Gamasutra has an interview with VP of PR and Marketing for Bethesda Pete Hines about DLC. The article is pretty interesting (at least the DLC parts) and if you're at all interested in the subject I suggest taking a quick read. I wanted to make a few comments on it (as I'm interested in DLC models in games), but first I have to do a quick disclaimer first, so here it goes:
I am a former employee of Bethesda, but any comments I'm about to make do not reflect on the company's opinion of anything. I was never in any position to make any decisions about the design of their games, the business model of their DLCs or anything related to anything other than the lowest level system code. DO NOT ATTRIBUTE ANYTHING I SAY TO BETHESDA OR EVEN TO A FORMER BETHESDA EMPLOYEE PLEASE!!!
With that out of the way, I'd like to comment on Pete's stance on large expansions as DLC:
What we discovered was that we want to be able to do stuff that doesn't take a year to come out.
All these people are out there playing our game by the hundreds of thousands on a daily basis and we want to be able to bring those folks something they could do in a much shorter time frame, rather than just saying, "See you next year." That instantly ruled out doing a big expansion because those things just take so damn long to do.
I'm only partially with him on this one. I honestly think Oblivion got it right. Offer a wide gambit of stuff to get: small digestible chunks along with one (or two) big expansions. That way, you don't have to say "See you next year" and you still provide a big expansion, which increases the visibility of the game immensely (and encourages people to get more DLC). With the excellent design and art team they have at Bethesda, splitting the group into a set of small(er) DLCs and one large expansion just makes sense to me. It keeps the game fresh for those that are going to want things fast, but also increases the game's and DLC's profile when a giant expansion comes out.
I also think that there's one model that Bethesda isn't touching on, and I hope more companies think about as a future revenue model soon. That model is episodic DLC content; content that builds off of itself and is offered (say) once a month at a reasonable price point, then bundled together at the end. A game like Fallout or Oblivion (it seems to me) is the perfect place for something like this: a full game that's expanded over time with DLC. It strikes me as a better alternative to games like Gears, which were episodic, but at a full price point for each title, and on different disks. I think we're still placing too much emphasis on engine improvements when in some cases people just want to continue the game. Sure Gears 2 looked better, but couldn't they have released DLCs to continue the plot while working on the next engine in parallel?
Interestingly, it's been my prediction for a long time that more and more games will start looking towards DLC and episodic models to create games. This doesn't mean we'll see the end of "big blockbuster" games any time soon, but I think it will not only become more and more common to release things episodically, but almost an expectation of the audience. Already, you're starting to see games sell on the promise of DLC, or demands for DLC after a game ships (like Mass Effect). I think this is only going to become more common.