Originally created 05/14/05

Xfire glues together players as online games expand



DALLAS - For many PC gamers, getting a group of friends together to engage in online battles in such multiplayer games as "Unreal Tournament 2004" or "Battlefield 1942" has always been a major problem.

The issue was simple but annoying: Short of putting all your pals on a conference call, there was no easy way to muster them.

Mike Cassidy and former world "Quake" champion Dennis "Thresh" Fong came up with an answer. They called it Xfire.

The free instant-messenging program effectively solved the scheduling riddle, letting PC gamers know when their friends were online bouncing around as electrons in online games and reach them in a flash.

In a sign of how popular online games have become, nearly 1.5 million people have registered for Xfire since its January 2004 release, almost exclusively by word-of-mouth.

Xfire Inc. hasn't spent a penny on advertising.

The product aims to connect PC gamers of all stripes with a universal communicator of sorts. It melds an instant-messaging program with a Web portal where you can download video game patches, demos, screen shots, video clips and other material.

The Windows-only software runs in a small window during game play, letting you see when and where your friends are playing, said Cassidy, Xfire's chief executive.

The 2-megabyte download works with more than 300 PC games. The system also tracks the time you and your buddies have spent playing.

Xfire's success mimics the surge in growth of massively multiplayer online games such as "World of Warcraft," which recently eclipsed 1.5 million users. Market research firm DFC Intelligence predicts global revenues for online games will grow to about $5 billion next year from an estimated $3.5 billion in 2005.

The current lineup of consoles all support online play, to varying degrees.

Very few games actually use the feature offered by Nintendo Co.'s GameCube, and Sony Corp. left it to individual game companies to develop their own online infrastructure for the PlayStation 2.

Microsoft Corp., on the other hand, invested big.

Its $50-a-year Xbox Live is by far the most robust service, providing built-in voice chat and a unified online framework for all Internet play. It has more than 1.4 million registered users who can speak to one another with real-time "audio chat" as they coordinate battles in games like "Halo 2."

Newer handhelds from Sony and Nintendo have been imbued with Wi-Fi and local-area wireless networking capabilities as well.

But none of these systems match Xfire's ability to connect players across different games.

Microsoft chairman and co-founder Bill Gates said recently that the next-generation Xbox console will include improved communications tools so gamers can video chat with their buddies and know when others are present online.

Xbox's approach so far has been limited to voice, but like Xfire it allows someone playing "MechAssault" to see buddies playing "Halo 2."

Yahoo Inc. also has an instant-messaging tool that lets users connect for casual games like chess and checkers but that only works if you're playing a Yahoo game, not a PC-based shooter or role-playing game.

Cassidy said 97 percent of Xfire's users are men ages 14 to 34, a desirable target for advertisers trying to capture a demographic that is increasingly turning off their televisions and playing video games.

Dave Gregory, a customer support representative for an Internet service provider in Boulder Creek, Calif., says he uses Xfire to link up with pals across the country for bouts of "Desert Combat," a game modification for "Battlefield 1942."

His list of gaming buddies now tops 270 people, just short of Xfire's limit of 300.

It might seem a bit distracting, but Gregory, 21, said it's the best way to keep in touch with so many people while gaming.

"It's a way for me to interact with people and have fun," he said. "We just rock it up."

A tiny startup of 24 in Menlo Park, Calif., Xfire posted revenue of $750,000 last year, much of it from banner ads that run across the top of the chat window.

The company emerged from a startup Fong founded in 2002 and called Ultimate Arena.

That now-defunct service let adult gamers wager real money while fighting friends and strangers in first-person shooters like "Counter-Strike."

Ultimate Arena was put on hold indefinitely last year so the company could focus on Xfire, said Fong, who dropped out of college in the mid-90s to pursue a career as a professional gamer, winning thousands of dollars in rounds of "Quake."

"There's no way you can anticipate something like this," Fong said. "We actually launched as a beta product to 100 gamers. We just said 'Hey, check this out, let us know what you think' and literally it just kind of blew up."

Xfire's rapid growth hasn't been without challenges.

The company currently is embroiled in a legal dispute with Yahoo, which claims a patent on key software that makes Xfire hum. Xfire countersued, and Cassidy called Yahoo's lawsuit a "baseless attempt to drive us out of business or force us to sell at below-market price."

Yahoo declined comment on the cases, which remain undecided in U.S. federal court in San Francisco.

Regardless of the outcome, Cassidy believes the future for video games is looking better than ever.

"There's going to be a huge shift from TV to games," Cassidy said. "You see everyone suddenly saying 'Whoa, gaming's big.'"