This might be a little disappointing, but of course there's no single universally right and surefire way to make money on making games. On the contrary, the entire industry is currently experimenting wildly with how to best make both great games and money.
Be sure to read our report on the subject matter:
Even though securing public funding and/or private investors might be a good idea for you, it remains very important to figure out how you want to turn your company into a healthy, sustainable business in the long run. You will have to know the meaning of business models, and to consider which models best suits the games you are going to make. In short, business model is just another way to describe how.
Here is a more in-depth description of various business models (Word Documents) :
Strategic models for serious games
The advertising business model
The Work for Hire Business Model
Here's an additional short description of some of the most commonly known business models for game companies:
Retail
The traditional model, where games are published and sold as "boxes" in physical shops. This model is today most viable for big titles, but even these are increasingly sold and distributed digitally. The penetration of this old retail model is thus declining rapidly.
Digital sales ("premium")
Games sold and distributed digitally via online services like Valve's "Steam" is the direct successor to the retail model. In most cases, people buy their games just like they used to do in the physical store, only now it's all digital.
Ad-funded
Many free games are ad-funded, which basically means, that the player is exposed to a number of ads within and/or around the game.
Freemium
The socalled "freemium" is one of the most talked-about business models, which is equally heralded and criticized. If your game is freemium, you give it away for free and then base your revenue on microtransactions from players, who are willing to pay for an even better experience. You'll need to implement this carefully, so you don't punish players who play for free, but simultaneously make it easy and meaningful to pay.
Often you see a mix of these models, so you get, for instance, games that are both ad-funded and freemium, or where you pay for the full game, and then are also offered to buy additional material through DLC (downloadable content).
