It is a sharp business move in terms of cutting off all competition.

Doesn't seem like this will "cut off all competition". The inclusion of characters in P4 and P5 didn't "cut off all competion" for Curious Labs in the realm of figure creation. In a sense, it helped spur the creation of DAZ. Competing with DAZ is certainly not easy, but it has more to do with market share, available R&D dollars, and the size of their "audience" and little to do with releasing V3 and M3 as free figures.

Laroo, Koshini, and Sixus's figures compete with DAZ's M3 and V3 and have their own following. Project Kaimira also appears to have the potential to be some pretty stiff competition for DAZ figures.

This is a smart marketing move for DAZ in that it will stimulate sales of more add-on merchandise for V3 and M3.