One topic that I don't believe been mentioned in this thread yet is the conversion of new arcade gamers. As has been mentioned several times, there is a limited amount of space within an arcade and as a generation gains skill playing games of their desired genre, they demand more and more difficult games. Although such games do indeed satisfy the current fanbase (assuming that difficulty=satisfaction=fun for all true fans), it creates a problem when new fans are needed for the arcade to replenish its customers.
Think for a moment about what you've been saying up until this point. AFTER mastering easier games within a genre, true fans have demanded more difficult games to keep themselves mentally stimulated and challenged (and entertained, of course). After having the difficulty of a game elevated for the umpteenth time, however, it seems simply insane to assume that someone without prior training on the easier games (which would have been rotated out of the arcade to make room for the new ones) would find much of a reason to stay with the game after the first couple of deaths. No matter how much you desire more difficult games and how much fun you derive from them, I somehow doubt that you possess any hard evidence (such as statistics, not personal anecdotes) suggesting that new players (to reiterate, new players, not young players) are equally comfortable playing games of every which difficulty. As such, within each given genre, I?d expect there to be something of a requirement to have games of all difficulties. When this comes together with the limited space of an arcade, something of a problem emerges.
Also, your view that the difficulty of games must continue moving forwards relies on the biggest contributors to arcades being that group of ?true fans? that keeps pressing forward. If, for whatever reason, some of these people stop gaming or if the new generation creates a large demand for easier games to get it started, even Eastern arcades would be forced to use some of their finite space not to hold superior difficult games but rather to hold inferior easy games. In this way, the nature of gaming would remain forever cyclical,
perhaps rising a little bit higher whenever the next generation of true fans comes about.
What I?d propose to be the optimal system for arcade gaming wouldn?t be the complete dismissal of continues but rather any from a large number of compromises:
1. Penalize Continues: If you?re chief complaint is that continues allow players with no skill to erase their loss scot free, don?t let them get away scot free. If they continue, they can?t access a bonus level (with a better weapon), certain power ups won?t appear later in the game, the last level is gone, and you can no longer get the perfect ending to the game. Did somebody just continue three times? I guess another level and bonus level are gone, you only get the meh ending, and your score can?t be listed as a high score. In fact, let?s have a person?s score reset to 0 with each continue. In this way, a new player can play through and even beat a game but a skilled player who can do it with 1cc gets more satisfaction and depth from doing so.
2. Multiple Levels of Difficulty: While certain arcade games (like DDR) are known for this, many of them only have a single, default level of difficulty. Why not remake them so that they can be played on multiple levels of difficulty with lower difficulties being watered down and shorter and higher difficulties possessing more levels, story (in-so-far as arcade games can have story), enemies, bonuses, powers, cars, fighters, robots, weapons, costumes (preferably packaged with powers in a Mario-esque design), bosses, and even buttons (along with the mechanics they control) being unlocked but limiting and even banning continues as you get to higher difficulties. Alternately, you can have games simply cut off after a certain levels at certain difficulties and inform the player that the next level can only be reached in harder difficulties and offer to let the player immediately switch to a harder difficulty and start from the beginning free of charge.
This is personally my favorite option as it gives more satisfaction to more skilled gamers while training newcomers to join their ranks at the same time. Also, giving games multiple levels of difficulties would help arcades consolidate a bit and thus accommodate all levels of play for all genres that they decide to hold (even a 6-game movie theatre "arcade", for example, might be able to hold fighting, racing, and shooting game each ranging from simple to insane levels of difficulty).
3. The Curveball: This is probably the hardest solution to picture but try to stick with me here. Traditionally, an arcade game relies upon you using accuracy, timing, reflexes, and (occasionally) strategy to avoid dying. Why not have games focus on utilizing these attributes to build a high score rather than rely on them to simply keep playing? While you have made it clear that your expectations are that better player = more play time, having better player = better score makes an equal amount of sense and wouldn?t punish newer gamers. I?m not suggesting that no skill be needed for the game whatsoever, mind you, but that the minimum skill for games be lowered and that more precise targeting controls, combo creators, and so forth allow the good players to use more and more of their skill as new games come out. This is already in some games and doesn?t belong everywhere but I can still picture it working in a few more places.