Dream Arcades Takes '80s Nostalgia to a New Level

Dig Dug. Centipede. Asteroids. They're just three of the 1980s video games that kept many a Gen Xer hanging out in dark arcades on sunny days. Now they're among the more than 500 titles that Dream Arcades loads into '80s-style game consoles designed for the home or office.

"Nostalgia sells," says Michael Ware, who co-founded the Rancho Cordova, Calif.-based company with wife Michelle. And business is booming. Dream Arcades is the largest manufacturer of non-coin-operated arcade machines in the world. Last year the company broke $1 million in sales; for 2013 so far sales are up 20 percent, thanks to a growing number of residential customers and corporate orders from the likes of Google, Microsoft, Apple and Disney--demonstrating the universal desire for a kick-ass rec room or break room.

The consoles, which come in a variety of models starting at $1,899, can be customized with personalized artwork, lighted trackballs and joysticks and even unique games (one financial-services firm made a memorable request for "Catch Bernie Madoff"). They ship standard with 140 to 145 games (all licensed by Dream Arcades) but can be upgraded with game packs that run between $29 and $179.

Dale Tamura, CEO of printing and graphics company Lazer Image, says he installed a Dream Arcades machine in his Los Angeles office because of its great-looking user interface and the quality of the company's customer service. "I shopped around, but this was the coolest," he declares, while pushing buttons to scroll through his extensive menu of games. He says that in addition to options for more titles, he likes that he can upload music and install modern-day games(yes, even Angry Birds) onto the stereo-size PC console at the bottom of the unit.

Founded in 2002, Dream Arcades originated from a Christmas gift that Michael, a systems engineer, built for Michelle. With spare parts and a few hundred bucks, he assembled a Ms. Pac-Man machine in their garage. Friends who saw it wanted one of their own, and by the end of 2003 Michael had sold 10 on eBay, rolling the profits back into the business. A year later he left his job at Intel to devote himself full-time to
the venture, setting up partnerships with millworks and software companies. Early units had to be assembled by the purchaser, including one shipped to a military-research base in Antarctica. The first official preassembled model was bootstrapped with a woodworker who agreed to construct it on credit.

Michelle, who was working in marketing at Krispy Kreme, joined Michael full-time in 2005. "We worked out of the garage, in our living room and hallways," she says--a stark contrast to their current warehouse space and eight employees.

Up next: Dream Arcades is looking to expand into a broad spectrum of retailers, from Costco to popular e-commerce sites like ThinkGeek. And to celebrate the company's 10-year anniversary, it will debut a new product this holiday season: the Dreamcade Kegerator, which comes with a 29-inch monitor, built-in fridge, three taps and two cup holders.

Beer and nostalgia? Game on.