• by Shankar Gupta , May 25, 2007

When I was a kid, once you bought a game, your transaction with the publisher was pretty much over. No matter how great the game was, once it was over, that was it -- you could play it again, or get a new one. Nowadays, with the advent of widespread broadband-connected consoles in the current generation of video gaming, downloadable content is key. Even if it's a new color scheme for your character or a few new multiplayer maps, a game ain't over till you've spent a some cash on the Xbox Live Marketplace to extend its life a bit.

And on that note, two distinct schools of thought are emerging on business models for this downloadable content. The prevailing model, currently, is espoused by giants like Electronic Arts, Microsoft, Bethesda Software, and involves charging players for everything. Cheat codes? Map packs? New costumes? New characters? New missions? Hope you've got a lot of Microsoft Points.

The second school of thought was encapsulated by Valve, a successful development house, in an interview with Eurogamer.net. "You buy the product, you get the content," designer Robin Walker told Eurogamer. "We make more money because more people buy it, not because we try and nickel-and-dime the same customers."

Valve knows a thing or two about downloadable content. One of its biggest hits, "Counterstrike," was popularized by the host of downloadable add-ons designed professionally and by players. In fact, the game itself began as a player-created add-on to Valve's first mega-hit, "Half Life."

Both business models are viable -- extra content makes an excellent revenue stream for developers, of course, and with steadily rising development costs, more cash is, of course, better. But if Valve's theory of downloadable content takes off, the Xbox Live Marketplace model could be in serious trouble. After all, nobody's interested in paying for something that's given away elsewhere for free.