Alan O'Dea

In the 12 months to March 2009, Jagex generated revenues of £38.4 million and profits of £18.0 million (approximately $58m and $27mm, respectively). That’s an operating margin of 47%, despite spending “tens of millions of pounds” on the failed Mechscape project. 94% of that revenue comes from subscriptions. Naysayers may scoff that ads don’t pay, but the company is still making over £2 million every year in ad revenue. Which is impressive in its own right. So is Runescape really free? Absolutely. The company has over 10 million monthly unique users. Nine million of those play the game for free; 1 million of them subscribe each month. The company doesn’t spend money on advertising: the free service *is* the advertising. The shareholders have taken out over £31 million in dividends in the last four years and the company still has nearly £15 million in cash in the bank. Still need convincing that free works?