Company sells game nostalgia

FOLSOM -- Inside a tiny warehouse in a nondescript industrial park, Michael Ware busily builds game geeks' dreams.

Or at least their youthful reveries of hours spent hunched over video game consoles, chomping away at the likes of Pac-Man, Pong and Centipede.

Ware, a former Intel engineer turned video-gaming entrepreneur, has founded an Internet-based business with retro roots.

What began five years ago as a gift for his Pac-Man-playing wife has become a full-time business zeroed in on an emerging gaming niche: New-century takes on 1980s-era video arcade games.

Dream Arcades, which he co-owns with his wife, Michelle, manufactures and sells big, bulky arcade games, primarily those crammed with the hottest games of two decades ago. Think Asteroids, Pac-Man, Tempest and Centipede.

"The games play exactly like the original," said Ware, 33. "The nostalgia, that's what we're looking for. It's timeless, these games."

The company's target audience: 30- and 40-somethings nostalgic for youthful after-school hours spent glued to the controls of the now-classic games from Atari, Capcom, Midway and Namco.

"You have people coming into their own with disposable income (who) grew up in the '80s -- the golden age of the video arcade," said Kevin Steele, editor and publisher of GameRoom Magazine, a Cleveland-based magazine that follows home gaming.

Nostalgia is a strong marketing tug, but retro games are only a sliver of the estimated $20 billion video gaming market, said Michael Cai, director of broadband and gaming for Parks Associates, a Dallas-based research firm that monitors the digital technology market.

"I doubt it's going to be a more mainstream product. It's a niche," Cai said. "It brings back old memories. It's more of an emotion-related item."

The consoles, constructed of melamine-coated fiberboard and shipped from Ware's tiny warehouse, run on a Microsoft Windows platform and operate contemporary game consoles such as Nintendo's popular Wii. The company also sells tabletop versions.

Prices range from $589 to $1,799. The company's highest-end product, the Dreamcade Vision 120 priced at $3,999, features a 120-inch projection screen, a library of 145 arcade games and more than 7,000 console games.

Revenues for the privately held company aren't available. But Ware claims that Dream Arcades has increased sales by 90 percent in the past two years while maintaining an Internet-only sales strategy.

For Ware and his wife, who is Dream Arcades' financial officer, the video game venture was their gamble on winning financial independence.

For all the high-tech gadgetry, their game plan for success relies on tried-and-true strategies.

Personal savings and initial sales to friends helped bankroll their business and establish lines of credit.

They found the materials to build their arcade-style cabinets through a former Tower Records cabinetry contractor. Michael found marketing services by reconnecting with a colleague who started his own agency, then did a tradeout with a local DVD producer to create video installation guides for Dream Arcades customers.

To secure the rights to use its extensive library of video games, the Wares pay gaming publishers anywhere from 50 cents to $15 per game.

Today, Michael estimates that the vast majority of Dream Arcades' sales come via the Internet, with more than 1,000 units this year squeezed out of the tiny Folsom warehouse. He said the company's biggest market is in Silicon Valley, home to techsters eager to relive their 1980s gaming glory days.