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Miguel_Zorro said:
Arcades were big because people didn't have good options at home. Now we have great home systems and arcades cost a lot of money.

Most of the people I see in arcades here are asians playing dance games. Games that are fun with an audience. I'm guessing those are still popular in Japan.

Not to mention the other aspects of Japanese arcades that give them a wider audience.  Photo booths are still extremely popular with girls and UFO catchers appeal to girls and guys both.  They usually have mahjong and other games of that type that an adult might play.