If you've ever wondered by major game publishers seem so hung up on post-release downloadable content , consider this your answer: Electronic Arts hopes that revenues from DLC will reach $1 billion this year. That's right, one billion dollars.
The number came up in a recent Bloomberg report that was actually focused on Madden NFL 15, which was released in North America yesterday. An EA rep said the game, which isn't available on the PC, is expected to generate more than $350 million in revenue for the company through both retail sales and DLC.
Videogame sales at retail don't actually have very good profit margins—that's why GameStop has always been so focused on preowned games, extra warranties and accessories—but it's a different matter entirely when it comes to DLC. Of that $350 million in Madden revenue, $300 million is predicted to come from game sales and $50 million from DLC. But the DLC is particularly important because, as Longbow Research LLC Analyst James Hardiman put it, "The margins on Madden Ultimate Team are through the roof."
That's why the prediction that DLC could reach $1 billion this year is so significant: It represents a growing revenue stream that's far more profitable than conventional game sales. It's also an indication of just how important DLC has become to game publishers; as GamesIndustry pointed out, EA's total digital revenues broke the $1 billion mark in FY2012, whereas this prediction relates solely to extra content. Something to keep in mind the next time you're wondering why Dragon Age: Inquisition is shipping with a loot-focused multiplayer module .
