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Standing in the Xfire

What makes an online gaming app worth $102 million?

When media empire Viacom was shopping around for new companies to add to the videogames portfolio of its MTV Networks division, it found one candidate which might have come as a surprise to the rest of the industry - and liked it so much that it was prepared to shell out a whopping $102 million in cash for it, in a deal which caused many jaws to drop.

The company was Xfire, a firm which has developed and operated an eponymous piece of software that, put simply, allows people to easily connect and communicate with their friends in online PC games. With a userbase that recently topped four million, a significant proportion of whom spend many hours a week in the application, Xfire crosses social networking with gaming - and the results, so far, have been spectacular.

We caught up with Frederic Descamps, Xfire's Business Development and Marketing Officer, to find out more about the product, the company - and its future as part of the MTV Networks family of companies. Can you explain a bit about how Xfire got started, and how you built early inertia around the community?

Frederic Descamps: Xfire started as a direct result from our involvement with Ultimate Arena, which was arranging online gaming matches for cash prizes. We found that there was a significant demand for the ability to allow friends to play with each other - much more than the cash prize aspect. Basically, people were using the Ultimate Arena service to easily start games with their friends. From this knowledge we realised that there was a huge demand in PC gaming to allow friends to find each other online and join each others games simply.

One of the main ideas behind Xfire is the fact that it allows people to play games with their friends more easily. Xfire turned on its head the traditional paradigm of online gaming (in which you could see lists of game servers but you'd have no idea which servers your friends were playing on - and for FPS games only) by introducing social networking to gaming.

Xfire had already built up great relationships with the top e-sports teams through Ultimate Arena and we launched the initial Xfire product for these gamers. The influencer model took over from there as we found that our initial thoughts that people like to play with their friends was true.

What are your key revenue sources? Xfire is advertising supported, obviously, but how does that advertising break down across sectors and territories, and do you have other supplementary revenue sources?

Xfire generates its revenue through providing marketing services to advertisers wanting to build relationships with Xfire gamers. Our model encompasses not only advertising but also includes research, live online gaming events, Xfire skins, machinima movie competitions and other contests of all sorts. We have a broad range of advertising partners including major brands in the movie, retail, consumer package goods, electronics, gaming, soft drink, automotive and fast food industries. Xfire generates revenue in multiple geographic markets.

Did you find that there was a tipping point in your growth that allowed you to attract lifestyle advertising rather than game- specific advertising, or was that your target from the outset?

Xfire has always believed that with the decline in TV viewership by gamers that major non-gaming brands would increasingly seek alternative solutions to reach gamers. One of the first advertisers with Xfire was Pepsi.

How has your growth curve looked as you've approached four million users? Is it still speeding up?

Xfire has grown at a steady 2% per week since we started. So our rate of growth remains steady but obviously the average number of new users joining each day continues to go up.

Where do you see future growth coming from? Is Europe a major growth opportunity for you? How about the Far East?

We believe that we have still only scratched the surface of the North American and European markets so we are looking to significant continued growth here. We are also excited by growth in Eastern Europe and Russia as well as Latin America. The Far East is, obviously, another huge opportunity for Xfire.

In your opinion, is the PC online gaming segment continuing to grow? It seems to an observer that the actual player-base has remained somewhat stagnant for a couple of years now - has that been your experience?

We believe that the PC online gaming market has and continues to grow a great deal. The introduction of games like World of Warcraft, Guild Wars, Battlefield 2 and others have made it ever easier for people to play online. Xfire itself has seen a remarkable trend that the amount of time spent running Xfire has gone up 50% per user on average since we started. Considering we began with the hardest of the hard core we find that trend very encouraging.

What about the console market? Do you think the Xfire solution has an application within that space?

We are very excited by the opportunity of working with the console platforms. Time and time again Xfire has found that increasing the visibility of what your friends are playing in real time and making it easy for them to join each others games easily is a huge driver of game purchases and game play. Cross-platform visibility will only increase this trend for the console platform games as well.

Looking at your acquisition by Viacom, can you talk a bit about how you plan to leverage being part of MTV Networks to make Xfire more successful?

We are extremely excited by the opportunity to work with MTV Networks. MTV is well known to provide the best experience and content for young people on television and with music. We believe that the addition of the Xfire community will allow us to increase the value we provide to MTV viewers while also increasing the value to the Xfire community.

Who do you see as your competitors? Are you targeting products like GameSpy Arcade - or is it more social networking platforms like MySpace that are your rivals for consumer mindshare?

Xfire is focused on building a community of gamers through offering the best tools as well as the best community features and activities. Lots of other companies offer different benefits but Xfire is just focusing on making gaming as much fun and as simple an activity for people as possible.

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Rob Fahey: Rob Fahey is a former editor of who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.