Developing proprietary arcade-exclusive games presents unique challenges that differ significantly from console or PC game development. One major hurdle is hardware limitations. Arcade machines often use custom hardware, requiring developers to optimize performance for specific configurations, which can limit creativity and scalability.

Another challenge is the high cost of production. Arcade cabinets demand specialized components, from durable controls to high-quality displays, driving up expenses. Additionally, the need for frequent maintenance and updates adds to the financial burden.

Market competition is also fierce. With the rise of home gaming systems, arcades must offer exclusive, immersive experiences to attract players. This demands innovative gameplay mechanics and cutting-edge graphics, further straining development resources.

Lastly, arcade games must be designed for short, engaging sessions to keep players coming back. Balancing difficulty and replayability is crucial, as overly complex or repetitive games can deter audiences. Despite these challenges, successful arcade-exclusive games continue to thrive by leveraging nostalgia, innovation, and unique hardware features.