Microsoft is planning to launch a free-to-play games on its Xbox Live service.
This will allow game publishers and developers to release games through the Xbox Live service for free. Users can then purchase additional content such as weapons, experience points, in-game currency, and perks though Xbox Live.
To give an example, the game 'Joy Ride' for Kinect was originally a F2P game for Xbox Live Gold and Free members. Microsoft ended up changing its business model on this game later on. Game modes and environments were planned to be free while customization options were going to cost Microsoft Points (Xbox Live currency).
This is a great way for Microsoft to expand and dominate in the game industry. Microsoft already offers $60 console games on the Xbox 360 but can now offer cheaper games to those with the Xbox Live service. Microsoft has benefited from this service in recent years as Xbox Live has grown past $1 billion dollars in annual revenues. Microsoft gets a 30% cut of every game purchased though Xbox Live.
The F2P business model is traditionally used for massively multiplayer online games on PC, such as Vindictus and Dungeon Fighter Online from Nexon and League of Legends by Riot Games. Electronic Arts also began experimenting with a F2P model for shooters, including Battlefield Heroes in 2009 and more recently with Battlefield Play4Free, which is currently in open beta.
F2P games are hot right now especially on Facebook, iPhone, and Android. Microsoft hopes to capitalize on this sometime next year using its Xbox Live service.