Before the development of web games it all begun with simple mail based games. These were often based on tabletop strategy games.
The development of web games began with simple text based games called MUDs. These allowed the user to play in an environment in their imagination based on text from the server. You could play with other people and do quests and fight. The games were often based on board games such as Dungeons and Dragons. The profit was made by charging for pay per minute of play, as this was similar to the pay scheme of internet connections with dial up. These games may be developed throughout their life much like games that exist today.