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Not all games cost $60. In fact, some games cost nothing at all! Free games are usually PC games, due to the open platform that anyone can develop on, however with the recent inclusion of downloadable content (DLC) for consoles, free games are starting to appear on consoles. The iPhone is another popular platform for free games, because, while it is not a completely open platform, Apple's approval system is much less strict than Microsoft's, Sony's or Nintendo's.
Free games are often ad-supported, which provides a source of revenue for the developers and publishers. Sometimes games are created with the sole purpose of advertising, for example Yaris (created to promote the Toyota Yaris car) and Dash of Destruction (created as an advert for Doritos). Sometimes games will be funded by microtransactions, in which players will buy enhancements to the game. Microtransactions are used most commonly in free MMORPG's. Games without any of these sources of revenue are often made by game programming hobbyists during their free time.
Often, games that were formerly commercial releases are made free by their publisher. This is usually a method used promote their sequel(s), although sometimes can just be due to the games no-longer being profitable to sell commercially. The following games were commercial releases, but have since been made free:
It has been known for games to be offered for free as part of a promotion. For example, in early 2009 in Canada, Beyond Good And Evil was being offered for free with a particular brand of string cheese.