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I don't mean to discount it. I've been a big gamer for years. I played at Cyberjocks when they first started in a storefront on Parkside Ave, playing C&C : Red Alert for hours on end.
The problem with a physical location for LAN games is that there's no need anymore. Back in the early 2000s, if you wanted to get 8 friends together and play something, it made sense to lug your PCs/Consoles somewhere and hook them all up. Nobody had broadband, and dial up games were a pain in the rear to get going.
Now, it's totally different. If I want to play Diablo, or WoW, or SC2, or whatever, I can sit down in my office, launch a game, and be online with 7 friends in about a minute or two, with voice chat on Ventrillo or Skype.
Cyberjocks failed because as more people got broadband, there was less need to go there. They raised prices to compensate, driving more people away. There's also a significant capital cost too. People expect top end gaming rigs in these places. That's $1500/$2000 per rig every 18-24 months or so, plus game licenses, electricity, space, staff, etc. Not a lot of margin there, even if you get a hopping bar attached.
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