Want a Free Xbox Game?

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If you're still smarting after shelling out $60 for a copy of Halo 3 last month, relief is on the way. Xbox owners connected to the Xbox Live Marketplace are getting a free treat this week with a game called Yaris.

OK, maybe it's more product placement than video game. The New York Times reports that Toyota (NYSE: TM) bankrolled the game to promote its Yaris car line. There's little for Toyota to lose here. Racing car games are popular. Electronic Arts (Nasdaq: ERTS) has a killer franchise in Need for Speed. Activision (Nasdaq: ATVI) recently bought the developer behind the Project Gotham Racing series, which has sold 4.5 million copies.

The Xbox marketplace provides developers with inventory-free distribution, so it's not as if Toyota is going to have to eat a ton of returns. As long as players don't walk into a Toyota showroom and wonder why the real Yaris can't shoot missiles or claw away at other drivers with electronic tentacles, Toyota will accomplish its goal of reaching out to young drivers.

The only problem I see is with the other publishers of Xbox Live games. Microsoft (Nasdaq: MSFT) has always preached its love for developers. The Xbox Live Marketplace is the perfect example. Video game heavies like EA, THQ (Nasdaq: THQI), and Take-Two (Nasdaq: TTWO) can afford to spend years and millions in launching breakout games through retail. The online platform that Microsoft has championed to nurture upstart Xbox game makers is there to provide an easy way to hit the market with a simple console diversion. Marketplace games don't cost much. You can snap up titles for as little as $5 apiece.

See the problem? How are they going to feel if they have to compete with free? Quality will win out, but it's going to be hard to let the filtering process play itself out if more companies keep priming the pipeline with subsidized freebies. Even if you argue that the solution is for these small developers to hook up with the brands that want in, the end result is that format is still devalued if free games are plentiful.

Hopefully I'm wrong. Burger King (NYSE: BKC) put out three branded Xbox games -- on disc -- that it sold through its restaurants for $3.99 apiece last year. It didn't cheapen the Xbox brand. It certainly didn't get in the way of Halo 3 setting all-time Xbox sales records two weeks ago. I would still keep an eye out to see what happens with Xbox Live now that Toyota is giving its auto-racing game away. Sure, Apple gives away free iTunes tracks without freezing pocketbooks. The difference here is that the top acts still sell because they are nationally known. The Xbox Live Marketplace thrives on attractively priced titles by typically small developers.

If free is the new five-dollar bill, who will be there to bankroll the unbranded -- and unbridled -- creativity?

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