On-disc DLC is a very hot topic right now coming off the heels of Capcom's Street Fighter x Tekken PR fiasco. Gamers have a right to be upset knowing that DLC is included right on their disc, locked away at manufacture-time. They have a right to believe that this content should be free. However, before demonizing Capcom for such a practice, I think gamers should understand what the benefits to this kind of practice is and what it allows for. I'm not trying to defend Capcom here, I just want to present a few points that will hopefully give people a few more viewpoints on the issue other than "it should be free, go fall off a cliff Capcom".
Multiplayer management: How do you get two people who own the same game playing with each other online when one has DLC and one does not? The data that your console needs to load to accommodate someone playing with DLC has to come from somewhere. This is a benefit that on-disc DLC provides. You actually have the data, on the disc and ready to go. Again, you have every right to be mad and say that this content should be free... but the fact that it's there means there's no issue with someone that has DLC and someone that doesn't in a case like this.
So where does the data come from then? There are only 2 possibilities left, either it's streamed in as needed, or you download it as a patch. Streaming is not going to work in all cases; and when talking about SFxT and characters, we're talking about models, animations, textures, sound files, and all the behind-the-scenes data like damage per hit, character name and move name strings, and the way your character reacts to being hit by this new fighter. This is not going to work as streamed content.
I'm not much of an online gamer when it comes to consoles. In fact, I've never had a console go online ever, so I may be speculating here... but I think it's a pretty safe bet that most games don't download potential DLC to your HD to make multiplayer playable in the way that fighting games need to be. Consoles are not like Steam where you download patches as they come out and everyone can see and have access to new stuff and it all meshes together in one fluid flick of a switch. The reason why? Who really knows? We know that hard drives can be potentially small for consoles(or non-existent entirely). We know that there MUST be some CD involvement for games that aren't entirely downloadable, and with that comes the issue of dealing with CD loading and hard drive loading. We know that Microsoft is stingy about DLC in light of Left 4 Dead DLC campaigns coming free with the PC version but sold on Xbox Live because of Microsoft's policies. I'm just saying there could be many reasons why consoles don't behave more like Steam with DLC and who's got access to what content and how they can play together despite the disparity in content.
Until consoles and developers adopt a Steam-like model where patches come in every time new content is released, whether you're going to buy it or not, we're going to continue to have this problem not just with Capcom but with console developers in general. Capcom chooses to muscle their way through the quagmire, and they're suffering an enormous backlash from it. Other devs don't touch the issue at all. I don't blame people to be honest after 3 versions of Street Fighter 4(the other two being Super Street Fighter 4 and Super Street Fighter 4: Arcade Edition) and two versions of Marvel vs Capcom 3 where Capcom only sells 2 characters as DLC while 12 are exclusive to the Ultimate version(and the two DLC characters are still DLC and not even on the Ultimate version).
It's entirely possible that Capcom ripped the content out of the final version of the game to sell it back to gamers, but we really don't know as consumers. This is essentially what is wrong with the on-disc DLC concept. You admit that this content was ready before the CDs were even manufactured, and most gamers believe that DLC is something added to a game after release to add to the experience. On-disc DLC destroys this belief because it's DLC that's finished before the game is even released. As convenient and multiplayer-friendly as it is to have that data accessible even if you don't have the content for rival players so everyone can play every match, the negatives and the player's perception far outweighs the positives as we've seen.
I simply want to give Capcom credit where credit is due, assuming they're not going to release another version of Street Fighter x Tekken and are going to learn from their efforts going forward. The worst thing that could've happened with Street Fighter x Tekken's DLC is that people without the content can't play against people with the content, or if you're matched up against someone that doesn't have the DLC then you can't pick any of the DLC fighters even if you have them. On-disc DLC for the sake of uniting gamers under 1 game, DLC paid for or not, is not a horrible trade-off considering the mess that was SF4 and MvC3.
I'd rather have on-disc DLC then deal with complications of not playing against certain people or not being able to use certain characters depending on the status of DLC access, or even having different versions of the same game with their own online communities altogether. Of course I'd prefer mandatory patches with DLC data in them after release so the public perception falls in line with our beliefs on DLC but still offers a way to unite all gamers under 1 game's online network while able to deal with different DLC purchases for each gamer... but I don't know if we're quite there yet.