A number of computer games developers are opening up a new channel of distribution via the internet. They are enabling gamers to play online for free. At first this does not seem to make sense, since it would appear to generate no revenue stream for the product – but there are ways of generating revenue, as well as saving costs. This is discussed in an article on the BBC Technology website.
First, developers are not puting their newest games online, but selected games from their back catalogue. They are hoping that this will cut into the very vibrant secondhand market for games. Second, they are generating revenue by placing advertisements on screen. For instance, CoreOnLine streams games – but to finish the game, gamers will have to agree to watch ads, each of which gives them additional minutes of game play. An alternative approach to generating revenue might be to charge a subscription fee, but one games company that adopted this business model was unsuccessful in generating sufficient revenues. A third benefit may be that free online streaming will cut down on piracy, which is a major problem in this industry.
This emerging business model is termed free-2-play, or F2P. It also being used as a marketing tool with new games, by allowing gamers to try out soon to be launched games online with restricted game play, in order to excite interest in the new product.