SAN FRANCISCO – The Stockton Tunnel, excavated in 1914, lets San Francisco drivers get between downtown and Fisherman’s Wharf without having to ascend the scarily steep grades of Nob Hill. The tunnel is bordered on the west side by the famous cable cars and on the east by the Chinatown gate, so no tourists need ever walk near it. Accordingly, the tunnel entrance is a dingy block crammed with aging tenements and seedy shops. Junkies tweak out on the sidewalk; a grimy massage parlor called The Green Door advertises “A Touch of Ecstacy.”

Late every Saturday evening, the massage parlor, the tiny taqueria and the assorted other shops all close up, but one is still bustling. A gaggle of young men wearing Street Fighter T-shirts and toting their own massive arcade-style game joysticks mingle inside the tiny Southtown Arcade, jammed wall to wall with arcade cabinets. They’re throwing down in friendly matches for now; later tonight they play for cash.

Here in this dingy alleyway is the leading edge of what Seth Killian, director of online and community strategy at Street Fighter maker Capcom, calls the “second wave” of video arcades – run not by businessmen looking to make a buck, but by those with a passion for communal gaming.

"The second wave was the people that grew up in the arcades and dreamed of starting places of their own, maybe a bit like Flynn from Tron or something, or just because they – like me – had so many intensely happy memories of that kind of place," Killian said.

In the late '70s, during the heyday of Atari, one of its sales managers trumpeted the new family-friendly video arcade: "Many arcades used to be in rat-hole locations. Now they have turned into family amusement centers where you can take your wife and six-year-old daughter,” he said, as quoted in the book Replay.

Now, the big family arcades are closing and the gamers are moving back into the rat-holes. In San Francisco, New York, Austin and elsewhere, these gritty little storefronts hearken back to the days when arcade cabinets mostly lived in bars, pool halls and run-down amusement parks. They are a place for gamers to test their skills against like-minded enthusiasts, a digital Fight Club for those looking for something more than Skee-Ball and Dance Dance Revolution. It's in these packed alleyways and basements that video arcades are staying alive.

"You can always drink a beer at home, but that's not what you're looking for, right? You're looking for that communal interaction,” says arcade owner Myung Kim.

A player's fingers fly across a fighting game controller during a Southtown tournament.

Photo: Brian L. Frank/Wired.com Brian L. Frank for Wired

You Should Practice More ————————

When Jared Rea was eight years old, he nearly got stabbed playing Street Fighter II: Champion Edition.

His dad bowled in the local league in East San Jose, and he’d sit his son down in the little arcade with a roll of quarters while he played. Rea was opening a can of whoop-ass on the local teens, demolishing them with his pint-sized dragon punching technique.

“You should practice more,” he said to his opponent, a “thuggish Asian kid” about twice his age. The kid responded by pulling a switchblade.

“You think you’re funny? You think you’re tough?” he said, scaring the pants off Rea. “Give me your quarters,” he said. Rea handed over the whole roll. But he didn’t tell anybody it had happened.

“I went back the next week because I wanted to play Street Fighter,” he said. He’d risk getting knifed if it meant he could still go to the arcade. Street Fighter at home wasn’t nearly as good.

The emergence of the fighting game genre in the early 1990s was the second coming of the video arcade. The days of Pac-Man and Asteroids, primarily single-player contests, had given way to games like Street Fighter II in which the object was not setting a high score but defeating the human opponent next to you.

Capcom sold over 200,000 units of the original game and the Champion Edition update, but Street Fighter’s success would be short-lived. Myung Kim, who operates the indie arcade Game Center in San Mateo, California, says that sources at Capcom told him that starting around 1988, the company’s international division went from having about 300,000 arcade games in circulation to about 8,000 in just two years' time.

“There was just a massive culling of the market,” Kim said. “That’s when the troubles really began.”

Once fighting games stopped bringing in the quarters, most arcades turned to redemption games and other amusement machines. Finding an actual videogame in a Chuck E. Cheese today is an exercise in futility. That’s what inspired arcade entrepreneurs like Kim to build places like Game Center, where real videogames still rule.

He used the money from his first job out of college writing financial planning software to purchase his first cabinet, a Japanese "Neo Candy" unit – "beautiful cab, built like a tank." As his personal collection grew, Kim started to wonder if he could open an arcade that was like the ones he knew as a kid. It was taking a trip to Japan, where blaring video arcades still live in every shopping center, that cemented his decision.

"As you've seen arcades become ... almost non-existent, you've seen people take up the mantle and try and do it themselves," says Kim, who modeled his arcade after those vibrant gaming halls in Tokyo. "And that can be [attributed to] nothing more than a love of the work."

"God knows there are very few other incentives to do it,” he says with a fatalistic laugh.

Miranda Pakozdi, center, reacts to a loss during a Saturday night 'ranbat' at Southtown that has filled the tiny arcade with competitors. Photo: Brian L. Frank/Wired.com Brian L. Frank for Wired

Fight Club ———-

Every weekend day, Southtown hosts “ranbats,” an abbreviation of the Janglish term “ranking battle,” or tournament. Ranbat nights pack the tiny arcade with regulars who take part in fighting game tourneys. The lure of cash prizes gets players in the door. What makes them stick around is the community.

In the age of gigabit ethernet and Xbox Live, most multiplayer gaming has moved online. But as Southtown regular Jared Rea puts it, playing Street Fighter over the net is like “playing [against] a ghost.”

“We as a fighting game community grew up playing side by side,” he says. “You're not even looking at one another; you're just staring at the screen, but you can tell how your opponent is being affected by the actions in the game.”

"So let's say I've got you in the corner and I'm trying a mix-up, and you jerk [your body],” he says. “I can see it out of the corner of my eye, and that tells me that you don't like whatever I'm doing to you. So I'm going to keep pressuring and pushing your buttons in that kind of way."

"The fighting community still has this rough edge to it," he says. "There's a saying that some people aren't in it to win tournaments. They're in it to ruin your day.”

Parker Butynski, a tall, solidly built 29-year-old with glasses and a Giants cap, has become a Southtown regular as of late. He’s never finished higher than fourth in a tournament, but he’s recognized as being one of the better players. Tonight, though, things aren’t going his way. After losing his first match in Ultimate Marvel vs. Capcom 3, Butynski goes to the losers' bracket to square off against a team that includes Phoenix Wright – the lawyer from the Ace Attorney puzzle games, considered something of a joke character in a game whose roster also includes Spider-Man and Thor.

“Oh my god! One hit!” screams the Southtown kid doing the play-by-play as Butynski loses to his rival, the skinny defense attorney improbably slapping down the hulking robot Sentinel.

In the back of the room, Southtown co-owner Arturo Angulo tenses up a bit as he watches. Butynski has a bit of a reputation for getting a little too pissed off when he loses. This time he keeps his cool, although he stands up and leaves the cabinet before Phoenix’s super move is even finished dealing its fatal damage.

"Unfortunately, [getting upset] is one of the things I'm known for,” he says later. “Kind of getting salty or getting upset when I lose. I try and work on that because it's not a very good trait, but my coping mechanism is to get really angry and blow up.... You hate someone when they beat you; but you're there every day, you see them, and you start respecting them. After a while you get a friendship out of it, or maybe a friendly rivalry,” he says.

Southtown Arcade founder Arturo Angelo calls competitors for their tournament battles with a low-tech solution.

Photo: Brian L. Frank/Wired.com Brian L. Frank for Wired

Just Trying to Stay Afloat ————————–

Ranbats are the best of times for Southtown. But indie arcades are still small potatoes, so small that some arcade game makers in Japan don’t even want to deal with them.

“I don’t want to call any [companies] out, but they’ve been less than responsive to say the least,” says Southtown Arcade co-owner Angulo, who opened the arcade in 2011 with partners Simong Truong and Cameron Berkenpas. “And I know we’re not the only ones to have reached out. Ryan Harvey from Arcade UFO [in Austin, Texas] has talked to Namco ... but never heard back.”

“It’s an opportunity for these companies to make more money,” he says. “It’s a lost opportunity for guys like us, who are just trying to stay afloat. And we can’t even do that because we can’t get the games.”

Even when gamemakers are willing to deal with indies in America, the expense can be astronomical. Game Center’s Kim says a simple upgrade kit for Super Street Fighter IV, just the circuit boards with no cabinet, can cost $12,000. Other popular games are only accessible through digital distribution services that don’t work outside Japan.

Luckily, the American branches of these companies are often happy to help attempt to sway their indifferent Japanese parents. “We have been able to do some exhibitions of new titles at the Southtown Arcade recently, and I would like to do more of that. It's just a great time," says Capcom’s Seth Killian, who is himself a fighting game master.

"[The U.S. branches of] Capcom and Namco have both been really, really helpful,” says Angulo. “Namco last weekend brought over Soulcalibur V to the arcade, and that was really cool.” Capcom came through with a Super Street Fighter IV upgrade. “We were like the first arcade in America that had the actual arcade board installed,” he says.

One money-saving move that many indie arcades are making is playing games on home machines like Xbox 360 and PlayStation 3 instead of buying full cabinets. At Game Center, Myung Kim sells one-hour PlayStation passes for three bucks, which he describes as “pretty popular.”

Arturo Angulo would rather not fill his arcade with Xboxes, if he had the choice. "We’re trying to keep that arcade scene alive. So for us, it's not something we really wanna do just yet,” he says. But reality is a harsh thing. Capcom didn’t even create an arcade cabinet version of Ultimate Marvel vs. Capcom 3, which is why gamers tote their own joysticks to Southtown if they want to play the popular crossover game.

"I think long term, as much as I want it to be, it's probably not sustainable” to run a small arcade, Angulo says. “But I do think there's ways that you can make it work. You might have to do things you might not associate with an arcade ... integrate it with a bar, a restaurant or a night club. But just having it be an arcade, I don't think it's possible just based solely on the fact that it's impossible to get new games these days."

"Things are hard for U.S. independents already, but if new games – which are mostly made primarily for the Japanese market – stop being produced, that would be a very difficult situation," says Capcom’s Killian. "With the Japanese scene still successful at the moment, I hope arcades and the magic they create will be around forever.”

For Angulo and Kim, running an arcade is a daily grind of maintaining equipment, promoting events, and simply trying to stay profitable. But any sense of fatalism or frustration seems to fall away when night falls and the regulars pack the house for a night of ranbats. They move easily through the crowds, chatting with the regulars between matches. Angulo's and Kim's personal touch is what separates an indie arcade from a massive Dave and Buster’s.

In many ways, Southtown and other arcades like it remain a well-kept secret. In North America at least, the popular perception continues to be that the arcade business is completely dead and buried. But it's only mostly dead. When a gamer stumbles upon that little alcove wedged between the tunnel and the Green Door, he can scarcely believe his eyes.

One night, a couple wandered past Southtown Arcade. The guy gawked at the scene, staring at Angulo, seeing some memory from his childhood come to life. “Let's go,” said his girlfriend, pulling him away from the lights and sounds and banging and yelling.

The next afternoon, the guy came back to Southtown, just to make sure what he had seen was real.