Deciding on a type of monitor is the single most difficult decision in building a custom cabinet. This is a hotly debated topic on many cabinet building websites so let me explain. No, there is too much, let me sum up:
To see the differences, take a look at Oscar Controls Monitor Comparison, or a similar study at BYOAC. I happen to be in a position of having used all three possibilities, which puts me in a unique position to judge the results. My first machine used a 21" NEC PC Monitor. The second machine used a 27" Sharp television with an S-Video interface. Supercade uses a 27" Wells-Gardner Arcade Monitor (D9200) with a built-in VGA interface. My Dragon's Lair cabinet uses a 19" Wells Gardner (U3100).
If possible, use the Windows port of MAME. Run the games at 640x480, and use hardware stretching (-hwstretch) with the default render effect (-effect none) and a good video card. Most modern video cards use interpolation when they perform hardware stretching, and the effect is smoother and more authentic than what is provided by other effects and ports. The interpolation mostly eliminates the "blocky" appearance that normally makes PC monitors a bad choice. Also, recent versions of WinMame include some interesting D3D effects, so try them out as well. If you have to use DOS, you can try using AdvanceMAME and play around with the video settings to get a good effect.
There are a few things which significantly improve the appearance of the games when used with a television:
There aren't really any special instructions here. Not surprisingly, an arcade monitor is the most authentic looking. Ideally, you want to avoid the interpolation mentioned in the TV section. However, the -effect sharp switch is only effective at resolutions greater than 640x480 -- and many arcade monitors won't go higher than this. The good news is that even with the interpolation, it still looks pretty amazing. I'm hoping to try out the ArcadeVGA card in the near future, which I understand can produce even more authentic results.
Comparisons and Conclusions
The short answer is no matter what you use these days, it can look pretty good. Hardware stretching and D3D effects make a PC Monitor look much more authentic than it used to.
Traditionally, the biggest problem with an arcade monitor is interfacing it to a modern video card and dealing with the refresh rate issues. But there are arcade monitors available with VGA interfaces that run at 640x480 -- which resolves a lot of issues, and the ArcadeVGA card also solves this problem.
If you choose to use a TV, you can still get extremely good results. In fact, looking at the same images side by side on my TV and my arcade monitor, they look very similar. There's a little more blending on the arcade monitor, so the image looks smoother. Also, the colors are much more vibrant on the arcade monitor. But the TV comes pretty darn close.
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