Is this really different from arcade games, where when you lose all your lives you can stick some more money in before the timer runs out and continue where you were killed?
Having said that, I do think this concept ruins games. Personally I never play 'free to play'. I prefer ad supported ones, where if you like the game you can then pay a one off price to get rid of the adverts, or ones where you can pay to get more levels (and remove adverts).
Funny you should mention those old arcade cabinets.
Their "pay to try again" model created the perverse incentive to kill the player off quickly in unpredictable ways to give the impression that it wasn't really their fault. Coin eating machines.
They're great examples of how business models color the nature of a game deeply.
Having said that, I do think this concept ruins games. Personally I never play 'free to play'. I prefer ad supported ones, where if you like the game you can then pay a one off price to get rid of the adverts, or ones where you can pay to get more levels (and remove adverts).