The Video Games are the problem.
In today's society, more and more parents want their kids to have reduced screen time, Giggles caters to parents who are more health and wellness oriented than Chuck E Cheese -- and these parents want their kids to be entertained through other means than video stimuli.
Almost every home has some sort of gaming console (including iPads/iPhones). Giggles provides a place where kids can have interactive fun with other children -- building creativity, and improving social skills.
Not having video games differentiates Giggles from Chuck E Cheese.