About Realnetworks, Inc.

RealNetworks pretty much invented online media streaming with its RealAudio technology way back in 1995. Then there was music streaming through its Rhapsody service. More than two decades later, the company keeps media streaming online with its technologies called codecs that compress files to make streaming more efficient. In mobile media, RealNetworks offers messaging systems and ringback tones to wireless carriers. As a game maker, the company provides casual contests for mobile devices through its GameHouse and Zylom brands. In another callback to the past, RealNetworks also holds a major stake in music subscription service Napster.

Operations

RealNetworks operates in three segments: Games, about 40% of revenue, Mobile Services, about a third of revenue, and Consumer Media, about 30% of revenue.

The Games segment includes GameHouse Original Stories, which are based on a series of characters including Emily (Delicious Franchise), Amanda (Heart's Medicine), and Angela (Fabulous). Zylom is another RealNetworks gaming brand and the company also offers games licensed from third parties. Revenue is generated by sales of mobile games, licenses, online games subscriptions, and advertising on games sites and within games.

Mobile Solutions consists of software as a service (SaaS) digital media services for mobile and online service providers. Included are its intercarrier messaging service and a  product called Kontxt, which provide text message management, anti-spam, and classification. The company also offers a ringback tone product. (A ringback tone is the allert a caller hears when a mobile phone call is going through.) The company's RealTimes platform enables video and photo sharing for wireless carriers.

In its Consumer Media segment, RealNetworks offers its RealMedia High Definition (RMHD), a compression technology. It can be used on a range of devices, including smart TVs, to transmit high quality images online.

RealNetworks owns 42% of Napster, the latest incarnation of the music-sharing service that revolutionized the music business before it was shut down around the turn of the century. RealNetworks rebranded its Rhapsody music streaming service as Napster and it generates revenue by selling subscriptions to consumers and distribution partners, such as mobile carriers.

Geographic Reach

RealNetworks is based in Seattle, Washington and it has an office in Eindhoven, Netherlands,

The US is the company's largest market, with more than half of sales, while Europe accounts for more than 15% and the rest of the world contributes about third of revenue.

Sales and Marketing

RealNetworks' segments have their own ways to reach customers.

The Consumer Media Business sells RealPlayer services through its websites such as Real.com, as well as through third party distributors. It has a sales team in China that works with distribution partners to market codec technologies.

Mobile Services works closely with its customers to identify opportunities for entertainment applications, services, and systems. 

The company's games are marketed from the GameHouse and Zylom websites and through third-party distribution channels, such as application storefronts, search engines, online portals, and content publishers. 

One Mobile Services customer accounts for about 10% of total revenue.

Financial Performance

The last five years have seen RealNetworks revenue drop by more than half, from $177 million in 2013 to about $79 million in 2017. The rate of decline slowed to 3% in 2017 from 2016, slowing the rate of decline.

The company reported lower sales in the Consumer Media (due to declines in licensing) and Mobile Services segments (due to declines in carrier integrations and intercarrier messaging), while showing a slight uptick in the Games segment (due to higher mobile game sales).

RealNetworks reduced its net loss to about $16 million in 2017 from a $36 million loss the year before. Cost reductions in salaries, facilities, and marketing lowered operating expenses 18% in 2017 compared to 2016. 

Negative operating cash flow slowed to about $21 million in 2017 from $24 million in 2016 due to cost reductions. 

Strategy

RealNetworks has spent several years developing technologies while reducing costs, a combination that it asserts sets it up for growth.

The company has developed RealMedia High Definition (RMHD), a technology that compresses video streaming files which retaining sharp images. The company is selling the technology to electronics manufacturers in China for use in smart TVs and other consumer-oriented devices. The company also sells to technology to PC makers.

In messaging, RealNetworks release Kontxt, a mobile messaging platform, in 2017. The product enables carriers to identify, classify, and put policy around messaging over a network. The company is aiming at corporate uses of messaging that include notifying consumers of flight changes and restaurant reservations.

A new technology for RealNetworks is its computer vision platform called RealCV. In 2018, the company released a facial recognition product based on the RealCV technology.

As for games, RealNetworks is developing titles for the GameHouse Original Stories portfolio, which it sells through subscriptions.

RealNetworks reduced costs through a restructuring effort that its said put expenses in alignment with revenue. The company moved to leave its low-margin music-on-demand business in South Korea in late 2017.

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Realnetworks, Inc.

1501 1st Ave S Ste 600
Seattle, WA 98134-1470
Phone: 1 (206) 674-2700
Fax: 1 (206) 674-2699

Stats

  • Employer Type: Public
  • Stock Symbol: RNWK
  • Stock Exchange: NASDAQ
  • Chairman and CEO; Interim Lead, Consumer Media: Robert Glaser
  • Chairman and CEO; Interim Lead, Consumer Media: Robert Glaser
  • CTO: Reza Rassool
  • 2017 Employees: 456

Major Office Locations

  • Seattle, WA

Other Locations

  • San Francisco, CA
  • New York, NY