Some of you might still remember Netmeeting. It's still a component of Microsofts os's, although not a really well-known much less popular one nowadays. It was the first mainstream method to communicate online having a cam. It was designed as a point-to-point application and directories to locate others were spread out over the internet without any central database.
free chat
Go forward, almost ten years later. It's rarely called interactive video now, but web cam chat. Will still be exactly the same thing, it just has a different name and it has become quite a hype.
Most cam chat rooms utilize Adobes Flash for that chat front-end with the Flash Application server as tailgate end. The technology is good, but expensive, as the flash application server doesn't run inexpensive and requires quite a bit of server capacity to do its job. There are several large cam chats dealing with that technology already, providing decent resolution real time video.
However, recently a new player entered the ring: Red5. Red5 is an open source flash application server considerably faster and more accessible compared to monster developed by Adobe. It's in beta state, but already is really stable that several sites happen to be launching self-made video chat rooms.
chat
When a technology opens up towards the free community, commercial products often need to step back. Red5 proves this on a single site particularly: Vagipe. Vagipe is really a totally free web cam chat site allowing users to view as much as five high res video streams at the same time, something unthinkable before. Cost-free for the application, really low resource use, and one lonely hobbyist can give away free of charge what needed a great deal of money and manpower before.