RealNetworks has enjoyed real success in the world of digital media. Best known for its RealPlayer media playback software, its primary revenue now comes from Software-as-a-Service (SaaS) used by mobile phone carriers for ringback tones (RBT), music and video on-demand, and text messaging. RealNetworks' other core products are the licensing of its Helix streaming software used to broadcast live and on-demand media, and content subscription service SuperPass, which offers access to video, games, and music. It also creates and publishes downloadable and online games (GameHouse). The company gets almost half of its sales in the US.
RealNetworks operates in three divisions – core products, games, and emerging products. Core products consist of its SaaS digital media services, the Helix software, and the SuperPass content subscription service. It accounts for almost 60% revenues.
While SaaS dominates its business, it has been building its video game business, which operates under the GameHouse division and brand (replacing its RealArcade brand) in North America, Zylom in Europe, and as Atravita in Latin America. It focuses on casual games but parts ways with companies such as Zynga by offering downloadable games for sale, in addition to the typical social, casual avenues of online subscription and ad-supported free play, third-party portals, social networks, and mobile devices. It not only develops its original games, but games based on licensed properties, as well as licensing its properties out to external developers. It also acts, itself, as a portal for other developers. The games division accounts for about a quarter of sales.
Rounding out the company's operations is the emerging products segment, mainly consisting of the RealPlayer media player software, which competes against Microsoft's Media Player and Apple's QuickTime and iTunes. To keep up with competitors, RealPlayer has grown from something that only played media into a tool that helps customers find, obtain, manage, and even edit content. The software handles not only audio and video, but also photos, and enables users to share content to sites such as Facebook. RealPlayer had once focused on differentiating itself as a streaming platform, but now concentrates on being a content management tool that can handle many formats across a variety of devices. It's available in both a free and paid version.
The company has three offices in the US and international locations in Austria, China, France, Germany, India, Indonesia, Japan, Luxembourg, the Philippines, Portugal, Singapore, South Korea, Vietnam, and the UK. The US is its largest market, accounting for almost half of sales. Europe accounts for about 20% and the rest of the world (including Asia) make up the other 30%.
RealNetworks has seen its revenues steadily decline over the years, going from a record $600 million in 2008 to $375 million in 2012. (After much restructuring the company has about half as many employees as well.) However, 2012 sales actually increased 12% since the company recorded an extra $116 million as a gain in operating income – even though the money came from selling intellectual property (about 190 patents, 170 patent applications, and next-generation video codec software) to Intel. Without recording the operating income gain, sales would have fallen 23% to $258.8 million.
A key growth strategy for RealNetworks' core business is the delivery of content to wireless devices, particularly mobile phones. The company partners with leading handset makers and service operators, including Nokia and AT&T and sells to leading wireless providers SK Telecom and Verizon.
Mergers and Acquisitions
In mid-2013 it bought Slingo, a social gaming company whose flagship game combines slots with Bingo. RealNetworks paid $15 million for Slingo, which counts about 4.5 million Facebook users, and millions more on mobile handsets, slingo.com, and at real slot machines in casinos around the world.
Founder and Chairman Rob Glaser owns more than 35% of RealNetworks' stock.