Electronic Arts, the computer game publisher, has signalled its intent to embrace new, internet-based business models, announcing a version of its popular Battlefield title that will be distributed free online.

Battlefield Heroes - a slimmed down, cartoonish version of its popular combat game, will be released for PC this summer. Instead of being sold for around $20 (£10), it will be available as a download for no charge. The makers aim to generate revenue through advertising and sales of weapons, outfits and other 'virtual items' that can be used in the game.

The move reflects a wider shift in the video game industry towards online distribution - both as a means of capturing new audiences and to take advantage of new revenue opportunities, such as the ability for players to make purchases within the game, and watch ads.

Already in South Korea, one of the world's most developed markets for games, companies such as Nexon have garnered huge audiences for so-called 'online casual games', which are free to play and often generate far greater profit margins for their creators than games sold at retail.

Battlefield Heroes will be a simpler than previous installments - with an average target playing session of 10 to 15 minutes. EA hopes that this - along with its more cartoonish style - will attract new players.

It won't be EA's first venture in free, online distribution of games. Two years ago, it introduced a free version of its FIFA football game in South Korea, which allows players to buy shoes and strips, as well as to increase the speed and accuracy of their team.

The game now has more than five million players, and while most do not buy anything, a significant number end up spending between $15 and $20 a month, meaning that the title generates $1 million a month of 'in game' sales, an EA executive told The New York Times.

"Traditional publishers like EA are seeking to move away from the traditional model, which is building something very expensive and hoping it will generate sales within three to four weeks of going on sale, to building something cheaper, which it's possible to update," Piers Harding Rolls, an analyst at Screen Digest, said.

Computer games have long allowed players to interact with one another online. Both the Xbox 360 and PlayStation now have internet-based features, and so-called 'massively multi-player online games (MMOG)', such as World of Warcraft, are expected to have 12 million subscribers in the US and Western Europe by 2011, according to Screen Digest.

Unlike the latter - for which users must pay a monthly subscription - the new breed of 'casual online games' are free to download, and generate revenue through other means, such as the sale of virtual items and advertising.

"Many millions more people are playing these casual online games than console games," he said, citing the example of Kartrider, a racing game which allows up to 16 players to race against one another at the same time as well as interact in a virtual community.

A similar model is being employed by sites such as Stardoll, a fashion-based 'virtual world' aimed which now has more than three million users worldwide, and allows players to buy virtual clothes and accessories for dolls that they fashion.

The in-game advertising market, meanwhile, is expected to grow to $732 million in the US by 2010 - a 13-fold increase on the figure for 2005, according to Yankee Group, the research firm

"Games are a lean-forward medium, unlike television - they're 100 per cent engaging," said Ed Bartlett, co-founder the IGA Worldwide agency, which already sells ads to EA for use in the other Battlefield titles.

Mr Bartlett added that games allowed adverts to be highly targeted, as in the case of a recent promotion for a Discovery Channel programme about weapons, which was displayed inside another of the Battlefield games.

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