Best known for its RealPlayer media playback software, RealNetworks' 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 makes about 40% of its sales in the US.
RealNetworks operates in three segments - RealPlayer Group, Mobile Entertainment, and Games. Core products consist of its SaaS digital media services, the Helix software, and the SuperPass content subscription service.
Mobile Entertainment generates revenue from the sale of its SaaS services, which include ringback tones, music on demand, and intercarrier messaging, and our LISTEN product. It accounts for 51% of revenue. In connection with SaaS services, also offered are business intelligence, subscriber management, and billing for carriers.
The Games business, through its Slingo, GameHouse and Zylom brands, derives revenue from sales of games licenses, online games subscription services, advertising on games sites and social networks, microtransactions within online and social games, and sales of mobile games. It accounted for 24% of the company's revenue. While SaaS dominates its business, RealNetworks 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 Atravita in Latin America. It focuses on casual games but parts ways with companies such as
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 RealPlayer Group mainly consists of the RealPlayer media player software, which competes against
Media Player and
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
. 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 RealPlayer Group accounts for about 25% of revenue.
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. While the US is the company's largest market, with 40% of sales, South Korea is also big with 26% of sales. Europe accounts for 17% with the rest of the world at 18%.
RealNetworks continued the slide in revenue, reporting $156 million in 2014, down about $50 million from the year before. The company's three segments all posted lower revenue with the RealPlayer Group leading with a $36 million decrease. About $16 million of the RealPlayer Group's decline resulted from a shot to a third party distributor at lower rates than previous partners. The company's shift toward RealPlayer Cloud subscriptions led to a decrease of $7.6 million in revenue. An increase in demand for the company's music on demand service, particularly in Korea, helped keep the revenue decrease in the Mobile Entertainment segment to $1.3 million.
The company posted a net loss of $71.8 million in 2014, compared to a $59 million net loss in 2013. Cash flow from operations was a negative $60.2 million in 2014 compared to a negative $50 million in 2013.
RealNetworks is moving to cloud-based products and services for mobile devices. The company's RealPlayer Cloud now has more than 10 million users, up from 500,000 in 2013. The company is working to bring in additional marketing and distribution partners to drum up more consumer adoption. The company's Slingo Adventure and Emily's New Beginning games have shown early promise. And the company's stake in the Rhapsody music service benefits from the service's subscriber and revenue growth.
RealNetworks introduced LISTEN, an application that combines music sharing, ringback tones, and productivity tools, in 2014. It's available for US smartphone users in a partnership with T-Mobile. LISTEN allows users to customize the experiences of people calling them. With the app, callers to hear music or status messages chosen especially for them rather than the tones usually heard when the phone is ringing.
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.