charlequin said:
So, here's the problem with DLC.
When you produce something like this, you're selling to, essentially, the target market of everyone who bought the original game, but you know that a huge part of this market isn't going to bite -- they aren't online, or they didn't beat the game, or they're just not that enthusiastic, whatever.
There are also a small number of people who are really dedicated and will happily spend more money on your game if you give them a way to do so.
The reason DLC is a terrible value, basically across the board, is that companies have looked at the curve and realized that there's a split between a large group of people who are unlikely to buy much DLC no matter how it's priced and a small group of people who are largely price-insensitive and will buy a lot of DLC even if it's overpriced. The end result of that is that even though all this content is priced higher than it "should" be, it'd actually bring in less revenue priced "correctly" because it'd inspire very few people from Category 1 to buy more, and it'd earn less for being bought by people in Category 2.
This is also why "vote with your wallets" is sadly useless advice here -- it's not like you can refuse to buy games that have DLC (that's basically everything now) and by virtue of not being in category 2 you're already expected not to buy DLC so you can't really influence anything by refusing to do so.
Absolutely agree with this.
Consider the example of Street Fighter II. SFII had an extremely fervent following when it was first released in arcades. Subsequent iterations of the same title (SFII Turbo, Super SFII, Super SFII Turbo) made apparent an interesting strategy: they weren't trying to expand Street Fighter's appeal to new consumers. Obviously, speeding the game up and adding a few characters to the same basic game design isn't going to convince people who didn't like the original SFII to suddenly like it.
Instead, Capcom increased revenue a different way. Rather than try to expand the appeal of the game (Which would require significant redesign and would be significantly more expensive), Capcom figured out how to get the really fervent fans to buy the game again and again with small updates. Put differently, Capcom increased revenue by making the fervent few spend more, rather than expanding the number of consumers buying their products.
The same basic principle applies here: Bethesda cannot, as an example, get uninterested players to buy DLC for Oblivion. First,
anyone who does not own Oblivion is already uninterested, which represents the vast majority of PS3/360/PC users, let alone the vast majority of consumers. Second, of the people who purchased Oblivion, many will have not finished it (making subsequent playthroughs irrelevant), or did finish it but didn't enjoy it, and so forth. What you're left with is a group of people who bought Oblivion, finished Oblivion, and thoroughly enjoyed Oblivion. Even for cheap DLC, this is likely the entirety of the audience which a Publisher has within its reach. All other consumers are basically never, ever going to buy DLC.
Similar to Capcom's SFII strategy, DLC represents another way for companies to increase revenue not by expanding their consumer base, but by getting the dedicated consumers they already have to spend more.
As Charlequin stated, these consumers are usually highly flexible with pricing. That's the whole point: they love the product so much they'll spend a great deal to get it. Therefore, there is very little incentive to drop the price of DLC. In fact, I expect pressure goes in the opposite direction, as companies explore just how much these dedicated few will pay before the demand really does fall off.