The answer is in-game microtransactions. These games, while free, let you buy items in-game at little cost. Generally these items are under five dollars. There was however a danger to this system. Early free-to-play games became known as “Pay-to-win” games because they let players buy items that gave them unfair advantages in-game. For example you could buy a temporary 50% damage bonus in a multiplayer shooting game. It would cost about five dollars, and you had to buy it each match. Considering that serious gamers play hundreds of matches, this adds up rapidly. These games devolved into who had the bigger wallet, rather than the most skill. Gamers then abandoned them.
League of Legends was the first game to get the free-to-play model right. Their game now has over 32 million players, most of whom have spent over ten dollars on the game. Some of whom have spent over a hundred dollars. What League of Legends did that other publishers did not is ensure that anything you can buy with real money is cosmetic, and doesn’t give an unfair advantage in-game. For example you can buy unique clothes for your hero that make you appear differently from everyone else in the game, but don’t actually change your power level at all.
This novel approach to free-to-play gaming clearly paid off for Riot Games. Based in Los Angeles, Riot games is headed by two gamers named Steve Feak and Steve Mescon. Notably, they hired a number of ex-Blizzard employees and raised over $8 million dollars to develop the game. Riot Games recently sold their Los Angeles studio to the Chinese company Tencent for $400 million dollars. Larger companies have taken notice of the free-to-play model’s wild success. Sony and other companies are releasing their next big games using the free-to-play model created by companies like Riot Games. We’ll know within a year or two if these companies can pull off the free-to-play model as well.