Jaybird tosses tokens into the discussion and argues that the profitability of one-on-one, fight-based arcade games helped drive other types of games into the home:
The industry (quickly!) learned that the most money to be made was not in side-scrolling storyline games (which, if you were lucky, had 2-3 obsessed folks playing until Magneto was beaten) but in a new token being dropped every 90 seconds. Let’s face it… in theory, two really skilled players could beat X-Men by themselves (in theory). But Street Fighter II? You’d have a token every minute and a half if there were two players there.
The focus ceased to be on games intended to make you keep playing, but games that made you want to (FINALLY) beat the sonova that kept killing you with Dhalsim. And every piece of real estate being taken up by Captain America and the Avengers is a piece of real estate that you cannot dedicate to yet another Street Fighter II SE ... Meanwhile, at the same time, home consoles were providing the side-scrolling, and Tetrisy, and shooter, and jumper, and storyline games that we all fell in love with in the arcade but had since been relocationed due to the popularity of Street Fighter II (and pretenders).