An arcade game is a coin-operated entertainment machine, typically installed in businesses such as restaurants, public houses, video arcades, and Family Entertainment Centers. Most arcade games are redemption games, merchandisers (such as Claw crane), video games or pinball machines.

History

The first popular "arcade games" were early amusement park midway games such as Shooting galleries, ball toss games, and the earliest coin-operated machines, such as those which claim to tell a person their fortune or played mechanical music. The old midways of 1920s-era amusement parks (such as Coney Island in New York) provided the inspiration and atmosphere of later arcade games.

In the 1930s, the earliest coin-operated pinball machines were made. These early amusement devices were distinct from their later electronic cousins in that they were made of wood, did not have plungers or lit-up bonus surfaces on the playing field, and used mechanical instead of electronic scoring readouts. By around 1977, most pinball machines in production switched to using solid state electronics for both operation and scoring.

In 1971, students at Stanford University set up the Galaxy Game, a coin-operated version of the Spacewar computer game. This is the earliest known instance of a coin-operated video game. Later in the same year, Nolan Bushnell created the first mass-manufactured such game, Computer Space, for Nutting Associates.

In 1972, Atari was formed by Nolan Bushnell and Ted Dabney. Atari essentially created the coin-operated video game industry with the game Pong, the smash hit electronic ping pong video game. Pong proved to be popular, but imitators helped keep Atari from dominating the fledging coin-operated video game market. Video game arcades sprang up in shopping malls, and small "corner arcades" appeared in restaurants, grocery stores, bars and movie theaters all over the United States and other countries during the late 1970s and early 1980s. Games such as Space Invaders (1978), Galaxian (1979), Pac-Man (1980), Battlezone (1980), and Donkey Kong (1981) were especially popular.

During the late 70s and 80s, chains such as Chuck E. Cheese's, Ground Round, Dave and Busters, and Gatti's Pizza combined the traditional restaurant and/or bar environment with arcades.

By the late-1980s, the arcade video game craze was beginning to fade due to the reputation of arcades as being seedy, unsafe places as well as the advances in home video game console technology. Arcade video games experienced a resurgence with the advent of two-player fighting games such as Street Fighter II (1991) by Capcom, Mortal Kombat (1992) by Midway Games, Fatal Fury (1992) by SNK, Killer Instinct (1994) by Rare, and The King of Fighters (1994-2005) by SNK.

However by 1996, home video game consoles and computers with 3D accelerator cards had reached technological parity with arcade equipment—arcade games had always been based on commodity technology, but their advantage over previous generations of home system was in their ability to customize and use the latest graphics and sound chips, much as PC games of today do. Declines in arcade sales volume meant that this approach was no longer cost-effective. Furthermore, by the late 1990s and early 2000s, networked gaming via console and computers across the Internet had also appeared, replacing the venue of head to head competition and social atmosphere once provided solely by arcades.