At this week’s Microsoft Gamefest developers conference, Xbox Live Marketplace group business manager Alvin Gendrano provided a fascinating look at how developers can best use premium downloadable content and the advantages it provides to the industry. Full session summary follows…
PREMIUM DLC: THE STORY SO FAR
“Premium downloadable content [PDLC] is the fastest growing category on the Xbox Live Marketplace today. So fast has it grown, that it constituted more that 50 per cent of all revenues and sales from the Marketplace in the last six months,” said Gendrano, opening with an overview of the PDLC market on the 360 today.
In fact, PDLC is growing faster than the category of the moment, casual games, “because of the many millions of users” on Live. And the Live userbase is making PDLC worth it because Microsoft is the only of the format holders to properly cater to that audience with lots of choice, he added.
“We’ve put in more focus and more efforts and energy in our online experience,” said Gendrano. “We’ve been at it longer and have more learnings than any other console marketplace today”
For Microsoft, DLC started back in 2005. The first downloadable content for Ridge Racer 6 and Kameo. The former offered music downloads and the latter costumes.
By 2006 that had evolved rapidly, to the much-maligned Oblivion horse armour, and GRAW2 maps. “It happened very quickly,” explained Gendrano, adding that despite criticism at the time, the Bethesda-authored Oblivion Horse Armour DLC “sold so well it is on the top 20 pieces of bestselling marketplace content today”.
A year later, the Xbox Live Marketplace already had “90 per cent of all types of PDLC that exist today” and since then has boomed. With 70 per cent of Live members downloading content from a library that consists of over 20,000 items. For games like Rock Band and Guitar Hero, over 3.5m songs are bought a month.
“One of the reasons why the last 12 months have been great form a PDLC standpoint is that we have been learning together,” commented Gendrano.
The most successful genres with DLC, from first to fourth in terms of revenue are currently FPS, music/rhythm, RPG, action/adventures. But ‘that it is not static’: “In mid-2007 RPGs were number one. By the end of 2007 first person shooters shot up. By early 2008 music and rhythm overtook RPGs.”
OBSERVATIONS ON PDLC
Gendrano had four key observations to communicate back to attendees in looking back at the past three years of 360 DLC.
The first was that significant ARPU (additional revenue per unit) was available via PDLC. He said that top 10 titles with PDLC available had each earned an extra extra $18 in revenue; “That’s significant additional revenue potential through DLC that you can unlock”
Plus, it’s common to see PDLC attaching at 25 per cent during its first month of release, he said. “Timing or release is important. So if you have high attach rates during the first month you know you need to release at a time when there is peak usage for the titles.”
Also, Gendrano said, social networking is a key driver for purchases: “If your friends are playing the latest map pack and your clan mates are doing the same chances are you will feel left behind.” The same goes for the use of achievements on single player PDLC – other players will by the content when they see that it can get them more achievement points.
Lastly, he said that “the hardcore gamer is not price-sensitive, in general” – as proven by the fact that there are many items available at over $10 (or 1,000 Microsoft Points) which sold well.
“Pricing your PDLC at 500 points versus 400 points does not change the equation so much,” he said. But that doesn’t mean you can rip them off, Gendrano added: “On the other hand, hardcore games rare quality conscious. They need good value and good quality.”
Some key success stories proved these points, he said. The first, Call of Duty 4, saw over a million downloads of its variety map pack in nine days – that’s $10m top-line revenue in under two weeks. Rock Band, meanwhile, was publicly credited for boosting the bottom line of MTV parent Viacom.
“There is a big and avid base of purchasing users on Xbox Live today,” Gendrano concluded, added that over 20 titles have made over $1m through PDLC – and not all of them were million-selling games, “many sold just over 500,000”.
TIPS & OPPORTUNITIES
Gendrano also outlined three key tips for those looking to take advantage of premium downloadable content on the Xbox 360.
The first was to “make sure you release your PDLC to catch peak unique usage”.
He explained: “That means having your first piece of PDLC to appear in the first four to six weeks after launch. PDLC needs to be part of your plan – it cannot just be an afterthought if you want to succeed in downloadable content.” (See image on the right for an example of the timing of PDLC release and resultant slides.)
Secondly, he said that developers should expect a big hit on launch and a fairly long tail. Using the pictured slide, he demonstrated an example sales pattern, saying “this a good way to factor out what kind of revenue you might be able to make”.
Gendrano’s third piece of advice was to implement in-game marketplaces, which “allow your gamers to be aware of and purchase your PDLC. There are two ways to do that: in-game promotion and an in-game store-front.” Examples Ace Combat 6 featured a splash screen telling you what content was available Rock Band famously has an in-game store.
The former is “very effective” as form of marketing while “Rock Band has an amazing in-game store with album art, track names and album info – but importantly it allows you to preview those songs. The most interesting thing is that it allows players to buy content without leaving the Rock Band experience.”
Premium downloadable content also brings with it some key indirect benefits, Gendrano added – primarily in curtailing the used game market, which he said frustratingly takes money out of developers’ pockets.
“PDLC helps defend against the used games market and helps maintain your games’ prices in the marketplace,” he said. “Everyone is aware of the problems with used games. These are dollars which come out of gamers’ wallets and don’t go back into helping us build better games and tools.”
PDLC, however, increases user engagement: “The longer players play your game the lower the chance there is that they will trade them in.”
There were three key areas for opportunity as the PDLC marketplace develops further Gendrano added.
His first was “True Episodic Gaming”. He said: “Who here has watched 24 or Heroes? Great episodes in TV that keep viewers glued to their screens As we see convergence of interactive gaming and non-interactive forms of entertainment it’s not long until we see true episodic games, either released weekly or monthly. All through PDLC. Think about sports games that could be updated based on the best plays in the previous week.”
MMOs supported by virtual items is also an area ripe for growth on Xbox PDCL, he said, as the console market takes cues from the PC space. “This is popular on PC, especially in Asia, but we’ve not seen it in the console space yet.”
His last suggested opportunity was more creative in-game PDLC stores.
Although Rock Band has done well, “we’re only touching the surface on in-game marketplaces,” he said, pointing out that virtual showrooms for cars and map packs are all viable options.
Overall, he added, that although the PDLC market is booming, “there’s still more innovation to come in this area – innovation that will come from developers.”