Downloadable Content (DLC) is now being used to combat both piracy and the re-sale market. I'm only half interested in the anti-piracy tactic, but one can understand it's use, especially on the PC. People will talk about how piracy on the PC would end if only games were produced people really valued and wanted to play, etc. I don't hold to this argument. I believe it's basically true, but not to the extent of having a significant effect. Anecdotal evidence suggests to me there is a core of PC gamers who just don't buy games, despite forming communities around them and getting literally years worth of entertainment from them (yet they'll spend five times that much on one night out). A number of year ago our guild in World of Warcraft had a handful of ingrates who had formed communities around a range of games they'd pirated. Paying for a game on a subscription wasn't new for them, paying for them at all was new. In 2009, Call of Duty 4 was downloaded 4.1 million times for the PC despite selling an estimated 200,000 to 300,000 (it sold 6 million on consoles). Okay, each of those 4.1 million downloads isn't necessarily a sale or represents a person who went on to play it in any meaningful way but, come on, 4.1 million? I think DLC as an incentive to purchase is fighting a losing battle on the PC market.

This brings me to the much more interesting second use of DLC: the battle against the re-sale market on consoles. The re-sale market is a thorny one. It's thorny because I can't see myself supporting some sort of legal ruling that disallows it. You've bought the game, it's yours to do what you like with, and if there is a market for it second hand, so be it. You don't see many other products trying to secure revenue from re-sale? It tends to be creative industries like video games and film. Do car makers invalidate warranties on re-sale? Not sure. At the same time, there is a part of me that recognised the pain of the development studios and even the publisher to a degree. They put in the creative effort. They put in the money and funding. They spend a fortune on marketing to shift the demand curve and make demand more price inelastic. Yet they receive nothing from every penny spent in the re-sale market. The store gets it. It's a monopoly for only that portion of the sector's value chain for relatively little effort which doesn't return in anyway to fund bigger, better or more games. Technically it's not a free rider issues, but it shares some of the elements.

While economically sound, it is pretty harsh, and it could be argued destructive to the sector as a whole.

The use of DLC to disrupt the re-sale market is fascinating. Initially, they've tried to do this with special editions, and they still represent a good tactics as they undoubtedly represent a higher return per box than the standard edition. If they didn't at least have an equal return I'd question their use. The trouble is, a potential special edition customer is highly likely to be first hand purchaser anyway. Launch DLC is clever, as it means only those buying the game first hand, no matter when, will get the launch DLC. It's an incentive to buy first hand, rather than on re-sale copy. Even more importantly, it's not time limited, so if you want to wait until the game is half-price that's fine. Sound tactic.

Electronic Arts and Bioware have raised the tactic to a new level with Mass Effect 2, which I think is a stroke of genius. Not only is there launch DLC, there is also a launch code for access to the Cerebus Network. The Cerebus Network is the delivery mechanism for future DLC. The launch DLC is access to all DLC. If you buy the game on re-sale and you want access to the Cerebus Network then the access code is itself DLC and it's going to cost you 15 USD (or the UK equivalent). In this way, Electronic Arts and Bioware get some money from the re-sale product if that person is interested in DLC (possibly for each re-sale). It's a great strategy, produce DLC to minimise the number of people putting the game on the re-sale market and also charge for access to the DLC for anyone not buying first hand.

Is this a bad thing? Again, it's hard to say. Since I can't bring myself to support a legal ruling to stop the re-sale market, I find myself liking the incentive approach. The purchaser has a choice. It may not be a choice he likes, but that's hard luck. I'm in a unique position really, as apart from using the re-sale market to get DS games for a 'play value' of a few pounds, I don't touch the re-sale market. I don't overly understand the appeal of PS3 and 360 games selling on re-sale for 5 GBP less than new. I have contributed to the re-sale market by offloading games gathering dust on my shelf.

I like the strategy, I suspect we'll see more of it. It'll backfire though if Bioware doesn't pump out some good DLC over the lifetime of the game.