It will work.. lots of games on the iPhone work that way..

If it means that Australian Game prices sell at MAX $80 for a Standard Edition of a Game then that's a start. $60/$70 AU even better.

I'll like to see how it goes. At the surface it looks like they are taking a realistic approach in that they make concessions to the buyers at the same time as they make concessions for a new business model. Its typical price discrimination really. Charge X amount for the semi interested buyer and charge Y for the buyer who is interested outright. If you're an X for this game then you're a winner and if you're a Y you're probably a loser. On balance it is hard to say whether it would work or not, however since most games come in at ~$42 average sale price it does have some logic.

see the Y guy could get all he needs and pays only 55 dollars total, there is alot of potential but i dont know how they are going to juice money out of used gamers since they will just play what they bought it for. 

They don't start at $40 though.

While $40 sounds a lot better than $60, I'm a little concerned with how the DLC would be set up.

Instead of a nice amount of content at a cheaper game price, we'd probably get some content at the cheap price point with a lot of DLC that would easily jack up the total price past $60. I don't know if I want to have the 'freemium' thing spill over to more full retail games.

Another thing that worries me about this 'freemium' thing is going to be the kinds of things that will be sold. Such as some games sell things that would be rare/impossible to get otherwise or they sell things that will greatly augment your abilities giving the people that do spend the money an advantage over the people who don't buy anything.

Speaking of which, I'm reminded of the big change in Battlefield Heroes that made it so that the in-game currency was very ineffective at buying things in the store, practically requiring people to either play for hours and hours or to buy things with real money.

Used gamers will still buy the content packs if they like what they see. So when they sell the game it is another potential pair of thumbs to sell DLC to. Im sure they will make sure you know about the DLC available.

Anyway the Y guy is someone whom is interested in racing games and whom plays them a lot. Whereas the X guy is someone who just feels like playing a game, liked the box art, wanted to try it out, heard good things about etc. Sort of different markets, Y guy is the kind who would buy it day/week one.