Agree. They are arcade-themed bars. They admit in the article that the revenue stream from their arcade games can't pay for the game and let them even come close to staying in business. They sell beer, food, music, and dancing using arcade inspired nostalgia as a hook.
>True, consoles were a big competitor but there was nothing like getting in that line to put your token on the machine.
Disagree here. There was something like putting your token on your machine, except better. Having the machine in your living room, with arcade quality graphics. I don't believe that arcades could have simply kept their prices lower and still remained competitive. The cost of their new machines increases over time, as does rent and all of their other bills. I am certain that the increase in price they charged was purely a function of their costs, especially as it happened across the industry as a whole.
Edit: Incidentally, the misconception in the second line of yours that I quoted is the purest and most distilled expression of your first point. Nostalgia is a powerful force eh? ;)