This is a "Wild Mass Guess" entry, where we pull out all the sanity stops on theorizing. The regular entry on this topic is elsewhere. Please see this programme note.
The entire Arena/Island is part of a VR computer game created by Arcade for his amusement.
Arcade is God-modding in #1. People have 'life bars' next to their names which shorten as they take damage. Unless Arcade has somehow pulled the kids into Scott Pilgrim vs. the World it has to be a VR game. Whether that means those who have died are 'Not really dead' and will be back for 'round 2' or were killed in the real world when they died in the game remains to be seen.
If the VR ran faster than real time, that would help to explain why (per the flash forward in the first issue) the entire rest of the Marvel Universe's heroes can't find the kids for a month (because really, the alternative is that Arcade has outwitted Tony Stark, Hank Pym, Reed Richards, Bruce Banner and all the rest - and while they were working together, at that).
VR would also explain why Hypothermia appears to not exist.
Anachronism mentions this possibility, but Bloodstone pints out that it ultimately doesn't matter. Pointing out that they would still be dead just the same. After all, this is Arcade, meaning that if it is a VR, Arcade would make sure it's of the Your Mind Makes It Real variety.
Arcade has a client or benefactor with extra-temporal knowledge
Though Arcade claims that the people were grabbed at random, he had no real way of knowing about Ryker and would have difficulty finding the Runaways, and teleported Cammi directly out of a S.W.O.R.D. facility. This would suggest that the picks are not random, but at least partially precise to remove certain players from the field to prevent or achieve a future event for the client or benefactor behind him. We have no reason to trust anything he said at the beginning either.
It is also a WMG, and possibly related to the popular VR theory, that Arcade has been hired by to turn one, more or all of the heroes into villains. All of them seem to be able to be nudged down that path. The Runaways are more focused on independence than heroism, Cammi is a space pirate, the BA kids are brats, Deathlocket is a Deathlok, Academy kids were those most likely to be supervillains. Darkhawk is problematic, but has anger issues or might be a sacrifice.
Half-Jossed. He has a benefactor, Ms. Corriander, but she has no apparent extra temporal knowledge.
See above. Arcade has pissed off a lot of people now. This list includes:
Hank Pym, Tigra and the rest of The Avengers for the Academy kids and Runaways.
Drax the Destroyer and the other Guardians of the Galaxy for Cammi.
Cammi was by herself in space and the Guardians have no been keeping tabs on her seeing as how she was surviving as a space pirate. The only ones that know she has gone missing is SWORD.
S.W.O.R.D. for Cammi.
S.H.I.E.L.D. for Ryker.
Captain Britain and MI-13 for the Braddock Kids.
Wolverine and the X-Men for X-23.
Namor, the Hulk, Doctor Strange and the Silver Surfer for Red Raven.
Slash pairings ftw
Cammi and Ryker will be the survivors, hooking up over the bodies of the last other teens, the couple Axbro and Bloodstone. Cammi is the most skilled and ruthless, Ryker has Deathlok tech that will be awesome when she learns to use it. They are both the same age and have not been hinted as hetero in Arena. Axbro and Bloodstone are nearly as awesome and Heterosexual Life-Partners at the very least.
Arcade is playing with people's brains
Using subsonic signals, EM Fields and other non-intrusive means to raise stress and heighten aggressive responses in the victims. He said he wouldn't make anyone do anything, but he could be making it far more likely that they'd do such things. It would explain a lot of otherwise out-of-character behavior and everyone's general 'quick to anger' reactions.
Ms. Coriander is Spiral in disguise
She's using Arcade as a pawn to create a twisted reality show for Mojo.
She's currently stripped of her post and in Uncanny X-Force, so that is extremely unlikely.
Mojo is behind everything
Excluding Spiral involvment, it's not such a bad idea.
No One Has Really Died
Hear me out here: In my theory, as the readers we are reading only what is visible for Arcade to know. He thinks everything is going to plan, when really the group, through a carefully constructed plan made quickly when Arcade and the readers weren't looking, have messed with the system so it looks like people are dying when they aren't, tricking the computer into freeing them. Thus, the final issues will pull a surprise twist Everybody Lives.
Nico's last spell worked because she was dying
The idea that the magic from the Staff of One is powered by pain has been bouncing around in my head since Joss Whedon's run of the Runaways. There the Witchbreaker (Nico's ancestor) tortures her because her tolerance for pain was low by Witchbreaker's standards and afterwards Nico shows a lot more control and power than she did before. Nico's spell, 'help', works because she was in the worst state of pain she could possibly be in after loosing an arm, bleeding out, having Chase forced to attack her, and knowing that everyone on the island that she cared about was going to die unless she did something.
Arcade could have easily kidnapped the kids from the Jean Grey School
...But he was too scared to try. Arcade was able to kidnap kids from Avengers Mansion, Braddock Academy, and even a SHIELD base, but he claimed that the Jean Grey School's security was too advanced. In actuality, Arcade, remembering his past experiences with the X-Men, decided not to risk a trip to the school. He wanted to make absolutely sure he won this time.
He didn't actually say that it was because they had too good security though, the security there being "better" is just one of the many sarcastic explanations he gave as examples of why it didn't matter why.
No matter who else lives, Arcade will not.
We have a Moral Event Horizon with the idea that Arcade is killing these kids to shore up his villain cred, combined with the fact of how those who harm children are treated by other criminals in prison and if he escapes both the Heroes and his victim's wrath, the enmity of other villains will produce the opposite of what he wants. Or just kill him outright.
At the last moment, when all remaining survivors are about to murder Arcade, Avengers will show up. Somebody, probably Captain America, will try to talk the kids out of the revenge, when suddenly SS-Man, who has personal beef agaisnt people that hurt children, will murder Arcade in front of everybody. This will create a rift between Avengers and remainis of new generation of superheroes and even sway some of the kids towards more lethal approach of dealing with supervillains.
Arcade only wanted the Darkhawk amulet
Not for his personal use. He only included Chris Powell in this scenario just so he could get at the amulet. Chris is arguably one of the most powerful and experienced heroes in this scenario, but a lot of it comes from the Darkhawk amulet. A jewel which transforms the user into an armored warrior, which can also heal any wound the wearer has before transforming, could create quite the amount of havoc and chaos if used by people who are unfamiliar with it.