The arcade revolution started in 1972 when Noland Bushnel introduced pong in bars all over the world. It became a hype when Space Invaders entered the scene in 1977. The game profited from the Space-wave which conquered the world with films like 2001: A space odyssey and Star Wars. Taito's game led to a coin shortage in Japan. More on Space Invaders at this site

PacMan was the next revolution. Moro Iwatani was fed up with all shooting games. He wanted a game that looked like a cartoon. He called the Game with the ghosts Inky, Pinky, Blinky and Clide: "Puckman". This was later changed in Pacman, because he was afraid Americans would change the "P" in a "F"

The Arcade halls were the inspiration to create the first consoles and convert games to them, as that comforted parents who saw their kids spending all their money in the coin-ops. In 1981 Donkey Kong, Defender Joust and Q*bert claimed a new generation of addicts.

At the end of '80s the focus had left the arcade halls. Home computers had reached the standards previously only possible on Arcades. Games used tricks like the big Outrun-cab with steering wheel or Thunderhawk's helicopter to attract vistors. A renaissance was needed, which arrived with Street fighter II, a new kind of beat'em up with 'combo's' and character. Legions of kids arrived and many clones were created. This lasted until 1996 when every game had to be 3D.

At this moment the Arcades haven't got much influence on the state of the games art after the 3D hype became incorporated in every single game. In the old days, a game lasted longer if you were better. One got more levels for one's money. These days, a game lastes shorter if you are good. One can liken a modern game to a ride in an amusement park, where you follow a preset path. The faster one puts in another quarter (or more), the better.

More on arcade games history on DesignBoom