JMich: P.S. How does it currently make economic sense to release crap? I recall a tax exemption clause in Germany, but it has been revoked from what I recall. Unless you mean making clones of successful games, which was also happening from the 80s.
No, I mean specifically in relation to extra content for existing games.
Before, in order to release extra content, you not only had to produce the content itself, you also had to produce the physical media and get it distributed. That's a sizable investment. Add to that the percentage of the sales price going to the retailers, and you'll need to sell quite a lot of copies just to break even. That means you have to be sure that lots of people will want to buy your content. It also means that there has to be quite a lot of it, in order to justify the necessarily high price needed to recoup your investment. In short, it requires a large investment, and has a high risk of economical failure due to the large number of sales needed to break even.
Contrast that with the situation today. You don't need to neither produce nor distribute any physical media. There is no retailer involved to cut into your profits. The expenses involved in selling 100,000 units are not appreciably larger than those involved in selling just 1,000, because the expenses involved are mainly just the cost of developing the content itself. This means that it is feasible to make content units of any size. It also means that it is feasible to make content units of just about any quality. Because the necessary investment is so low, you don't need nearly as many sales in order to break even.
In the old model, in addition to the cost of developing the content, you had to pay for each potential sale (production, distribution) and lose a cut from each actual sale.
In the new model, there is no cut taken by a retailer, and the cost of production and distribution are negligible, and only exist for each sale you actually make, rather than for each sale you would like to make.
Hence, it would not have been feasible to make $2.50 cosmetic horse armor under the old model, but it is feasible now.