A colleague of mine has just forwarded this interesting cnn.com article (here). The article goes straight to the point. XFire is the new wizz product. Imagine, its VCs also invested in hotmail & Skype…..so it’s got to be good…Hmm. Let me think…
“If you’re a male online gamer aged 18-34, chances are you’ve already heard of Xfire
Well I am 18-34, I’ve heard of Xfire. Am I using it? nope. Being aware of a piece of software is a great step. I admit it. However being a user is also part of the equation (uh? acquisition and then monetization. Doh!)
“The average user convinces five friends to join the first month. That’s what we call a viral business model. It’s free. As Cassidy says, the whole thing is “monetized” with advertising”.
Ah that’s what a viral business model is!! Now I get it…So where the concept of successful business model does not add-up anymore (in my humble opinion) is in those following ‘facts’
“Xfire, which only launched in January 2004, has three million passionate customers who use its PC software an astonishing average of 88 hours a month, according to Cassidy. More amazing facts: almost 300,000 new users join each month, and for two years the service has sustained a 2 percent-plus growth rate — weekly. Its users — in 100 countries (a slight majority are in the United States) — are online for 200 million minutes every day.”
…Well, it’s currently Friday 11pm GMT. I call that gaming time here! (well blogging right now, and gaming in 10 minutes)…and how many users are concurrently online according to Xfire.com? Current Users Online: 153,753. Sorry not 1.53MM, but 153K!
Even assuming an engagement ratio (concurrent vs user base) improving by +5% week on week (considerable achievement), with the entire user base increasing by +2% week on week, it would still take Xfire another 1/2 year to bring their number of concurrent users to the 1MM mark. (reaching an engagement ratio of 18%). This is just not going to happen!
It would be interesting to see who buys that company. The real asset is certainly not in the RTC model, probably more in the gaming path. Not sure any of the big internet players would be interested (certainly not MSN, neither Google nor AOL, Yahoo! could to boost its presence in gaming…and even….). As the article points it out rightly, Murdoch could well be the only one falling for this.