Kongregate
The world’s most addicting website. It hosts several thousand flash games, many of them of low quality, but it’s not like people actually play them: they don’t have badges. The reason Kongregate is particularly popular is that it not only provides flash games, but gives good games badges and achievements. For these games, accomplishing certain goals within games, e.g. 1000 kills, 5000 points, etc., will earn you badges stored on your account. Each badge is like a Boy Scout equivalent, with a little drawing and sentence description. Additionally, earning badges is accompanied with gaining points, which also helps you gain Kongregate levels. For example, I am level 9 on Kongregate, while many people have levels in the twenties.
The benefit of having a higher level? Well, certain games or beta testing of games is only available to those with a high enough level, say 35. Also, it lends you credibility in the comment sections of games, adds street cred in general (although only among gamer circles - higher levels generally denote a lack of a social life), and will, most importantly, help you become an administrator on Kongregate.
In addition to badges and leveling up, there are also multiple chat rooms. Thus, Kongregate becomes a fully functioning social network, in which friends will talk, and can keep track of others’ accomplishments. This website takes the inherent solitude of playing computer games and completely obliterates it; simply having the presence of other people in the same gaming community reverses the isolation, and for this reason Kongregate is relatively popular.
A good business model.