I have asked myself the same questions. How the hell can this machine pay for itself. I'm born in the early 80s so naturally the 90s were my playing field. I've seen flyers in Sweden for new Sega Rally machines that cost 130000 SEK (about $14500) in 1994 which naturally is crazy expensive. However, as you said, the arcade games were the driving force of graphical development and gameplay in the 80s and 90s until computers and home entertainment surpassed it.
Many operators have several games on route which circulate which can keep locations fresh even though they don't buy new machines all the time. But today, I would say the games are there to get the customers in, and then you make a profit on things around them. Food, drinks, merchandise and so on. Arcade machines are not the primary income any longer. At least, that's my guess.
EDIT: I'd also like to point out that you need a permit since 1982 to be an operator in Sweden. It's costly and also a pain in the ass to handle the administration since every machine you buy, sell or change needs to be reported. We're trying to get it abolished.
