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GameFest: Fighting The Used Games Market With DLC
GameFest: Fighting The Used Games Market With DLC Exclusive
July 23, 2008 | By Christian Nutt, Staff

July 23, 2008 | By Christian Nutt, Staff
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More: Console/PC, Exclusive



Speaking at Microsoft’s GameFest event, the company’s Alvin Gendrano and Chris Novak described how companies can utilize paid downloadable content (PDLC) to compete against the used games market and maintain the prices of their games.

Combating The Used Game Sales Market

Xbox Live Marketplace group program manager Alvin Gendrano, who is managing the service’s PDLC initiatives, began: "I think [used game sales] are a bad issue... by using PDLC we can keep your games being used over a long time. The longer your users play your titles, the less chance they give those titles away to retailers and sell them for used."

Citing an internal study, he argued that fewer discs in the used games market would result in reduced pricing pressures in the long term: “We found out that by the second quarter, games without PDLC had less pricing power than games with PDLC... Games with PDLC were still selling for $59 in [the second quarter of their release lifespans]; those without were selling for $56."

The program manager went on to quote a 2007 report by analyst group DFC Intelligence forecasting that the online console revenue would exceed $13 billion by 2012.

Referring to the convergence of interactive gaming and non-interactive entertainment, he predicted, “It's just a matter of time until we see true episodic games.”

Gendrano turned his attention to virtual item sales, which the same DFC Intelligence study projected would account for 40% of the $13 billion in online console revenue: "Another innovation area I think would be interesting would be MMO games supported by online items. This business is very popular in the PC space, especially in Asia, but we have not seen it in the console space yet."

He commented that publishers and games with PDLC, such as Dead or Alive Xtreme 2 and Rock Band are just barely touching the surface when it comes to in-game marketplaces: “I think there's still more innovation to come in this area."

Providing Compelling PDLC Content

Microsoft Game Studio lead design director Chris Novak explained that PDLC allows the company to “leverage the content we have and use it in a more compelling way.”

He explained his personal evolution with PDLC: “With Project Gotham Racing 2, we shipped two cities... We looked at them, we were happy, they sold quite well. The design team and I looked at it after we shipped - we realized we could do better.”

“People who didn't finish PGR2 already have four cities left on their disc; why do they need to purchase cities from us?,” he continued. “We want DLC that's sexy for everybody. When you look at the DLC, you say, 'That's a fundamentally different experience than I had.'”

The team eventually removed the barriers on PGR2’s race tracks and added simple game rules, which the community appreciated. Novak described it as “a new way to play in the city.”

Moving on to Crackdown, he noted that the design team decided to work on what seemed the most fun to them: “We [took] our cheat tool, polished it up, put a user interface on it, and called it 'keys to the city.'"

Because content creation can be lengthy and expensive, his goal with producing a PDLC pack is not to include as much content as possible, but to pick out the best mix of content types to deliver the most compelling content to the user: “More songs are good for a singing game, but if you want to create content up front, be wary of ‘Oh, we'll just do more content,’ because it can be quite pricey, and it might not capture more users.”

After deciding on what content to include with its Crackdown pack, such as game modes, new achievements, cars, weapons, and a cheat mode, the team cut the pack in half and said, “This half is going to be free, this half is going to be premium.”

He explained: “The free pack had some of the best content... We felt good about that because we wanted to drive people back to it." Novak added that providing compelling free content made the pay content seem good as well with a positive “guilt by association effect.”

Players who purchased the premium content could also share some of that content with their friend. Though the team initially worried that this feature would result in lost sales, they found the try-before-you-buy-strategy successful:

"We had a 4x spike that was a solid wall, and then had the natural trail right when we released the free pack. Users and the press seemed to respond to it quite well. In the end, I think it's still the top selling action-genre PDLC pack."

Questions And Answers

Taking questions from the audience, Novak commented on whether single-player or multiplayer content is more suited for incentivizing PDLC: “I will say in my experience, in what game I was working on, I would certainly tailor my PDLC content 30% around to making what experience they have better, and the rest to something new."

Gendrano added that the company has data suggesting that gamers are purchasing both single-player and multiplayer DLC from Xbox Live Marketplace: "I haven't run into a study [about the ratio] yet... The answer is that there is value. ... If you have a piece of PDLC that has both single and multiplayer content the value is additive, and you can price it together."

On managing developing costs using PDLC, Novak noted that, with the exception of MMO companies, most of the industry looks at PDLC too lightly. He went on to advise that developers have a small team that builds off simultaneously while the main team moves to the next project.

He also commented that the social elements of games released in Asia are very different compared to western titles, at least in regards to consumable PDLC: “I don't think we've seen so much of that in western games. I had 'pay for gas' up on the wall and, it quickly got line-itemed out! No, we're not going to make people in [Project] Gotham [Racing] pay for gas.”


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