Episodic gaming is the idea that a game will be released in small parts, or episodes. Each episode would be quite cheap and would progress the story of the game a small amount.
The idea has generally not worked, mostly due to episodes being fairly large downloads with rather little content. They also require a lot of work from the development team, much more comparatively that just making the whole game. They are also download only, which limits the market a lot. Lastly as the gameplay is broken up, with episodes weeks apart, they lack immersion.
Its an idea that sounds good on paper but is not really practical/marketable.