floor of the arcade is typically for rewards where Players can trade credits or tickets for prizes.<ref>{{Cite web|url=https://observer.com/2018/12/american-arcade-death-japan-video-games-thrive-nintendo-playstation/|title=Arcades Are Dead in America, But Thriving in Japan. Why?|date=2018-12-04|website=Observer|language=en|access-date=2019-05-16}}</ref>

In the Japanese market, [[Computer network|network]] and card features introduced by ''[[Virtua Fighter 4]]'' and ''[[World Club Champion Football]]'', and novelty cabinets such as [[Kidō Senshi Gundam: Senjō no Kizuna|''Gundam Pod'']] machines have caused revitalizations in arcade profitability in Japan. The reason for the continued popularity of arcades in comparison to the west, are heavy [[population density]] and an infrastructure similar to [[casino]] facilities. 
[[File:Outside of Akihabara.jpg|thumb|Outside of Sega Arcade, a famous arcade located in Akihabara, Japan]]
Former rivals in the Japanese arcade industry, [[Konami]], [[Taito]], [[Bandai Namco Entertainment]] and [[Sega]], collaborated during the period.<ref>
{{cite web|title = Interview: Takenobu Mitsuyoshi|url = http://www.tssznews.com/2013/03/28/interview-takenobu-mitsuyoshi/|archive-url = https://web.archive.org/web/20130331094607/http://www.tssznews.com/2013/03/28/interview-takenobu-mitsuyoshi/|url-status = dead|archive-date = 31 March 2013|website = TSSZ News|access-date=28 June 2015 |first = Danny|last = Russell}}</ref> Approaching the end of the 2010s, the typical business of the Japanese arcade shifted further as arcade video games were less predominant, accounting for only 13% of revenue in arcades in 2017, while redemption games like [[claw crane]] machines were the most popular. By 2019, only about four thousand arcades remained in Japan, down from the height of 22,000 in 1989.<ref name="afp 2021"/>

==COVID-19 pandemic and decline (2020- present)==
The impact of the [[COVID-19 pandemic]] from March 2020 onward on arcades financially harmed many arcades that were still operating. In Japan, arcades did not qualify for funding to recover from lost revenue from the Japanese government. In the wake of the pandemic, several long-standing arcades were forced to close; notably, Sega sold off most of its arcade business.<ref name="afp 2021">{{cite news | url = https://sg.news.yahoo.com/virus-threatens-game-over-japans-030359925.html | title = Virus threatens 'game over' for Japan's arcades | first = Mathias | last = Cena | date = February 9, 2021 | accessdate = August 2, 2021 | publisher = [[Agence France-Presse]] | archive-date = August 2, 2021 | archive-url = https://web.archive.org/web/20210802223646/https://sg.news.yahoo.com/virus-threatens-game-over-japans-030359925.html | url-status = dead }}</ref> Financial analysis firm Teikoku Databank reported in 2024 that they estimated that over 8000 arcades had closed in the previous decade, with arcade games being shifted away in favor of redemption games.<ref>{{cite web | url = https://www.videogameschronicle.com/news/the-number-of-japan-arcades-has-declined-by-8000-in-10-years/ | title = The number of Japan arcades 'has declined by 8,000 in 10 years' | first = Andy | last = Robinson | date = April 8, 2024 | accessdate = April 13, 2024 | work = [[Video Games Chronicle]] }}</ref> Large game companies view the remaining arcade businesses "as a rapidly sinking ship", and regard future investment in arcade titles as "fruitless". The decline was experienced strongly among gambling oriented games such as Pachislot.<ref>{{cite web |last1=University |first1=Maximilian Padilla-Rodriguez, Florida Atlantic |title=Will Arcades Survive the Post-Pandemic Gaming Industry? |url=https://studybreaks.com/tvfilm/will-arcades-survive-post-pandemic-gaming-industry/ |website=Study Breaks |language=en-us |date=22 August 2022}}</ref> A UK arcade owner described a similar situation there, saying that "All arcades are either closed or suffering hardships."<ref>{{cite web |last1=Makar |first1=Connor |title=Arcades vs COVID-19: How communities can save small businesses |url=https://www.gamesindustry.biz/arcades-vs-covid-19 |website=GamesIndustry.biz |language=en |date=14 May 2020}}</ref>

==See also==
* [[History of mobile games]]
* [[History of online games]]
* [[History of video games]]
* [[List of arcade video games]]

{{clear}}

==References==
{{reflist}}

{{History of video games}}
{{Amusement arcade}}

[[Category:Arcade video games]]
[[Category:History of computing|Arcade]]
[[Category:History of video games|Arcade]]