There's one thing a VR arcade can have that very few consumers can have, in areas where VRcades might be likely to thrive: physical space.

Immersive VR requires at least some space to move around in, or set up a big omnidirectional treadmill in. As the human population grows but Earth stays the same size, personal living quarters will always be at a premium, the rent will always be too damn high, and space to set up this awesome VR rig will be prohibitively expensive.

VR machines could be consumer-grade and still draw an audience, because of the people locked out of the market due to lack of space to set up a rig. Consider what we have now that isn't even VR- I don't have space to use a Kinect.

Just one minor quibble: the reason we have density issues in cities is not that Earth doesn't have enough space for humans to spread out -- even if we only count the nice parts.

No, the answer is that we actually seem to enjoy living in really dense clusters and spend a premium on trying to pile more and more people in to the mess. (Well, there's some argument that wealthy people have had an undue influence on the societal process of urbanization, but that's digressing.)

Other than that, I actually think that arcades are posed to make a comeback, precisely because of the issue you highlight: the only way to have enough open space in a building (in a major city) to really walk around in requires splitting the rent or being really wealthy.

I don't think cities form out of enjoyment (although this becomes a factor for many people after a city and its services have already formed). They form because there is some infrastructure or geographical rarity that many people can benefit from, thus they move there. Train stations, harbors, water ways, airports, mines and castles come to mind as a seed. Once people move there, more and more services become available, making the location more and more attractive for employers, people seeking jobs and people seeking apartments. A certain density is optimal for economic productivity, thus cities are usually don't deviate much from that density, except in places where zoning is heavily regulated. East Asia, especially SK and Japan, is a good place to see how cities grow organically.

My point, and perhaps I was unclear, is that people seem happy to exchange the costs of density for the benefits of density (trains and airports; lots of varied good provided; many different kinds of jobs from many different employers; etc), ie, that there are no "density issues" with cities, it's just that people really want to live on top of each other as much as the rapidly rising costs seem to indicate, and we haven't adjusted to this idea as a society yet from our older vision of sparse open West and the American frontier (or pick your local myths). The post I was replying to implied that people were somehow forced in to cities -- it's just untrue. They could be lots of other places, they just choose to be in cities. (Nothing in my post was about how cities nucleated, and was entirely about why cities have the rising costs they do, which reflect a HUGE demand for more city rather than a demand for out of the city.)

I didn't mean that if you found a unicorn, they wouldn't prefer it, just that at the end of day, people made the compromise of plowing their fields with horses, not narwhals.

Focusing on the horn as "man, that would be a great feature to add!" misses something interesting in why they picked the horse to the (perhaps arguably) more majestic narwhal. I would even argue that studying why the preference when you split the unicorn in to extant beings is the paramount question about the topic, since it gives us the seeds to move forward building more dense (and enjoyable!) cities and societies.

I find it interesting that despite everyone lamenting how they wish they weren't in cities, they don't take any of the many opportunities to move to smaller cities or out of cities all together, despite there being many such chances. (Some people do, obviously, and are quite happy with their choice. I just meant that there was a net flow in to cities.)

In so far as you point out that cities seem to top out a certain size that doesn't hit any inherent physical constraints, our daydreaming about unicorns (and more importantly, our discussion of horse versus narwhal) serves to improve these limits and let us move towards more focused centers of human activity.

The information age (and really... modern humans for ~10,000 years) has been driven largely by focused human intelligence, of which cities -- being a natural focal point of human efforts -- have played center stage. The story of humanity since the ice age can be glibly phrased as: we found a way to stay in one place, and grew; we found a way to get power more efficiently, and got denser, and grew; we made many theoretical breakthroughs about the mechanics of getting, storing, transporting, and using power, and got denser, and grew. The past few centuries have been a concerted effort on externalizing our various faculties, following a series of breakthroughs on fundamentals, and as a result we've been able to double the population in just the past ~100 years. People have picked up on the narrative, even if they don't know why it's happening, yet.

They enjoy getting to be part of the important cluster of human activity, instead of relegated to energy production out on a farm.

tl;dr: You made an uncharitable reading of my posts, and failed to connect that I was using "enjoy" as a euphemism for the idea of a "utility" function, because I was talking in public, and wanted my idea to be generally understood rather than technically sound. This error in parsing my post led you to make a long rant -- concurring with me. Your violent agreement amused me, so I wrote you a rant back. [Ed: Or just flat out missed I was talking about why the skyrocketing prices, not the nucleation of new cities.]

Hope you're having a good day. (:

That high capital investment is what makes arcades ideal. Even if they're only "cutting edge" for 18 months, even the previous generation of that hardware will still be outside of the range of most consumers.

Would you really need a physical arcade for that though?

If everyone has a black box strapped to their face and can communicate sub-100ms, would people even know that they weren't in the same physical location?

People don't need to be in the same physical location. However they do all need to be in arcades so that they can all have access to warehouse-scale motion capture setups as well as physical sets and motion-captured props that would be impractical to keep at your house.

Actually, it would be more interesting if they weren't in the same physical location. A VR arcade chain would be a great way to hang out with friends in other cities; you could all visit the local arcade location in your city and then hang out together in a shared virtual space. The game would almost be secondary. Imagine being able to play pool with your friend on the other side of the world, with a real pool table, real cue, and virtual balls. That would easily be possible with a VR arcade.