Beginner’s Guide on Starting an Arcade and Retro Gaming Business in the United Kingdom

Starting an arcade and retro gaming business is among increasingly lucrative propositions for entrepreneurs. Gaming and social engagement are re-emerging as popular pastimes for millenials.

For many years, the gaming sector regulation has been strict.  In reaction to high-tech gaming machines and the growing popularity of the video game industry, the government implemented a new ruling. The United Kingdom’s government supported the industry by providing funds for job placements. The government also safeguards children and other vulnerable individuals to keep gaming from becoming a source of crime.

According to statista.com, the total number of adult and family arcade locations in the UK reached 1,247 by 2020. There were significantly more adult gaming centres than family entertainment centres between the two types of arcade establishments. There were 1,431 adult gaming centres in that year against 184 family entertainment centres. In 2020, the total number of arcades decreased.

The British Amusement Catering Trades Association represents manufacturers and owners of coin-operated gaming and amusement machines interests. Family entertainment centres are in Division 1, whereas adult gambling centres are in Division 3. Its members follow a Code of Practice. This article is a 3E Accounting guide to company registration in starting an arcade and retro gaming business!

 

What is an Arcade and Retro Gaming Business?

Arcade and retro gaming businesses feature coin-operated game machines usually found in public venues such as malls, restaurants, and amusement arcades. The most prevalent sorts of arcade games include video games, pinball machines, and electromechanical games. From the late 1970s to the early 1980s, arcade games were at their peak. They had a reasonable appeal even in the early 1990s.

Short levels with easy and intuitive controls are common in arcade games, which quickly escalate in difficulty. Game players are effectively renting the game for the duration of the game avatar’s life. The game’s difficulty must be high enough to cause a game-over but also entertaining to attract players.

 

Business Registration

UK company incorporation varies depending on the type and structure of the business. Machine Games Duty (MGD) is the major taxing mechanism for gaming machines, and you must register for it. MGD is payable on slot machine games where players hope to win a cash prize greater than the game’s cost. Before the machines are accessible to use, you must register with HMRC for at least 14 days.

Sole Proprietorship

After taxes, sole traders keep all business profits but are individually accountable for any losses. They are classified as self-employed and required to register and pay tax and NI. They should maintain track of their expenses and sales and pay any applicable business taxes in the area where they operate. VAT registration is necessary for businesses with a revenue of more than £85,000 per year.

Business Partnership

Registration requires a specified nominated partner to transmit business tax returns. The company name should not be derogatory, violate copyright, or include language implying limited liability. Businesses with less than £85,000 in turnover do not need to register for VAT. Failure to register by October 5th of the second tax year after conducting business carries a penalty.

Limited Company

A limited corporation is a separate legal entity from the individuals who own and run it. The money of the firm is distinct from the finances of the owners or partners. When founding a limited company, you must first incorporate or register your business with Companies House. For a legal entity inquiry that is right for your company, contact 3E Accounting now.

 

Licenses & Permits

Operational license and one or more personal licenses are necessary to run an arcade business. As part of the Gambling Commission’s licensing process, a criminal background check is likely necessary. You’ll also need a premises permit from your local government. Operating licensees must adhere to a Code of Conduct and file annual regulatory reports.

You’ll simply need a gaming machine permit from your local government to run an unlicensed family entertainment center. More information regarding gambling premises licenses and gaming machine permits are obtainable from your local government. You will require an amusement permit from your local council to operate an amusement arcade in Northern Ireland. The Department for Communities website has more information regarding entertainment permits in Northern Ireland.

Arcade business with gambling sections in the United Kingdom is subject to Gambling Act. The Act established three types of permits: operational, personal, and premises. You’ll almost certainly need a PPL PRS Ltd Music Licence as well. It comes with an annual charge, which you can pay on the PPL PRS website.

If you sell, install, repair, or alter gaming machines, you’ll require a Gambling Commission operating license. Adult gaming centers (AGC) or a licensed family entertainment center (FEC) require a local authority premises license. Unless your company has an exclusion, your employees need personal gambling licenses.

 

How to Grow an Arcade and Retro Gaming Business?

Do Market Research

As part of the business plan, you’ll need to decide what business structure is best for the business. Consider running it as a sole trader, a partnership, or even a limited company. Each option has its own set of benefits and drawbacks, depending on the size and turnover of your company. You’ll need to estimate when your company reaches a specific size or grows to that level.

You’ll need to figure out how much costs and capital you will need to keep the business going. Premises, renovation, staff salary, arcade machines, off-site storage, equipment repairs and replacement, security, and more are factors to consider. You may evaluate concept viability after a fully costed budget and cash flow prediction. Make sure you have all of the necessary permits and insurance when you start your firm.

Formulate a Business Plan

You’ll gain a better grasp of your market, organize your resources, and recognize potential difficulties with a business plan. It might also assist you in obtaining external funding. It is a road map that outlines your company’s objectives and the steps required to achieve them. A proper business plan can help you stay organized and accountable, which will help you avoid costly mistakes.

Include a list of suppliers, vendors, and potential partners in your business strategy. Contact them ahead of time, ask for many quotations, and negotiate rates. Monkeys Arcades has a vast collection of secondhand and discontinued arcade gaming machines. From redemption arcade games and motion simulators to pinball machines, BMI Gaming has over 1,400 items.

Evaluate Equipment

Arcade equipment costs range between £1000 and £5000 for businesses. As a result, even a small collection of 25 machines may cost over £100,000 in total. If this is out of your pricing range, consider renting or leasing instead. It will lower the initial capital investment but raise ongoing expenses.

Another advantage is that leasing includes some maintenance agreement, whereas outright buyers don’t. Arcade machines, shuffleboard tables, and pinball machines are specialty gaming equipment that might come with a hefty initial investment. These permanent assets are vital to your bar’s success because they are necessary to create your product. As a new firm, you should always keep your initial capital costs as low as feasible.

Establish a Unique Selling Point

Differentiating your firm gives it a competitive advantage and a distinct reputation. One of the most important considerations is deciding what type of games you want in your bar. Install classic bar games like pool tables and snooker, as well as air hockey and shuffleboard tables. It would generate a unique offering for your primary target market.

Once you’ve decided on your bar’s emphasis, you’ll need to ensure it’s properly themed. It is crucial for your customers since they will want the entire experience to be in sync. If you want to emphasize retro arcade gaming, your bar should be retro-themed. Having a similar theme and atmosphere throughout your bar ensures that your clients feel welcomed and engaged in all of your locations.

Market your Business

To acquire visibility: distribute brochures, leaflets, flyers, and other marketing materials. Use social media to promote your arcade on sites like Facebook, Instagram, Twitter, and YouTube. Share videos and photographs of your consumers having a good time while playing their favorite games on social media. Organize online contests and award free tickets or special prizes to the winners.

Offering reduced packages to families and large groups is another option. With this, customers will be more likely to bring friends and spread the news about your business. You can also engage in cross-marketing with other nearby businesses like bowling alleys and groceries. 3E Accounting corporate service provider can help you with starting an arcade and retro gaming business!