A Global Perspective on DLC

The other day, PushDustin posted some translations of the Smash Bros thread on Japanese site 2ch, which was linked to reddit.  As the thread went on, the discussion cropped up on why it would be an issue to include some characters that were unknown in Japan when at the same time characters like Marth and Roy were completely unknown in the west when they came over in Super Smash Brothers Melee.  So it begs the question:

How can Marth and other Fire Emblems characters be added while Western characters can’t?

To understand this, we need to look at the nature of how the DLC and the main game sells.  Nintendo is a corporation and its ultimate goal is to make a profit. Both the full game and the DLC produce income in the same manner: the customer pays the company and they get the content in return. However, they are still very different in how how the content entices the consumer.  To illustrate, let’s assume that the only reason anyone buys anything related to Smash is for the characters. In the full game, you’re buying the whole roster of characters. This includes favorites like Little Mac and Mega Man and some you may not particularly want. Many players may have first learned about Shulk in Smash, but consumers weren’t buying the game solely for Shulk. This is also why the inclusion of Dark Pit, a generally disliked character, didn’t stop anyone from purchasing the game. In contrast, with DLC, you are buying a single character at a time. The sale of that DLC is dependent on you wanting to play as that character as opposed to the full game where you want to play with the roster of characters. As such, the strength of the individual character is what gets that content to sell.

It is this distinction that makes it difficult adding characters that are not well known in a specific region. For example, consider Shovel Knight. As of this writing, his game has not been released in Japan. So if Japanese fans do not know him, they are less likely to purchase the DLC. As of year-end 2014, the 3DS version sold 6.19 million units, of which 2.42 million units, or 39 percent, are from Japan. Selling a character who is unknown in a specific region posses a significant risk as the company restricts sales in a particular region. If Shovel Knight sold to every consumers outside of Japan, at $4 a character, total sales would be $15.08 million. However, Nintendo could generate the same revenue by selling to 60 percent of Japanese fans and 61 percent to fans outside of Japan, resulting in revenues of $5.9 million and $9.2 million, respectively. A lot of consumers will not purchase DLC due to a lack of knowledge, or they are uninterested in DLC, so being able to spread the sales over a larger consumers base can make a significant difference, even if the subject character will sell incredibly well in one region. As the old saying goes, don’t put all your eggs into one basket.

Regardless, some consumers may purchase a character even if they have no idea who the character is.  This may be because they want more characters or they will find the character interesting.  Likewise, consumers may purchase the full game for more than just characters. But the fact remains that the primary driver in someone purchasing DLC is if they like the character. This is also why Nintendo released a ballot for which character consumers wanted in Smash right after the company announced their plans for DLC. Will this completely bar the inclusion of characters like Shovel Knight? Perhaps not. But it is something to consider.

I’ll be talking more about some of the economic behind DLC soon and I’ll touch back on these topics.  Either way, please feel free to tell me what you think about this in the comments.