The article starts out saying that the gaming industry loses a bazillion dollars a year due to pirating. In order to combat this, some companies (mostly in Japan right now) are giving away their games for free. Yes, that's right - you can just go to the website and download the game.

Sounds great for the consumer. And maybe the company is getting gamer good-will, but ... that's not a very good business model. So what's in it for the companies that are doing this? I'll get to that in just a minute. That's the really interesting and innovative part.

But first: the article goes on to say that because some companies are starting this, eventually it will spill over and all companies will HAVE to give their games away for free, because why would you pay $50 for a game when you can get another equally fun game for free? Good point.

Ok, so how can a game company give away games for free and hope to survive? Enter "micropayments". Even though you can play the game for free (or at least part of it), it's all the accessories and extras that you will buy to enhance your experience that will fill the game company coffers. Suppose you're playing a racing game. You want a red car with a super cool flame paint job? $1.00. How about a t-shirt for your character with your face on it? Another $1.00. Walk into the virtual game-store and buy that barbarian character of yours a wicked-cool two-handed longsword of slaying for $1.75. Brilliant! I can totally see this taking off. There's already precedent for this in second life where people sell virtual goods/services for real-world cash.

What do you think - genius or madness?