It is that time of year to create my "secret Santa" gift lists. My usual gift for Xmas is either a book or a game but this year buying me a game is actually a problem.
The reason it is a problem is Steam and downloadable content (DLC). Bioshock, Orange Box, Call of Duty 4... For the first time ever, I am purchasing most of my games as DLC and not at retail. In fact, the only games I want at retail are console games and that is only because consoles dont really do DLC yet.
DLC is clearly a winner for consumers like myself but it is not loved by everyone and it represents a big change for the industry.
the DLC game
I am told that most video game sales are about immediate gratification. Consumers either pre-order or pick up a game on their way home from work. DLC provides that immediacy and it also allows one to play games without a CD (or annoying copy protection software).
The subtle cost for DLC is that it essentially eliminates the used game market. That is a big change for consumers (you cannot sell or give away your old games anymore) but it is an even bigger change for retailers.
While there are a number of parties that would like to eliminate used video games because it means more money for them, it turns out that the world's largest game retailer, GameStop, allegedly makes all of their profit from selling used games. DLC is a huge threat to their business and thus they are fighting it tooth and nail. If you have wondered why DLC has been so slow to develop on consoles, now you know why. There are some interesting stories out there about Gamestop punishing publishers for putting out DLC instead of retail.
It will be interesting to see how this works itself out.
On one hand, DLC means no software piracy which is a boon for game developers and publishers and some retailers who will get more money. On the other hand, it means no secondary used market; since gamers cannot sell their old games (and recoup part of their cost) they will actually be paying more for games (retail cost vs retail cost - used revenue).
Will console game companies (Sony, Microsoft, Nintendo) ever be willing to challenge retailers and provide a true DLC option on consoles? I certainly hope so. For now I will enjoy my time on Steam and the time I save by not having to visit the sad video game isles of a Big Box Retailer.
