Is FMS the only way to make an MMO?

There's also Wowza and SmartFoxServer.

Wowza is like Flash Media Interactive Server with more streaming options.

SmartFox seems to be geared towards games.

If I was going to build an MMO however there's only one real solution for me:

http://www.reddwarfserver.org/  Originally called "project dark star" and created by sun labs it was discontinued at sun and given over to the community.

This would be something you'd build a flash "world of warcraft" in.

If you're asking these questions I'm assuming you're really looking at building something simple like a visual avatar chat so I'd personally recommend Flash Media Server, Smart Fox, or Wowza.  Probably in that order.

I personally haven't tried red5 yet because I didn't have any experience with anything like FMS and its documentation is spotty. ( From what I've heard. )

Good luck to you!

I don't know whether it would  be appropriate to list alternatives to FMS here, but for the sake of helping you out, I will risk my account and state:

There is Red5 (www.red5.org) - an open source Flash media streaming service. It is written in Java and can work with your Flash Player application without any changes to your client code. It may not be as polished and feature-rich as FMS in some areas, but in other areas it is much more potent - you can use the entire Java API to your hearts desire - including database connections etc. That you cannot do with FMS, as far as I know, unless you expose the database service as a webservice, an AMF compliant service (FMS itself, AMFPHP or something else). Red5 does not as far as I know, stream H.264 data, it does not have SWF-V authentication. Basically the only thing in common between Red5 and FMS is that they both work with Flash Player applications to stream media through RTMP (and via HTTP tunneling) protocol.

Remember that Flash Player has UDP/TCP socket API. Meaning you can push whatever data you want to the network, possibly to your own developed remote service. ActionScript is pretty fast, maybe some creative soul can develop a realtime video encoding in ActionScript 3? That way you have your own streaming solution. I don't have any hopes up for say 30fps realtime encoding, but 5 fps for 160x120 video may be a viable goal.

Try exploring Adobe Alchemy - the compiler will be suitable for exactly a thing like developing video encoding using pure SWF bytecode.

There is also haXe - a compiler that uses Alchemy-supported opcodes to speed-up execution, and it supports method inlining - an invaluable help when there is a need to squeeze out every last spare cycle out of the Flash Player runtime. As far as I know Adobe Flex does currently neither do inlining nor support the opcodes that Alchemy does.

Flash Player has been around for years, that has resulted in a plethora of options, good and bad. I think you do have some choice...