Currently exists many free games, or compatible with free enviroments, that are very interesting, for example:
- Super Tux (similar to Super Mario of SNES);
- America's Army;
- Open Arena;
- Tux Racer;
- Alien Arena;
- The Open Racing Car Simulator;
- Frets On Fire;
- Scorched 3D;
- Mania Drive;
List with many games here.
I believe that money is the biggest complicating for free game developers. But I find some answers to this question:
Publicity - a company can pay to the developers and the game could have advertisements of that, for example a car company (Ferrari, GM, Toyota, etc...) paid for a racer game, and all cars will be of this company.
"Closed" games - the game is free, so the source-code just together the program, but is possible to develop specific hardware to game and to market hardware and software together, or only the hardware, could be possible, too, make a portal with tutorials, tips, upgrades, device drivers, multiplayers games, etc...
Games to mobile devices (or embedded systems) - charge a fee by acess the site, download a program, upgrade, any resource, etc... And yet, the users could be tools to develop levels, for example.
Make money with free games is possible, invent your way!
Other big problem of game market is the developer's (programmers, game designers, graphic artists, etc....) greed, because many developers want be rich with only one game and live of this game forever.
Is better to do some games and make few many in each game than to do one game and make US$ 1,000,000.00 from it.
Today, most players can't pay for expensive games, but they can pay some cents for "simple" games.
Ok, it's all! Come on, let's to develop free games!!