A REPLAY OF THE '80S

FOLSOM, Calif. - Inside a tiny warehouse in a nondescript industrial park near Sacramento, Michael Ware busily fulfills game geeks' dreams.

Or at least their reveries of youthful hours spent hunched over video consoles with the likes of Pac-Man, Pong and Centipede.

What began five years ago as a gift for Ware's Pac-Man-playing wife has become a full-time business in an emerging gaming niche: Dream Arcades makes and sells big, bulky video-arcade machines, primarily those crammed with the hottest 1980s-era games.

"The games play exactly like the original," said Ware, 33, a former Intel Corp. engineer who owns Dream Arcades with his wife, Michelle. "The nostalgia, that's what we're looking for. It's timeless, these games."

The target audience: adults in their 30s and 40s who wistfully recall after-school hours glued to the controls of the classic games from Atari, Capcom, Midway and Namco.

"You have people coming into their own with disposable income [who] grew up in the '80s - the golden age of the video arcade," said Kevin Steele, editor and publisher of GameRoom Magazine, which follows home gaming.

Nostalgia is a strong marketing tug, but retro games are still only a sliver of the estimated $20 billion video-gaming market, said Michael Cai, director of broadband and gaming for Parks Associates, a research firm that monitors the digital-technology market.

"I doubt it's going to be a more mainstream product. It's a niche," Cai said. "It brings back old memories. It's more of an emotion-related item."

The consoles, constructed of melamine-coated fiberboard and shipped from Ware's warehouse in Folsom, run on a Microsoft Windows platform and operate contemporary game consoles like Nintendo's Wii. The company also sells tabletop versions.

Prices start at $589. The company's highest-end product, the Dreamcade Vision 120, priced at $3,999, features a 120-inch projection screen, a library of 145 arcade games, and more than 7,000 console games.

The privately held company's revenue isn't available, but Ware said Dream Arcades had increased sales 90 percent in the last two years while marketing only over the Internet.

The video-game venture was the Wares' gamble on winning financial independence.

Both bear scars from the corporate wars. Michael survived five rounds of layoffs at Intel. Michelle, 32, endured three at her former employer, Krispy Kreme; she is now Dream Arcades' financial officer.

"We figured, if this doesn't work out, I can go back to work or he could go back to work," she said, "but we haven't turned back."

For all the high-tech gadgetry, the couple's plan for success relies on tried-and-true strategies.

Personal savings and initial sales to friends helped bankroll their business and establish lines of credit.

They found the materials to build their arcade-style cabinets through a former Tower Records cabinetry contractor.

To secure the rights to their extensive library of video games, the Wares pay gaming publishers anywhere from 50 cents to $15 per game.

This year, the Folsom warehouse has squeezed out more than 1,000 units. The company's biggest market is in Silicon Valley, home to techsters eager to relive their 1980s gaming glory days, Michael Ware said.