[Japo]

The graphics during the golden era of the arcades weren't that superior. Specially if you check the resolutions they used, they were appallingly pixelated by today's standards. And the point is, home consoles and PCs weren't that inferior. Arcade games did usually have more colours, though.

For example After Burner was a kickass game released in 1987. But the Sega Mega Drive/Genesis released only a year after supports higher resolutions, although fewer colours. Even the graphic resolution of the Sega Master System is comparable to the contemporary arcade games.

The difference in quality between arcade and home video games was obvious, but it wasn't about the graphics mainly, even though that's the first thing one thinks about. The sound on the other hand was light years away; arcade games had decent, understandable digitized speech many years before home gamers could dream about such thing. And of course processing power, which translated into bigger, faster games, but not because of the graphics.

However late 90's is very late, if you think about it, any game for Windows 95/DirectX could easily surpass any arcade game of the time. The eclipse of the arcades happened before.

But people always cared about cool graphics and such, it's just that they couldn't get all of them in the past--unless they had a Neo Geo. But even very early home consoles were often advertised as "the arcades at home".

Which was the biggest business depends on the market (country or region). I think in Japan both arcades and numerous home consoles and computers were always strong. In the USA people turned completely away from home video games when they got sick of the Atari 2600 games, up until the release of the NES, that enjoyed a huge success; in the meantime people played at the arcades only. In Europe this time was the golden era of the arcades too, but the home market was covered by a strong presence of PCs such as the Commodore, ZX Spectrum, Amstrad, etc. But I don't know the exact figures about when was what the bigger money maker.