—The Lost and Damned puts downloadable content in the spotlight: Xbox 360 owners will sink their teeth into a new chapter in Rockstar’s GTA franchise next week, when The Lost and Damned, an expansion pack for GTA IV, goes live; PS3 owners will get their own episode later this year. IDC analyst Billy Pidgeon told USA Today that the downloadable episode model will continue to gain ground with gamers, and that the shift will come at the expense of packaged, store-bought games—much like the shift to digital music and movie downloads stalled CD and DVD sales.

—Real Games’ president talks recession: The casual games industry is maturing amidst a “financial tsunami”—but that doesn’t mean developers should start wringing their hands. John Barbour, the new-ish president of Real Networks’ Real Games, told Casual Connect conference attendees that now was the time to develop strong IP and get it distributed across as many channels as possible. Barbour also said publishers need to find ways to wring more money out of their free games—since “people losing their jobs will still want to play but can’t pay” (via VentureBeat).

—Lifetime taps Merscom for casual games: Lifetime will roll out at least four new casual games as part of a multi-year deal with game developer Merscom. The games will be tied to the network’s original TV series, including Wisegal, a crime drama about a woman who works for the mob; the initial deal includes two hidden object games, a downloadable simulation game and an iPhone title. N.C.-based Merscom previously developed a hidden object game based on Lifetime’s Blood Ties vampire series. According to Mediapost, the success of that game—it sold more than 100,000 units—drove the network’s interest in doing another deal.

—EA/Hasbro/Paramount collaborate for G.I. Joe game: EA announced that it is developing an as-yet-untitled video game based on G.I. Joe: The Rise of Cobra, the upcoming film from Paramount Pictures, Spyglass Entertainment and toy-maker Hasbro. EA inked a multi-year deal to develop games around various Hasbro brands in 2007. The game is slated to be released in conjunction with the movie’s premiere in August. Release.