Art is the key here. In any 3D game the art requirements are counted in man years, but
with MMORPGS it's much, much worse. There to put a half-decent world together the traditional
way, you need at least 10 man years of work from competent, dedicated artists. Beyond that,
you need continued artist input to keep the world going.
Speaking as a professional game developer, and one who has worked in (and run) startups,
it is very hard to find artists willing to contribute that much effort without a salary. Even
if you find one who is initially willing, the volume of produced results tend to be...
underwhelming. The art itself is usually high quality, but the rate of production starts low
and drops quickly.
Art isn't analogous to code here; while you can reuse artwork in other projects, there is
little value to be had in pulling it apart and tweaking the way there is with code. If you
know how to make a 3D model, there's not much that looking at someone else's 3D model will
As a result, there isn't much of a "free art" movement the way there's a free software
Good art is a requirement for good games, with rare exceptions; you can occasionally get
away with procedurally generated artwork or simple art, but only rarely. To produce an Okami,
a Panzer Dragoon, a Katamari Damacy or a Rez, you need good artists dedicating a lot of effort
to the project.
Art goes beyond the basic visuals, as well. Artists are often responsible for a lot of
the level design and level metadata; if there are areas where a character can hide in shadows
or take cover, an artist has probably manually marked those. An artist may well have laid
down pathfinding information, collision data, material information (so you get the splash
sound instead of the crunch sound when someone steps in a puddle) and so forth. If a door
opens when your character approaches it, an artist probably laid down the trigger volume. The
artists are responsible for a sizable amount of the game experience.
If the free software community wants to be competitive in the game industry, the art
problem will have to be solved.