Gamasutra: The Art & Business of Making Gamesspacer
View All     RSS
July 25, 2014
arrowPress Releases
July 25, 2014
PR Newswire
View All
View All     Submit Event





If you enjoy reading this site, you might also want to check out these UBM Tech sites:


 
Freeloadable content - an alternative to paid DLC
by Lars Doucet on 07/17/12 10:33:00 am   Expert Blogs   Featured Blogs

The following blog post, unless otherwise noted, was written by a member of Gamasutra’s community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

Cross-posted on www.fortressofdoors.com, my personal blog.

A lot of developers/publishers sell expansion packs and other discrete add-ons to their games as "downloadable content," or "paid DLC."  This model has problems, for both players and developers.  The problems for players have been covered exhaustively, so let's leave that aside for the moment. 


Here's my perspective as a developer.


Let's say that the upcoming version 1.0 launch of our game Defender's Quest goes well, and some time down the line we release an expansion pack.  Will it earn enough money to justify working on it? 

There are a couple of facts that influence this decision:

  1. It's impossible to sell more copies of DLC than of the original game
  2. DLC's price must be substantially less than the original game's
  3. Many people in your audience will never experience the DLC content*


*Only issues 1 and 2 are relevant from a financial perspective, but I'm a softie, so number 3 is important to me for other reasons.  One of the biggest reasons I make games is so that as many people can enjoy them as possible. As long as I make enough money to keep doing my job, I don't like restricting and fragmenting the experience, which is exactly what paid DLC does.  Free2Play is certainly an alternative, but I want to leave that for another article, this one is mostly about fixing DLC from within. 


So let's assume 25% of our audience buys our DLC (an optimistic estimate), and we sell it for 25% of the base game's price.  This gives us 6.25% of our original gross revenue.  Not bad - and if we spent less than 6.25% of the money, time, and effort it took to make the original game, we just got a raise! 

The problem is, it's all downhill from there.


First, it's a law of human nature that every purchasing decision has "friction," so fewer people will buy each subsequent DLC pack than the one before.  Second, it's a law of human business that day one is the most profitable day for DLC, which is why so many AAA games these days push day-one DLC.  The frightening corollary to this second law is that each day you wait after launch to release DLC means fewer sales.  Combine these pressures of time and friction, and you're looking at ever-dwindling revenue.  

What this means is that your first expansion pack will almost certainly be your best seller, and thus paid DLC can't sustain prolonged development.  Is there a way to fix this model without abandoning it for subscriptions or free-to-play? 


I think there is.

I call it "Freeloadable Content," or FreeLC.

 

How FreeLC Works

First, let's assume the DLC I want to create must make $5,000 to justify working on it.  So, with paid DLC, if the base game cost $7, we might sell the DLC for $2 and hope for at least 2,500 sales.  That's the traditional model.


Under the FreeLC model, we instead start a small Kickstarter project to raise the $5,000 we would normally expect to make through sales.  Now that we've covered this cost, we release the expansion as a free update to everyone who has already purchased the base game, even if they didn't contribute to the Kickstarter.  Hence, freeloadable content. 


Implications

Although the idea of FreeLC is quite simple, it has some interesting and somewhat counter-intuitive consequences. 

For one, FreeLC can be less adversarial than paid DLC.  Even if a player legitimately enjoys Mass Effect 3 and its $20 day-one expansion, it dampens her enjoyment when she has to wonder whether EA is just trying to find a sneaky way to raise the game's price to $80 (EA's Peter Moore has essentially admitted to this).


So that's one benefit.  But besides not having to nickel-and-dime, or more accurately, ten-and-twenty-dollar our players, we can let all of them have the extra content and still get paid to develop it.  We don't have to fragment the game's shared cultural experience into high- and low-paying tiers.


Furthermore, there's one final benefit that deserves special attention:

We just increased the value of the original game!


Under the paid DLC model, the base game stays the same, while any additional value the developer creates is locked up in discrete expansion packs, each of which has additional purchasing friction.  With FreeLC, each expansion makes the original game better, and since we've already made our "DLC money," we're free to sell the whole collection for the same original price. 

I'll illustrate this effect with an example.

 First, let's assume for the sake of argument that you can actually reduce the value of enjoying a game to some number.  So, say the base game is worth 10 units of fun, or "funits," (whatever those are).  Then, we make a small expansion, worth 2 funits.  Together, that's an experience worth 12 funits.  All together, we eventually release 1 complete game worth 10 funits and 5 DLC packs worth 2 funits each.

 

Then, we load all our merchandise into our digital wheelbarrow, and cart it off to the internet for sale. 

Here's how it looks under paid DLC:

  Game: 10 funits,  $10
  DLC:  2 funits,  $2
  DLC:  2 funits,  $2
  DLC:  2 funits,  $2
  DLC:  2 funits,  $2
  DLC:  2 funits,  $2

 
And here's how it looks under FreeLC:

Game+DLC: 20 funits, $10


Which would you rather buy? 

 

The second option provides the exact same content for half the price.  We've already recouped the cost that we would normally have to make through DLC sales, so we don't have to charge the extra $10.  

Even better, there's one, simple low-friction purchasing decision - "Do you want to buy everything for one low price?"  Sounds like a good deal to me!  That's a much easier sell than, "Do you want to buy this? And how about a little more for this? And this? And this?"

Now, let's look at all the potential problems with the FreeLC model and see if we can address them.


1) Freeloaders

James actually has one of these


Since everyone who's already purchased the game gets the FreeLC, there's less incentive to support the Kickstarter drive, and just wait to get the content for free. This is the biggest risk I can think of (though we certainly have nothing to lose by just trying it and seeing what happens).  

First of all, you have to buy the original game to get the FreeLC, so it's not as big a concern as if it was just free for the general public.  That said, here's some possible solutions to the problem:
 

  • Exclusive pledger rewards
    We create special stuff for high-dollar pledgers, such as exclusive bonuses and vanity items, putting their likeness into the game, etc. The only way you can get these things is by supporting the Kickstarter drive, so people still have an incentive to contribute besides just getting the FreeLC.


  • Sell the basic game
    The lowest pledge level lets you buy the original game at a reduced price, so the Kickstarter drive doubles as a kind of sale.  If you already have the game, you can gift this copy to a friend.  If you don't have the game yet, now's your chance to buy in at a reduced price.  Not only do you get something right now, you've now bought into all current and future FreeLC.


  • Count on goodwill?
    Perhaps this crazy idea will drive people to support it out of the sheer goodness of their hearts.  I wouldn't count on this alone, but it's a real thing that happens, and the amount of resentment players have for DLC suggests many would welcome an alternative that gives them more respect.

 

2) Lost "potential" sales


The next concern is that by giving away the updates for free, you're losing sales.  "Never leave money on the table," as the saying goes. 

First of all, if the Kickstarter drive succeeds, it doesn't really matter if you "lose" sales because the money you would have gotten through DLC sales is already in the bank.  Everything after that is just gravy. 


Second, and as I've said above, people now have more
 incentive to purchase the original game, which sells for a higher price than a DLC pack and can reach a larger potential audience since it has the lowest possible purchasing friction. 


Third, although it's impossible to know the precise number of DLC sales you'd have made otherwise (and thus ask for too little in the Kickstarter), you do have enough information to set a reasonably accurate upper bound.  DLC requires the original game to work, so you simply won't sell more copies than you did of the original game.  Furthermore, in the articles I linked above, we saw that AAA titles with huge marketing budgets like Mass Effect 3 had a 40% attach rate for day-one DLC (again, the best day for DLC sales), so it's safe to assume that we mere mortals would get substantially less than that.    


Finally, the FreeLC model opens up an additional revenue stream - dedicated players with deep pockets.  Free-To-Play developers call these "whales," but under the FreeLC model, I'd call them "patrons."  These players are the game's biggest supporters and are often looking for ways to spend more money.  Rather than just getting their money, this method includes them as pillars of the game's community.


3) (Insert complaint about Kickstarter)



The next issue is that of Kickstarter and crowdfunding itself.  

Many people have raised concerns about pie-in-the-sky Kickstarter campaigns for games that promise the moon and ask for tens or hundreds of thousands of dollars in funding, which then take years to materialize, if ever.  Most of these concerns don't apply to FreeLC. 
 

First of all, if you're a developer kickstarting FreeLC, you've already made your base game and established your track record. 

Second, you already have a basic reward that you can deliver to pledgers right away - a discounted copy of the original game, which entitles them to all current and future FreeLC.  

Third, since it's just an expansion pack and not a full-fledged game, even a relatively large and expensive project can ask for a modest sum of money and still cover the cost of development.  

Fourth, developing an expansion pack is much less risky than creating a game from scratch, and it takes a lot less time to boot. 


This should result in an attractive Kickstarter campaign that's easy to fund without making outlandish promises.


Future Work

Let me emphasize that the entire FreeLC model I've just laid out is a hypothesis.  I'm not sure if anyone's actually tried this before, and I don't know whether it will actually work in practice any better than paid DLC.  These are the effects and implications I can foresee, but nothing beats actually trying the thing out. 


So...when are we coming out with FreeLC for Defender's Quest?


Right now, we're still working on our big free update to Defender's Quest, version 1.0, followed by a release on all the big digital download stores that will accept us.  This should happen in a month or so if everything goes according to plan.  If I had been smart, I would have thought of this FreeLC idea back in February and used it to fund this huge update, but our financials are in reasonable shape and we should still be able to squeak by, and hopefully new sales will give the game a future.


I'm not sure what the future holds for us, but I can say for a fact that if and when we release an expansion pack for a game, it will be FreeLC.


This should result in an attractive Kickstarter campaign that's easy to fund without making outlandish promises.


Further Reading

If you're interested in my other musings on games and economics, try my Piracy and the Four Currencies series.


Related Jobs

Xaviant
Xaviant — Cumming, Georgia, United States
[07.25.14]

Lead Character Artist
Activision Publishing
Activision Publishing — Santa Monica, California, United States
[07.25.14]

Senior Online Programmer - Central Tech Online
Activision Publishing
Activision Publishing — Santa Monica, California, United States
[07.25.14]

Online Programmer - Central Tech Online
Raven Software / Activision
Raven Software / Activision — Santa Monica, California, United States
[07.25.14]

Technical Director - Central Tech Online






Comments


E Zachary Knight
profile image
First, let me say that I love that you used a Mimi & Eunice comic in this article. I am a huge fan and acquaintance of Nina Paley.

Second, I like this idea. I think it could work very well if you have a dedicated fan base who want to see more content for the game and only need a way to ensure that happens. I also think that it could be a way to get a higher rate of return on users paying to get the DLC. Sure they may not pay as much (instead of paying $2 that they normally would pay under a DLC model, they instead pay $1) but more of them will pay.

It also provides a better way for people to reward the value of your work. Some people may not value your work at $10, but if they get a free copy of the game at $5, you get them as a lifelong customer. (harkening back to your four currency model). Then if they decide that the game is actually worth more to them than $5 or $10 they will pay more in the next round of crowdfunding.

Thanks for the great thoughts on this.

Lars Doucet
profile image
I'm a fan of Nina's as well :D

Hopefully someone will try this idea sometime soon so we can start seeing how it works in practice. I'd lead the charge, but I've already promised to release a regular free update to Defender's Quest, so I have to do that first.

Afterwards, we might try the FreeLC model for further development, so it would be interesting to compare the two experiences (though not quite apples-to-apples).

Bart Stewart
profile image
I agree -- nice creative thinking.

The one question that occurs to me is very speculative, and concerns the timing of the base game purchase and thus the likely income.

In the paid DLC model, the cost of waiting to buy the base game plus all DLC goes up as one large purchase would be perceived as more expensive than several smaller payments. (Waiting for price drops or a reduced-cost GOTY edition would work against that, but as you point out, longer waits means fewer sales.)

The Freeloadable approach, by doing away with the general consumer cost of DLC, would appear to also remove most of the economic reason not to wait to buy the base game until all the DLC has been created.

I'm not sure whether that would result in lost sales, lost profit due to people being more likely to wait for a price drop + all DLC, merely a minor shift in sales from Day One to further down the long tail, or if I'm reading this completely wrong and Freeloadability wouldn't cause any change in purchasing scheduling at all....

Also, please let us know when you've derived a generally acceptable definition for the "funit" measure. Finally -- a replacement for Metacritic scores! ;)

Vitor Menezes
profile image
This model seems to actually offer a small deterrent to the problem of people simply waiting for a GOTY edition, and that's that players get all future DLC by simply buying the base game or purchasing some FreeLC (and thereby obtaining the base game).
Typically, people wait for GOTY editions because, prior to the advent of a GOTY edition, there's a chance they might be asked to purchase additional DLC in the future they have interest in. In other words, they exchange enjoyment now plus money and some enjoyment later for less money and all the enjoyment later.
With this model, though, this exchange simply doesn't exist; if the game looks interesting now, players lose nothing by choosing to enjoy it now. There is no additional cost between "enjoy now" and "enjoy this and some more later," unlike with paid DLC.

I really like this idea, especially since it has the potential to actually draw in new players with additional content, and perhaps even to attract people who passed up the base game but find the game with the new content worthwhile, at least more easily than paid DLC would. It's possible that an effect like that (depending on the extra content, of course) might compensate the forgone potential gains of paid DLC.

Looking forward to seeing how this works out!

Jacob Pederson
profile image
Hidden Path Entertainment is doing something very similar to this for Defense Grid 2, except instead of just freeLC, they are making it a possibility for a full sequel, using their first game as a give-away. Seems very viable to me, especially since their fanbase is passionate about seeing a level editor for the game.

http://www.kickstarter.com/projects/hiddenpath/defense-grid-2

Axel Cholewa
profile image
The DG2 campaign looks really interesting! I agree, it looks a bit like a precursor of the FreeLC idea. A fantastic idea in this campaign is that they'll create new content for DG even if the goal of 1 M$ is not reached.

James Coote
profile image
I really like this idea, and have been thinking about doing a similar thing myself.

I suspect that a game where developers actively put out new content, and engage with the players by involving them in the process would probably grow the number of base downloads in the process

Kenneth Blaney
profile image
I can't help but feel that this could tie into your previous articles about the 4 currencies with relative ease. Maybe Funits (Few-nits? Fun-its?) is a 5th currency? It basically works as a negative value in the same way that morality is in terms of piracy.

Chris Hendricks
profile image
That's interesting, actually. When reading it, I had concern about the "Sell the Basic Game" part in the freeloader section, but it actually could work.

Let's say your original game is $30, and the lowest pledge level on your Kickstarter is $5. If, at that lowest pledge level, you lower your game's price to $15 for them, then new players can get into your game for cheaper ($20 instead of $30), and you've actually given people who've bought the game an incentive to buy the game TWICE.

Of course, there's the issue that, if people know that's coming, that they don't buy the game in the first place expecting it to be discounted... but that's kinda the case right now in many platforms anyway.

Jason Wilson
profile image
I like the concept but one issue you might run into with it being on Kickstarter is that the minimum pledge amount is always $15. If you're estimating the value of $2 per user for the content it may be a hard sell for someone to put in a minimum of $15 to fund it. It also makes it hard to give away discounted games if they are priced less than that $15 mark. This would make it important to really appeal to the more generous members of your fan base.

I still like the concept and I've debated doing something similar myself but you would have to make sure backers feel they are getting their money's worth.

E Zachary Knight
profile image
Where did you get the minimum of $15? Kickstarter has a hard set minimum of $1 to pledge. Whether that pledge results in a reward or not depends on the campaign, but I have seen pledge tiers as low as $1.

Jason Wilson
profile image
I could've swore I had seen that hard limit some where, but I may have been mistaken. If so, than I guess my point is invalid.

k s
profile image
First I love that word "funits", very cleaver and amusing, second I really like this idea of FreeLC, treating people as fans and not suckers is always a better business practice.


none
 
Comment: