this came up as a result of a discussion about the new king of fighters: MI commercial "making fun of 2D" over at NG.com; that 3D somehow "killed" SNK.
i would argue that 3D is partially responsible for the slump in the arcade business altogether.
let's face it - video games are a visual medium. when i was a kid, there was no way to get something that paralelled the visual splendor of something like the sega system 16 games of the mid 80's. games like outrun, after burner, etc. simply weren't possible to duplicate on the home systems of the day. the arcades offered an experience that wasn't possible on home consoles.
when was the last time you played a truly great, inventive 3D arcade game? for me, it was crazy taxi, and prior to that 2D still pretty much ruled the roost in the arcades in the late 90's...you had your daytona USA and sega rally machines, but there were still plenty of 2D games still in regular use. once 3D and all the associated dev costs that went along with it took hold, most of the arcades here closed up. i can't imagine how much a new machine like say...F355 challenge costs vs. how much it has to be played to make a return. and to make a return, the price of a single play is obviously much higher than your typical JAMMA cab 2D fighter. i still remember when games cost a quarter...i was reluctant to spend my hard earned allowance money on games that cost 0.50, but it became the norm in the early 90's once things like the fancy CPS hardware became the norm (SF2 era).
as a well paid adult, i'm even more reluctant to plop $2.00 into an arcade machine for 60 seconds of spinning into the grass (or whatever). by the time i even got remotely proficient at the game, i could have bought the home version.
i could keep going on, but i'm at work so i'll chime in again later...
discuss for now.