[babarock]

One thing worth mentioning for games is what Valve is doing with Dota 2.

The game is truly free to play, and giving them all the money in the world will not give the player any in-game advantage. On the surface, the game sells various hero skins and other cosmetic items that are little more than vanity items. Looking closer, it seems that Valve is making (or at least trying to make) money by developing a scene of professional gamers around this game. Just last weekend they held an international competition (conveniently named [The International](http://www.dota2.com/international/overview/) ) where the prize pool exceeded 10 million USD. This pool was partly funded by the community of viewers paying to watch the pros play their games. I paid my ticket 7.5€ (10$) a third of which went directly to the prize pool.

I don't know if this model is viable or profitable. Maybe someone has more info. But it's worth looking at. I've always been interested by products that are free to use by the public and make money from the pros using it.

[gregpilling]

This competition model has been common at racetracks (motorsports) around the country for a hundred years. The promoter takes some of the "gate" to pay prize money. Sometimes the pros even get money just to show up, so that there are big names at the event.

The model is viable, but a little risky sometimes if you don't know how many spectators will pay. Usually the prize money is set before the cash flow is known.

[runevault]

With The International the final prize pool was set fairly close to the actual event, based primarily on 25% of sales related to this last Compendium. That was where the vast majority of the 10.8 million came from (I want to say Valve seeded the first million but I'm not positive).

[xerophtye]

Totally viable. Riot Games is pulling it off with League of Legends. Exact same case: money is just for skins etc. All the money in the world won't give you any unfair advantage. Oh and yes, HUGE competitive scene.