Even people who are not into fragfests sometimes lament the static, linear nature of PvE content caused by a game's reliance on computer, rather than human, intelligence. Game masters reintroduce the responsive creativity which only human beings are capable of. But it's important to note that there are many different ways a game master can provide content to players.
The little things
One way is for the GM to focus on creating relatively simple and brief experiences for one player or a handful of players at a time.
I've written before about using directly developer-controlled NPCs with little planning to provide what I call shadow content. This is one form of game mastering which I believe is very powerful and cost-efficient.
That Halo 3 video I linked to the other day is a great example of how one player's unique experience can catch the imaginations of thousands, exciting current players and inspiring them to continue exploring while simultaneously convincing potential players that the game can provide them with fun, memorable experiences. One video like this retains players and sells games. Ten videos like this (similarly unique experiences) convinces people that such experiences don't just happen to the very lucky; that influences the player's crucial long-term expectations (particularly vital to MMOs).
If tales of experiences like this are constantly being shared by word-of-mouth in your game and through videos on YouTube or elsewhere, then you'll have a consistently strong playerbase.
It's even more effective at player retention if you reward knowledge of such fleeting experiences. One of the great things about being a veteran of any community is being able to share stories from way back when. So, for example, a particular NPC is famous for her scowl and frightening disposition, but veteran players can remember how cheerful and kind she was before a particular incident (perhaps a whimsical scenario created by a GM with little planning, but recorded for future reference and possible use). As a result, veteran players can tout their memories, and veteran players are encouraged to interact positively with new players through the sharing of such memories (induction into the communal history -- an important element of socialization).
Another way GMs can provide content is through lengthier, more scripted player experiences.
These experiences would generally cost more time and assets to produce, but that is balanced by the fact that they can be repeated for multiple players. What sets these experiences apart from PvE adventures is that a good GM can slightly modify the adventure in response to particular player personalities and circumstances. They are thereby more rewarding to players and potentially more memorable experiences.
Conversation is the most obvious way this happens. A computer can only respond with rote messages and will miss many social and affective cues the players are giving. If an NPC is capable of pithy jabs and circumstantial comments, then interacting with him/her/it is infinitely more interesting.
Another way a GM can make a difference is to withhold and release information to players in response to their individual needs and preferences. Two players might both like mysteries but have vastly different prowess or skills for puzzle-solving. In that case, it makes sense to provide one with more/different clues than the other. The GM can also assess combat difficulties for players, giving a particular group an idea of how their unique combination of classes and gear will likely fare in a particular encounter, thereby helping players to find the difficulty level they're looking for.
Caution: There is a big difference between this type of GM content and shadow content. With the shadow content, any given player might expect to experience some of this content directly every now and then, but the player has no or little expectation of control over the experience (meaning both what happens and when it happens). Prescripted adventures, on the other hand, usually appear as selected services; it's like a themepark ride which the player may approach and expect a predictable experience from.
That means that, while the experience itself might not be very costly (considering that it is repeatable content), there are a number of peripheral costs. Because the player is promised a particular experience, the player may complain and perhaps expect recompense if the experience doesn't match expectations. The player may expect a certain level of accessibility, in terms of being available at regular times, in regular durations, and to equal enjoyment of all kinds of players. If you design the content to avoid these terms, then you must fight a battle of expectations.
Live events might or might not involve a GM, but they're generally focused at a game's entire playerbase or an otherwise large number of players.
Live events are shows. Players expect a spectacle.
You might think of the fore-mentioned GM adventures as being like going to see a movie in the theater. If the movie is bad, you'll probably be a little annoyed but not really get angry. Afterall, you probably expect movies to be hit-or-miss, you were able to join the experience by simply buying a ticket a couple minutes before the show started, and there are enough theaters around town that this one was close by. In short, you didn't plan much or invest much in the experience, and movies are common enough that one falling short isn't such a big deal.
Live events in an online game, on the other hand, are more like rock concerts. The experience usually requires more planning and investment from participants. And a good band putting on a big show near you is something that doesn't happen all the time, so you expect a truly memorable experience which you'll be telling your friends about weeks, months, or even years later. You're probably not even expecting new songs (analogous to a game's assets), but just expecting those songs to be used and augmented in a fresh and memorable way.
Live events generally require a lot of developer investment, but they can produce big rewards. These events stand tall in players' perception of your game. If the quality and polish are there, players will be talking about the experience for months. They'll excite each other about the game through memory sharing and speculation on future events. An event can even get players looking at old content in a fresh way. Live events are also more likely than regular gameplay to attract the attention of non-players. That's partially because participants are more likely to talk about fresh and big experiences; and it's partially because big events are more conducive to advertising -- it's easier for a themepark to attract people by advertising a new ride than by selling a new vision of the old park. Live events help keep the game fresh and feeling like a living game.
Live events also offer unique opportunities for testing and selling content. At rock concerts, multiple bands play together. It's common for attendees to go there for one band and "discover" one or more of the bands also performing. The supporting bands will thereby get feedback, publicity, and even sell a few albums. Likewise, a live event can include samples of future content. By doing this in the content's prototype stage (albeit, with more polish than a prototype would usually receive), developers can get feedback before more significant investment. Devs can also include samples of content from expansion packs, thereby marketing the expansions. If your game involves microtransactions, then the event can highlight some of those, like bands selling albums and paraphenalia at their concerts.
Anyway. A long article, I know. In summary:
---Small, unsolicited GM experiences are a shoe-in. Absolutely, they are well worth the expense.
---Scripted, solicited GM services can be costly. Manage expectations carefully. Ensure the quality of your GMs (patience, on-the-spot creativity, thorough understanding of both the game and social interaction, etc) and provide appealing avenues of feedback.
---Big events are great, but don't include them unless the quality is there. If the quality and polish are there, then good control of expectations can actually make these high-expense productions into low-risk scenarios (like rock concerts). They can be great testing and marketing tools. Just remember that games are about interactivity, so players should feel like participants and not just spectators.