Updated Fri, Apr 12, 2013 by gunky
Free-to-play is not the dirty word it may once have been. Back in the day, there were only a handful of sleazy, small-time F2P games with dodgy cash shops selling pay-to-win items and disproportionately huge populations of Asian gold-sellers. Then some forward-thinking Western developers took that model and made it legitimate and respectable, attaching it to big-name games. Converting flagging titles from a subscription model to F2P has proven time and again to be a game-saver. It worked well for Star Wars: the Old Republic, and even better for DC Universe Online.
Turbine's hybrid "freemium" model, used in Dungeons & Dragons Online and the Lord of the Rings Online, set a standard for the industry, and would probably work really well in the Elder Scrolls Online. There is an option for players to subscribe if they prefer, and subscribers gain certain advantages over free-players (a monthly allowance of cash shop currency, unlimited access to all game features, etc.), but players can enjoy essentially the entire game for free. Dedicated players can also earn cash shop currency through gameplay, usually through grinding for achievements or running specific content over and over.
Cash shop items in these games tend to be cosmetics (outfits, skins for mounts), convenience (XP buffs, consumables, stuff that can be earned through extended gameplay) or character unlocks and upgrades. Items that offer purchasers a particular advantage over other players are generally considered taboo, but some games do offer "statted" items for direct purchase through the cash shop. Some of the starships sold through the C-Store in Star Trek Online, for example, come pre-packaged with leveled weapons, but these ships are not really any more powerful than the same-level ships earned through regular gameplay.
This is a much more likely option for the Elder Scrolls Online, but Zenimax Online may take a different approach than Turbine, BioWare or PerfectWorld. Sticking too closely to the established model risks coming off as conventional and possibly cheap, and ESO likely needs to appear innovative in all aspects. The competition in the F2P market is kind of fierce, and all developers are constantly trying to find new ways to make their microtransactions more lucrative than the next guy's.