Information on arcade gaming business

Read our arcade purchasing guide to learn about the materials and equipment you'll need to start an arcade, how much to budget, and where to make purchases. The primary ongoing expenses are rent and machine upkeep.

Utilities are also a constant factor, and with electronic machines running all day, they may cost more than you expect. Beyond that, monthly expenses go to things like paying employees and keeping everything clean. As your arcade acquires more consoles, there may not be enough room to keep them all at your arcade.

Keeping a rotation of machines would require a storage space for unused machines, but this is not typical of small arcades, and would not be an issue in the early stages of your business.

Your preferred customer will vary depending on what type of arcade you run. Traditional arcades are frequented by families and children; families can use arcade gaming as a bonding experience, while kids occupy the sweet spot of having disposable income without many entertainment options to spend it on.

The standard model is charging customers to play your games, but there are a number of ways to do this. The old-school method of having your customers insert coins or tokens into the machines is still around, but there are some licensing and taxation issues that make this method less profitable than it may seem. This is largely dependent on the business model you choose, as discussed earlier. If your customers pay with quarters or pre-paid cards — rather than timed free play — many arcades charge more for newer games between 50 cents and a dollar and less around a quarter for vintage games.

You can also incentivize upfront spending by offering bonus points or free plays if they spend a certain amount of money. This depends greatly on the volume of customers, cost of upkeep, and the amount you invest back into your business.

Keep in mind that your take-home profit will also vary depending on how much you invest in your business to maintain its profitability into the future. Using a points-based card system instead of taking quarters can increase profits, both because it encourages people to play more, and due to some outdated tax laws concerning the use of quarters. Choosing the right name is important and challenging. If you operate a sole proprietorship , you might want to operate under a business name other than your own name.

Visit our DBA guide to learn more. When registering a business name , we recommend researching your business name by checking:.

The most common business structure types are the sole proprietorship , partnership , limited liability company LLC , and corporation. Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your arcade is sued. Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own. You will need to register for a variety of state and federal taxes before you can open for business.

Depending on which business structure you choose, you might have different options for how your business will be taxed. There are specific state taxes that might apply to your business.

Learn more about state sales tax and franchise taxes in our state sales tax guides. When your personal and business accounts are mixed, your personal assets your home, car, and other valuables are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name instead of yours , better interest rates, higher lines of credit, and more. Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.

When it comes to establishing your business credit, net vendors are considered the way to go. The term "net," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services. Net credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.

This is how businesses build business credit so they can qualify for credit cards and other lines of credit. Recommended : Read our guide on the best net vendors so you can start building business credit now , so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the 1 reason businesses fail! Recommended: Read our guide to find the best small business credit cards.

Recording your various expenses and sources of income is critical to understanding the financial performance of your business.

Keeping accurate and detailed accounts also greatly simplifies your annual tax filing. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down. In most states, it is necessary to obtain a game of chance license when operating games that require players to give you money or other items of value to play. If you sell food, you will also need licensing from your local health department, which will require your business to pass regular health inspections.

These inspections will check for compliance with local health laws, typically related to prevention of food contamination. Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

In order to play music in a business setting, permission must be acquired from the composer or license holder. Typically, you can acquire a blanket license that allows you to play music owned by a large catalog of artists and recording studios.

An arcade is always run out of a physical location, and as such typically requires a Certificate of Occupancy CO. The present state of gaming centers depends on the locality you are living in. In some places, an internet cafe with some random games itself is a profitable business. Developing and underdeveloped countries are not much used to the hi-fi services like a play station or Xbox consoles.

At the same time in developed nations, such gadgets can be found in most of the homes. There are other sets of video gaming centers which you may encounter in the bigger malls and complexes. These centers offer games such as bike riding where you actually sit on a bike like structure with a screen in front of you. Video gaming industry is one of the hottest industries now. Every day, game developing companies are coming in front of the customers with better and innovative games and gadgets.

And there are technologies like Virtual Reality which are like the toppings on your pizza. Gadgets like virtual reality headsets, motion sensing game controllers like cameras, move motion controllers have totally revolutionized the gaming industry. Millions of PlayStation, Xbox consoles are sold every year. People are going crazy over VR headsets. The above graph is a screen shot from google trends. It shows how people are going crazy over virtual reality.

If you are living in a developing or underdeveloped country, then you are in a very lucky position. There are people who charge 50 rupees less than a dollar for 5 minutes of a roller coaster video on VR headsets. You can make more money than that with a decent business plan. Good planning for any business is essential, and in the arcade business there are some basics that must be addressed upfront.

Your most immediate concern, outside of creating a business plan and obtaining financing, is being sure that you can secure zoning approval for your facility from your local "zoning board" in most countries before you proceed. Although most governments have now relaxed some of the strict zoning codes that have discouraged facilities from opening in the past, there are a few areas where entertainment locations are strictly regulated, or banned in rare cases.

There are many points to consider while planning your project covered below, but having a well prepared business plan for your project is crucial to its success. After completing all of the below steps, your final task is to actually purchasing your games and related equipment.

Depending on the type and size of your arcade, this could include anything from just arcade games to token changers, card swipe systems, ticket redemption centers, counters or machines and more.

Your BMI Gaming Arcade Consultant can help determine for you the best way for customers to pay for game usage, either via coins, tokens, or for larger facilities with 40 or more games, card swipe systems and card readers that eliminate the hassle of token collection and offer real-time, internet accessible data on the performance and profitability of your arcade And once you have completed all of the steps detailed below, and you are within a few months of opening your new facility, one of the last, but most crucial steps is to "get the word" out to the local community about your facility!

Entertainment facility marketing and advertising is one of the most commonly overlooked steps in creating a highly profitable operation, and effective marketing of your entertainment center, both online and offline, are absolutely paramount to future success. The correct size and location for your facility will depend on variety of factors such as local population size, number of other competitors and the market demographics within your area, along with the size and budget of your project.

Some areas in the past discouraged arcades FEC's from opening in their area, so it is mandatory you check with your local authorities first. BMI Gaming uses the industry's top experts to conduct these studies on your behalf to determine if your project is both financially and technically feasible, and that the revenue, expense and development costs are realistic and achievable.

Rather than delivering a "stock" development formula, as many "consultants" do and which in many cases may be obsolete , our feasibility studies are bespoke, custom-tailored reports generated to find opportunities, advantages or weaknesses in your local area marketplace, created by lack of competition, and unique characteristics of your market population and demographics.

Our global team of amusement industry experts and consultants are ready to share our extensive knowledge on arcade design, planning, theming and construction, along with arcade industry "best practices".

This can range from video arcade games, redemption arcade games, motion simulators and large attraction rides and machines, to token machines or newer swipe card systems that eliminate the hassle and security issues with token use, while providing real-time data on the profitability of your games, and the ability to re-program game prices remotely, so you can offer special game prices for "happy hour" or set all games on "free-play" for parties or other types of game promotions, which is time consuming for token-operated games.

Partnering with your local schools, churches, charities, youth centers and non-profits organizations to offer group discounts can also be very effective.

And finally, creating high-quality print and online brochures that details everything your facility has to offer clients, from birthday parties to corporate gatherings, is a must for the facility's future success. We can provide thoughtful guidance in areas from arcade game selection to initial site selection, feasibility studies, space planning, interior design, building plans, food and beverage operations, prize redemption centers and marketing of your business, along with some great ideas for your initial opening and the successful promotion of your new facility.