The reason the service is profitable is cause the games Sony give out probably cost them very little to 'get' from the respective publisher. Most games chosen either make a large amount of DLC to make the publisher money from (RDR, Deus Ex, Dead Space 2) or are just a way of promoting the sequel thats normally scheduled to come out within a year (Crysis 2, RE5, Borderlands). Most games are a combination of both - giving the games away for free makes the publishers more money then not in the end.
I'd imagine Sony does give 'incentives' for publishers to give out PS+ games but that doesn't have to be direct payments either. RE6, Borderlands 2 etc were plastered all over the PS Store when they released. Do you think Sony would of given them such luxurious advert placement without the publishers giving them some PS+ games? Not a chance.
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