I've posted about my distaste of for-pay DLC in the past. I've been thinking about why I hate it so much. I've come up with a simple answer which explains both why I hate it and why it is going to fade away as new business models emerge:
DLC weakens the game.
If two games have the same content, but one of those games has some of that content locked behind a download wall and the other has it included for free, then the one which includes it is going to be a stronger game.
A game with DLC is weaker than the same game which includes all the DLC right from the get-go.
This isn't just paid DLC - it's all DLC. Patches, free DLC - it would always be better to simply have it packaged with the game itself.
Even if it's a free download, it's an additional step and, in a few years, you'll probably shut down your server and the content will simply go away. So the DLCified game is weaker than an identical game with that same content packaged right in.
"But DLC allows the game developers to make more money off their game, which allows them to make more content, or even a whole other game!"
That's business, yeah. Games need to make money. But business models change. I feel very sure that the "freemium" or pay-DLC method is going to die out. Not only because it is weakening the game in an attempt to cash in, but also because the nature of DLC is going to change - which I'll talk about in a moment.
I don't know what the optimal solution is, but if I'm right about the nature of content, it'll be some sort of pay-curation thing which enhances the game rather than limits it.
"DLC that comes out after the game is released is~"
Things like patches and expansions are kind of a gray area. Patches are obviously best to include with the game upon acquisition, but if you're delivering DVDs, you can't reprint them all with each patch. Technical limitations often mean you'll be using DLC to try and fix a weakness in your original game. But the point stands: the game is weaker than if you could package the DLC in it.
Expansion packs are a gray area. I have a feeling their nature will radically change in the next decade. However, once the expansion pack has come out, the original game would still be improved by having the expansion pack bundled with it upon initial purchase. Putting aside the economics of how to get the expansion pack to pay off, the game is weaker without it than if it were already included.
Well, unless the expansion pack sucks.
"There are good kinds of DLC!"
Yes, there are. For example, Oblivion has tens of thousands of mods and content updates available for it, most of which are free. You can download them and radically modify the game to your preference.
Similarly, Spore and some other "massively single-player" games relied on DLC to provide content from a massive, ever-updating library.
DLC can enhance the game. As far as I can tell, there are three kinds of DLC that make sense as game enhancers:
1) DLC which appeals to a niche. For example, a mod which radically changes the game. It could be included in the game and left disabled, but I think it's okay to make it DLC.
2) DLC which is so vast that no player will ever download more than a tiny portion. For example, the billions of costumes and characters for The Sims.
3) DLC which constantly changes and cannot therefore be packaged. For example, the constantly-uploaded Spore creations.
These three kinds of DLC cannot reasonably be packaged with the game, and strengthen the game when treated as DLC.
Can you make money off of them?
Well, sure. Rather than sell a blue outfit for 40 MS points, you could instead sell a game rebalancer where ringouts are impossible and the gravity is half normal.
But if you can stop thinking about selling DLC, there are opportunities to make money by curating the DLC. For example, if you allow players to create and sell content, you can both provide a platform for other players to buy the content and also take a small cut of the sales and also promote ever-updating packages of "editor's favorite" content.
There are tons of opportunities.
I honestly think that more and more games are going to try to leverage their players. It just makes sense. If there are five hundred thousand people playing your game, there are five hundred thousand people giving you their time for free. You can leverage that by harnessing the things they create and using them to entice and enthrall other players.
Because of this, player generated DLC is the future.
I just can't imagine it any other way. Games which harness their players will have an unimaginable edge over games trying to sell "purple shirt 32" for cash.
But games which harness their players won't be the sole proprietor for DLC. DLC will come from the players. Fast. Faster than the devs can even keep up with reading descriptions of it, let alone create. In that kind of environment, trying to charge for individual pieces of developer-created content will be... difficult. Competitive.
DLC won't die out. It'll become so omnipresent that you won't be able to charge for it.