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DLC – a weapon against trade-ins, even if it’s free

By on April 14, 2009

Doing some research over the weekend, I came across this argument from 2007:

“There are publicly-expressed tensions between Epic and Microsoft over the handling of downloadable content for Gears Of War (Microsoft Games Studios wanted to charge for it; Epic wanted to give it away to build goodwill among its fans and as an incentive for people to hold onto their copies of the game rather than sell it to the likes of GameStop)”
Reported in Level Up, Newsweek, 15 October 2007

I have long known that downloadable content was a powerful tool for publishers to ensure that they get revenue from trade-ins. Of the 1 million people who downloaded additional Call of Duty 4 maps over the opening weekend, there is a good bet that some of them owned trade-in copies. So Activision moved from getting $0.00 in revenue from these gamers to generating $9.99 for the DLC.

But this argument goes further than that: It suggests that if a gamer is expecting that there will be good quality DLC coming in the future, they will hold on to their game even once they have finished playing it. In other words, DLC not only offers publishers incrememental revenue, it may make a substantial impact on total sales through reducing the availability of trade-in copies at retailers and, hopefully, therefore encouraging more gamers to buy the new version of the game, adding $49.99 to Activision’s revenue.

I was already convinced that the future trend is for fewer blockbusters with significant quantites of downloadable content published between iterations. This argument only strengthens my conviction.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: