I am a mixed bag on DLC. I will pay for it if I feel it is worth the price. $10 to get 10 extra hours out of a game is definitely worth it in my opinion. Remember, you're getting more of a game that you enjoyed (well, you better if you are forking out for the DLC). A lot of people will easily pay six times that price for a new game that they'll only play for the same amount of time. So, would you rather pay $10 and get 10 hours more of a game that you enjoy, or would you rather pay $60 and get 10 hours of a game that you thought would be good but ended up being a disappointment?
Let's look at a good example of DLC: the Fallout series. If you're like me, you may wander around for a few hours, checking out different areas, and working on getting achievements. Bethesda also sells several DLC packs for Fallout 3 and Fallout: New Vegas. If you love the game, you can buy a DLC pack and get more out of the game. These packs contain a signficantly expanded period of gameplay, at least a few hours each. They normally cost 800 MSP ($10), but if you buy the Game of the Year Edition, you can get the core game plus all the DLC (not to mention, you can share the DLC with friends for free) for one package cost.
In practice, though, companies can get a bit greedy. 400 MSP ($5) for a single level that you may only play once or twice will likely feel like a complete waste. And with Nintendo finally jumping on the DLC bandwagon with New Super Mario Bros. 2 and selling levels, Nintendo may wind up getting hit with a few black marks too.
Now an example of DLC gone wrong: on-disc DLC. No. No. No. No. No. Just no. If I buy a game, I should be allowed to access the content of that disc without paying extra money. If they patch the game to allow access to the
on-disc DLC, that patch should be free! To put this in different terms, imagine if you bought a box of trading cards, but inside was a small locked box containing 20 extra cards. To unlock the box and see the extra trading cards, you have to purchase a key. Why would you buy a key at the price of the 20 cards when you already have the locked box containing the cards in your hands?
Now for the next split issue: disliking the content and cheating. Level and item packs are primary of interest here. What if you spend $10 on a level pack but don't like any of the levels in it? It's not like you can rent the game and see if you like the levels first, unlike renting the game itself. What about a weapon pack for a shooter? In some cases, you buy the weapon pack and get instant access to some high-end weapons. Well, there went any reason to play the game legitimately, given you can use a near-unlimited rocket launcher on every enemy in the game. Don't even get me started on how this is cheating in multiplayer.
Finally, let me bring up completion. Achievement hunters like to get every possible achievement in a game before they can consider the game 100%-ed. However, for a lot of games, you absolutely need to buy the DLC for that. Of course, I'm not gonna argue here because you paid for the content, so you might as well get some extra challenges. What does annoy me, however, is when you cannot physically complete a game that you payed hard-earned money for without paying even more money for some type of DLC. Sadly, I don't have an example, but I know it exists.
Also, as of the date of writing, the record for a game with the most DLC would have to be Railworks 3: Train Simulator 2012. Ignoring sales, it's $34.99 for the game and $2,126.92 for all of the DLC.
tl;dr: DLC is good when you feel it has value. DLC is bad when it comes on the disc. DLC is really bad when you can't beat the game without it.
Much of the delay between production completion and being in your hands is bug testing; rating by ESRB, PEGI, CERO, etc.; production of media; reviewing; production of advertisements; and delivery to retailers. Half of that process revolves around the game being finished and not receiving updates. A single change means the game has to be re-rated and thoroughly re-tested.
With day one DLC, the folks behind the game can produce new content while waiting for it to be released, and that additional content can immediately be added to the new game on release day without causing delays and driving up post-production costs. I think a good way to do it is offer the DLC free to folks who pre-order the game, then charge for subsequent releases. After all, it worked well with Borderlands 2.
Then there are DLC codes, which are obviously unusable if you buy a used copy. It is reasonable as long as the DLC isn't critical or considered overpowered hax for online play (rocket-propelled grenades in shooters, for instance). After all, the publishers and producers make very little money on used copies of games, with almost none of that coming from the sale itself and mostly from in-game purchases, similar to the model for
freemium mobile apps (free app, paid extras).
Before DLC, there was something else that is almost identical to the concept of modern-day DLC, almost exclusive to PC games: expansion packs. You would buy an expansion pack, and it would add additional content to the existing game, such as new levels, tools, or characters. Just like today's DLC, you had to own the game itself to use the expansion pack, and the game would still be
complete without it.
A prime example is RollerCoaster Tycoon. The original game on its own was great. However, there were two expansion packs that were sold in stores on CD-ROM like the original game. The expansion packs gave you additional parks, rides, painting tools, ride music, materials, and much more. How is that any different than DLC you buy nowadays?