Updated Fri, Apr 12, 2013 by gunky
Also known as "Buy-to-Play" (B2P) or "the Guild Wars 2 model." A copy of the game is initially purchased, and there is no further financial commitment required. The initial box price gives players full access to the game, and an in-game cash shop with cosmetic and convenience items funds the maintenance and development teams.
Again, a fine line must be walked here. On the one hand, the developers need to make players want to spend money in the cash shop by offering lucrative items. On the other hand, loot boxes requiring a store-bought key to open them are kind of annoying. There's no guarantee that they contain anything worthwhile, and they can't be pawned to vendors like other trash loot, but they accumulate quickly and take up precious inventory space.
Cash shop items tend to be fluff and convenience, plus nonessential upgrades. Cosmetic outfits and accessories seem to sell fairly well, but not all players care much about how their character looks. Convenience items serve to eliminate tedium - for example, using a consumable to access a town service out in the wilderness instead of having to run all the way back to a town, or boosts to accelerate experience gain (or other, similar level-up resources for PvP ranking or faction renown, etc.). Nonessential upgrades include increased storage or carrying capacity and additional character slots - you get more value from these upgrades if you play a lot, but most players can probably get by with the default.
Guild Wars 2 challenged the dominant F2P "freemium" model and seems to be doing very well, without so much as a single subscriber. This bodes well for future games, but only if these future games have as much to offer as GW2 does. The Elder Scrolls Online looks like a serious contender as direct competition for GW2, and adopting a similar financial model makes sense, in a way.
While B2P and F2P/Freemium seem the most likely models for the Elder Scrolls Online to follow, we won't know for sure what direction they will pick until closer to the launch date when ZeniMax Online announces it. And of course, there's always the possibility that the studio will come up with some kind of new financial model. However it pans out, we'll be there, happily parting ways with our money.