Divnich: High profile DLC can hurt lesser retail titles

by Richard Mitchell { Jul 7th 2009 at 12:30AM }

In a column on IndustryGamers, EEDAR analyst Jesse Divnich lays down his case for premium downloadable content and its effect on the retail scene. According to Divnich, whenever a high profile game receives premium DLC, it can actually hurt the sales of lower profile games in the same genre.

He notes that a blockbuster game normally has a blackout period of a few weeks, meaning that when a new game comes out -- he uses Halo 4 as an example -- there's a period before and after its release when gamers are less likely to buy a similar game. Whenever that same game gets DLC, players are once again less liable to purchase a similar game for a certain period before and after the release of the DLC. After all, why would you pick up Call of Duty: The Next One, if you're still playing that fancy new Halo DLC?

The long and short of it, says Divnich, is that DLC has nothing but a negative impact on retail. It's actually a double impact, as DLC both prevents gamers from buying a new game and from selling their current games back to used game retailers like GameStop. According to Divnich, digital sales are going to seriously impact retail sooner than believed.

Tags: analysis, business, dlc, jesse-divnich

Reader Comments (Page 1 of 2)

THE WICKER MAN (BWF) (GT: Dalek Prime) @ Jul 7th 2009 12:34AM

G - Force. No question. ;)

THE WICKER MAN (BWF) (GT: Dalek Prime) @ Jul 7th 2009 12:35AM

Gears doesn't promise "EXPERIENCE AWESOME!"

Ballistic H @ Jul 7th 2009 12:45AM

Well, the G-Force game plays exactly like Gears. Honestly, the G-Force game looks like the best movie-based game out there. Go check the gameplay videos.

THE WICKER MAN (BWF) (GT: Dalek Prime) @ Jul 7th 2009 12:57AM

O M G. I just watched the footage. GOTY '09 CONFIRMED.

mr nimblewick @ Jul 7th 2009 1:03AM

Looked more like Metal Gear Solid meets Sonic the Hedgehog meets Tenacious D-style awesome-sauce.

The Dark Wayne @ Jul 7th 2009 1:18AM

did you play Gears? Because i just watched the videos for G Force, and i dont remember any platforming in Gears, i shouldnt need to be this specific either but it also had no cover system

Sly @ Jul 7th 2009 1:38AM

joke
_____

wayne's head

whylekat @ Jul 7th 2009 2:11AM

It's ok Wayne... I don't get it either... MAybe it's just not funny.

Sly @ Jul 7th 2009 2:16AM

it's all sarcasm. sometimes sarcasm is hard to detect on the internet.

The Dark Wayne @ Jul 7th 2009 2:44AM

the guy said it looks great again down there, and watching videos it doesnt look like your usual kiddie game crap, just not like Gears

The Dark Wayne @ Jul 7th 2009 2:45AM

also, sarcasm is perfectly easy to find in novels, it's just different on the internet because most people suck at sarcasm

Blank-Mage @ Jul 7th 2009 2:50PM

Yeah, right.

vdeogmer @ Jul 22nd 2009 5:45PM

Blank Mage, you win.

Bradwart @ Jul 7th 2009 12:36AM

DLC. Destroying your Local Capitalist. One game at a time.

The Dark Wayne @ Jul 7th 2009 2:44AM

DLC, moving capitalism from here to over here, but still pretty much the same

tmacairjordan87 @ Jul 7th 2009 12:36AM

So when I buy Fallout 3 DLC I'm in theory hurting the sales of let's say...Last Remnant?

I think I'm ok with that.

Bradwart @ Jul 7th 2009 12:41AM

It's both true and false. Games I didn't enjoy enough to buy DLC would be sold eventually. If I'm planning to buy it's DLC, I wouldn't sell it anyway.
Old games hurt retail sales too, you know. For example, I'm so engrossed in my playthrough of FFVII that i'm not buying ANYTHING at the moment.

Pensier @ Jul 7th 2009 12:39AM

Who cares if you hurt the sales of Gamestop? I've also never ran into an experience where DLC has stopped me from buying a new retail game, maybe a digital distribution game like Megaman 9 or such.

The Dark Wayne @ Jul 7th 2009 1:14AM

it's not just gamestop, it's the developer's too

Dougp @ Jul 7th 2009 12:42AM

I didn't personally get any hands on time with it at E3, but I watched some game play of G-Force. I hate to say it but the 3D in it is truly impressive!

Ballistic H @ Jul 7th 2009 12:47AM

Honestly, looks really good.

Longhorn of Myon [PSN: MariusElijah] @ Jul 7th 2009 12:47AM

Get out

Bradwart @ Jul 7th 2009 12:44AM

Stereoscopic 3D for GT5, CoD4 beats a movie (exploitation) game.

Ashkental @ Jul 7th 2009 12:58AM

Cry MOAR

mr nimblewick @ Jul 7th 2009 12:59AM

I wonder what Gamestop could do to get in on the digital distribution bandwagon. Maybe they would be better off just scamming all the money they can now and closing down in a few years.

RIP Air McNair PSN: johnnynumber5 @ Jul 7th 2009 1:30AM

They have already started to toy with selling DLC vouchers (GTA IV, Patapon, Fallout 3 etc etc) at retail. Thats really the only way I could them staying relevant when digital distribution becomes the only way to buy content.

The Gamestop head honcho said some time last year that even if digital distribution removes the middleman they will have made so much money and will have such a dominant market share it won't matter.

UNC_Samurai @ Jul 7th 2009 6:59AM

Gamestop is already trying to get into the market. The local store I used to run now sells cards, much like those for Xbox Live or Wii Points. These cards have redeemable codes for the content. Right now they're experimenting with Patapon 2 and the GTA4 DLC. It's sad, too, because the GTA DLC box clearly states no less than 27 times, "You Must Have GTA 4 to play" "This is not a game by itself". Then some mouth-breathing kid comes up and wants to buy it and can't understand it's DLC-only.

I'm sure that Gamestop could pick up a portion of the digital distribution customer base this way, as a significant advantage for some gamers is the ability (like with Wow Time Cards) to pay cash instead of needing a credit card.

Storm Eagle::The Blood Edge @ Jul 7th 2009 9:57AM

Except they make next to nothing on those cards. And you can get those cards just about anywhere. They're put out by the companies so people without an online connection can still take advantage of the "DLC".

Mr Khan @ Jul 7th 2009 11:38AM

Digital Distribution's a good 8 years or so off from becoming relevant enough to destroy them, so they'll have a long time to think up a replacement strategy.

The key, of course, is the recalcitrance of the big telco companies in America and Europe. They'll keep digital distribution down for quite some time

x Shadow @ Jul 7th 2009 2:23PM

They sell games of Gamestop.com, downloadable ones.

MrSpaceCowboy @ Jul 7th 2009 1:19AM

So good Rock Band DLC discourages me from buying another GH retail title?

Sounds about right actually.

burgerbat @ Jul 7th 2009 2:45AM

Just about to say the same. Haven't bought a GH game since RB destroys them weekly.

RIP Air McNair PSN: johnnynumber5 @ Jul 7th 2009 1:24AM

As we inch closer and closer towards digital distribution there will be little reason for brick and mortar shops to carry and sell gaming hardware and peripherals. Why sell the hardware if you can't make the money from the software?

As content goes all digital (as they will eventually - when not if) the hardware manufacturers will either have to make special deals and concessions or sell the product directly to the consumer through their own stores or an intermediary.

I still have reservations about publishers not selling their media or a physical storage medium. I know it's going to happen but I'm not sure it's something I want as my only option.

The Dark Wayne @ Jul 7th 2009 1:34AM

I think the when is going to be a lot farther than most people expect. I know stuff like Steam and whatever are going strong, but you have to realize, the average consumer is an idiot who will walk into Gamestop and ask if he can play xbox 360 games on his original xbox, i just cant see digital distribution becoming so prominent that stores are almost gone for at least 10 years if not much more

Sly @ Jul 7th 2009 1:41AM

yeah, like wayne said. the hardcores like most of us and average gamers will probably accept digital distribution but the casual market will keep disc based games alive for a while. and that's not a bad thing.

Hydrophobicfish @ Jul 7th 2009 1:49AM

You say "If we can't sell the software, why sell the hardware?"

Well, there's some stuff about that.
As far as new game sales go, there's very little money to be made in that (matter of fact, I think I remember reading some heresy that said Gamestop actually loses money when you buy new. They probably just keep selling new games as a way to draw people in).

Also, just because you're not selling the stuff that the hardware uses, doesn't mean you shouldn't sell the original hardware. Look at TV's, plenty of places sell just TV's, no movie players, no gaming systems, no other nick-nacks.

The Dark Wayne @ Jul 7th 2009 2:47AM

i highly doubt that hydro, if new games didnt make any profit for anyone then why would places like target and wal mart and best buy only sell new ones?

sam @ Jul 7th 2009 6:23AM

they won't have to 'make special deals' - they'll just have to stop getting the special deal they get right now, which is that hardware (except accessories) is sold with virtually no markup.

shops sell TVs and radios (despite having no way of making money from the programmes) because they make a profit on them. they'll do the same for game consoles.

which means future game consoles will have to be relatively slightly lower-powered (just a bit more like Wii, just a bit less like PS3) so that they can be profitably sold for a lower price to stores, allowing a little markup. [The alternative would be to increase prices, but that doesn't seem feasible.]

samfish (uses the Joystiq Comment-Kill filter!) @ Jul 7th 2009 8:55AM

I don't know about Gamestop, and I wouldn't be surprised if Wal-Mart gets some sort of sweetheart deal on bulk pricing, but for a lot of places like Best Buy, the reason they sell games, movies and music is primarily to get the customer into the store. The profit margin on those items are razor thin.
For a place like Best Buy, the real bread 'n' butter comes from selling electronics like TVs or computers and stuff.

Pensier @ Jul 7th 2009 1:32AM

Well, I've never personally had an experience where DLC has stopped me from purchasing a new game. Infact, I usually buy in genre. Like if I go buy an FPS, I buy 3 instead of one. Can you say that a $5-10 DLC has stopped you from buying a new game?
On the plus side, the lack of used games is great for developers.

Emperor_Den_Den @ Jul 7th 2009 7:53AM

man I usually lean into buying games if I know dlc is comming out just because it enhances the life of the game. Can't say it stops me from buying new title becaus being a gamer is an expensive hobby.

Pensier @ Jul 7th 2009 7:56AM

This was actually suppose to go under my orignal post to dark wayne, but it messed up.
Yeah, I can agree if DLC is around the corner I'm a bit inclined to buying the game.

Ryan Hamilton @ Jul 7th 2009 1:33AM

Oh no, you mean we're less likely to buy poorly developed movie tie-in games. That are strictly made for the purpose of making BIG money for a greedy movie studio company? How sad. I mean how appropriate.

Sly @ Jul 7th 2009 1:44AM

i guess it's kind of true. this november, i'll be buying modern warfare 2 without a doubt (damn you activision for owning the call of duty franchise), and if i remember correctly, MAG is coming out at the same time. i probably will pass on MAG for a while after that. and once new maps come out, they will probably hold me over for even longer, so a title that i might have purchased would be left behind. good to see this analyst doesn't have his head up his ass and can say things that actually make sense.

whylekat @ Jul 7th 2009 2:16AM

I agree with an earlier post.. DLC would in no way stop me from buying a new title.. Especially considering a huge majority of DLC I find over priced. I'd rather wait for it to be a deal of the week (360). But if anything I might not buy a new downloadable title due to playing a DLC item, but I'd still buy a new disc IP for sure.