2008 was a record-breaking year for video game sales. Thanks to a 20% growth in worldwide sales, for the first time video game sales exceeded worldwide DVD and Blu-Ray sales revenue. However, as the industry moves into 2009, the economy threatens a business model that relies on a large initial investment followed by crossed fingers. This year may be different.
In an effort to minimize risk, there is a clear trend toward downloadable content (DLC). With the DLC model, a publisher releases additional content for flagship titles after they have succeeded in the marketplace. The content can vary in price from free to about fifteen dollars, and vary in substance from an additional item to hours of content. Many of the top titles of 2008 have released (or are planning to release) additional hours of content via DLC. Among these titles are: Fable II, Fallout 3, Left 4 Dead, and GTA IV. The Guitar Hero and Rock Band franchises have created an entire industry out of their a la carte DLC song market. It is quite conceivable that some of the bestselling titles for Q1 of 2009 will be DLC add-on packs for the hits of 2008.
This trend presents an interesting opportunity for marketers. Traditionally, static in-game advertising offers significant creative possibility, but requires an extremely long, mercurial development cycle, and high costs. That is a big risk to take on unproven content. There have been a number of cases where marketers have spent time and money on integration into a game that ultimately flopped. As the industry moves toward a more conservative DLC model, it may revive some of the static in-game marketing possibilities. A brand can now execute a static campaign within additional content for games that have already succeeded in the marketplace.
There are also huge opportunities in the micro-transaction environment for DLC. While most of the longer form content is specific to the Xbox 360, Sony has some strong DLC offerings for Home and LittleBigPlanet revolving around a large number of small, inexpensive content pieces such as costumes or furniture. With micro-transactions, there is both the opportunity for sponsorship, as well as virtual sales. For example, in Sony’s Home, both clothier Diesel and furniture company Linge Roset have virtual storefronts. In the first three weeks of Home’s release, 3.4 million users visited the virtual space and bought over $1 million in virtual goods.
The DLC model is too efficient to be ignored, and will become established as a standard practice as more and more consoles are connected. Marketers and publishers need to be on the cutting edge, creating the partnerships and establishing learnings that will deliver a competitive edge as these practices become the norm.