Both Raph Koster and Tobold have posts up about a games user base and profitability. If this at all interests you, check both links out. The overall theme of the discussion is similar to my feelings about the iPhone app store and games on that platform. Lots of apps are very popular in terms of downloads, but few are actually decent enough to be used beyond the first 5 minutes, free or otherwise. The other issue is that anytime something is successfully sold, it’s likely to see someone make a ‘free’ version of it and destroy sales. Why pay $5 for Field Runners when you can download a bunch of similar tower defense games for free? And who would be crazy enough to invest money developing a game to compete with Field Runners when they also have to compete with a glut of similar free titles?
This also somewhat relates to F2P MMO games. Sure tons of people will try them because they are free, but when faced with the choice of progressing farther and paying, or quitting and downloading another free game, odds are most will opt for the choice that costs them nothing (especially in today’s economy). Only if the F2P games is truly pulling them in (arguably even more so than a standard sub game, because the decision to pay is more visible) will someone spend money, and one could argue if your game is THAT good (like I argue Atlantica Online is), why not just go and charge a monthly fee?
One final random thought (it’s Friday, can you tell?), is it harder to offer a product for free and THEN try to charge for it, or charge up front and perhaps lower the rate later? For example, if LoTRO drops its monthly fee to $8 a month, would that give them more profit due to increased users over a game like Atlantica Online closing its item shop and charging $5 a month for access? I mean assuming both are on equal ground to begin with of course. Bad example aside, what I’m trying to get at is I believe it’s MUCH harder to go from free to pay than it is to go from pay to less pay, even if less pay is still HIGHER than the pay of the previously free product.