I'll add that to the list of horror stories I've heard about Namco. I still don't think it tops the one about a guy getting fired for picking up a penny from the arcade floor though.
Namco's corporate status might have a bit to do with why they suck. By setting franchise-wide standards and running things from the top down they might be preventing individual stores from adapting to the market. Obviously they're not complete idiots, and try to gauge general market trends (which probably has something to do with why virtually the only things in Namco arcades are redemption games) but the result is what we see from them today.
It's lazy is what it is, and it's going to kill them quickly enough I imagine. It would almost be tragic if the few redeeming aspects of American arcades didn't seem to be destined to rot away even if the business did survive.
Speaking of all this, I got myself a copy of Arcade Mania today. It's pretty neat, you might consider checking it out.
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Phenomenology™ It makes you depressed and incomprehensible!
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