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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:

It's impossible to sell more copies of DLC than of the original game DLC's price must be substantially less than the original game's 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.