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Category: Real Networks
September 11th, 2009
RealNetworks: It can get worse
RealNetworks’ business is struggling and it can get worse. That message was delivered by a J.P. Morgan analyst who pooh-poohed any initial euphoria over the fact that RealNetworks’ Rhapsody app is now on the iPhone.
On the surface, J.P. Morgan analyst Vasily Karasyov pans the Rhapsody iPhone app’s prospects and gives Realnetworks an “underweight” rating. If you recall, RealNetworks broadcast its intentions to bring its Rhapsody music service to the iPhone Aug. 24. Apple approved the app on Thursday.
Karasyov writes:
We see only limited potential for new subscriber acquisition: in our view, Rhapsody’s subscriber base (750K as of Q2 ’09, a decline of 50K sequentially) reflects the existing demand for a subscription based music service irrespective of the device on which it’s available. We don’t expect the new application to reverse the challenging trend.
That’s not news. But Karasyov’s other key point may be worth noting. Karasyov said that RealNetworks could wind up paying a hefty penalty to VeriSign over a 2001 alliance. VeriSign alleges that RealNetworks interfered with its plans to sell certain business units. The two parties are in arbitration.
Indeed, in an SEC filing RealNetworks says VeriSign is seeking “a material amount in damages.” Karasyov reckons that:
“Every $10M of the potential payment would drive 7c per share impact—or 2% of the stock price—and we think the payment could be in the range of several dozen million dollars.”
And this is for a company that is already blowing millions defending itself—and losing—against Hollywood over its RealDVD software.
Karasyov’s note also reveals that RealNetworks’ primary selling point—for Wall Street at least—was its cash position. Sure, RealNetworks music, media and games businesses were struggling, but shares were selling for roughly its cash position.
The problem: That cash position is trending down. And if VeriSign wins and RealNetworks remains stuck in that RealDVD quagmire that cash hoard will shrink further. To wit: Piper Jaffray estimates that RealNetworks has spent more than $10 million on RealDVD litigation fees over the last two quarters. Simply put, Piper Jaffray analyst Michael Olsen says “RealDVD has proven to be a costly venture for the company, with no offsetting revenue.”
Simply put, these million dollar distractions are adding up. For the second quarter ending June 30, RealNetworks reported a net loss of $188.3 million on revenue of $135.7 million, down 11 percent from a year ago. Here’s a chart from Karasyov showing RealNetworks’ cash cushion:
From a Wall Street perspective, RealNetworks cash hoard is a floor for the stock. However, if that floor keeps falling—and it will given RealNetworks court problems—things could get materially worse for the company.
August 24th, 2009
Apple App Store approvals: The perception game playbook emerges
The Apple App Store playbook is starting to come into view. The game appears to revolve around managing perception and backing Apple into a corner if you’re a developer on the fence. Apple has its own playbook to play defense.
A big part of the playbook was revealed by RealNetworks when it announced its Rhapsody app for the iPhone. Now RealNetworks isn’t stupid. It knows that Rhapsody could be competitive with Apple’s iTunes. What’s a company like RealNetworks to do? Play offense. Tell the world that an iPhone app is coming and then officially set the approval clock. Here’s a look at the App Store plays:
Play 1: The preannouncement. RealNetworks executed this play nicely (Techmeme). In a blog post, the company said:
This week Rhapsody will submit our on-demand streaming music application for the iPhone and iPod Touch to Apple for review.
RealNetworks could have said: Hey Apple, here we come. Please approve us or the Feds may become even more interested in you. If Apple shoots Rhapsody down RealNetworks gets a little more mileage out of the tech news cycle.
Look for a lot of derivative plays after the Rhapsody move.
Now if you’re Apple you have to play a little defense here. Luckily, Apple has been working on its game with the Google Voice flap. Apple’s response to the Federal Communications Commission (FCC) inquiry about Google Voice on the iPhone gave us insight to a few plays.
Play 2: It’s our user experience, dammit. When in doubt, Apple can always go with the user experience line. Apple integrates the software and hardware so you don’t have to. Apple says regarding Google Voice:
The application has not been approved because, as submitted for review, it appears to alter the iPhone’s distinctive user experience by replacing the iPhone’s core mobile telephone functionality and Apple user interface with its own user interface for telephone calls, text messaging and voicemail. Apple spent a lot of time and effort developing this distinct and innovative way to seamlessly deliver core functionality of the iPhone.
Translation: The FCC can’t get into our user experience, can it?
Play 3: Blame the code. Apple always can just say your code is buggy. No preannouncement can tackle that one. Apple told the FCC:
Most rejections are based on the application containing quality issues or software bugs, while other rejections involve protecting consumer privacy, safeguarding children from inappropriate content, and avoiding applications that degrade the core experience of the iPhone.
Play 4: Use the security crutch. Every application is insecure right? Therefore, every app can be rejected on security grounds. Apple told the FCC:
Applications must not contain any malware, malicious or harmful code, program, or other internal component (e.g. computer viruses, trojan horses, ‘backdoors’) which could damage, destroy, or adversely affect other software, firmware, hardware, data, systems, services, or networks.”
Future plays: Once Apple shoots an app down, the developer will take to the blogs. This developer will then detail how good the code is, how secure the app is and how there should be an investigation into Apple. Apple will then counter. After running these plays for a few months, a more transparent and effective App Store approval process will emerge. If not, at least these spats will be entertaining.
August 24th, 2009
RealNetworks submits Rhapsody app to Apple
RealNetworks said Monday that it has submitted a Rhapsody app to for Apple approval. The move would bring a subscription music service to the iPhone and iPod touch.
In a blog post, RealNetworks said that it will submit the Rhapsody on-demand streaming music service for App Store approval. RealNetworks also plans to bring Rhapsody to the Android platform. The company also hinted it plans to “turn our sights on more mobile platform and carrier app stores.”
The natural question here is whether Apple will approve the Rhapsody app. Given the flap about Google Voice it’s a valid question. However, Apple has already approved a subscription music service app from Sirius XM. While the details are different, both services run you about the same a month—$15 or so.
Rhapsody on the iPhone reportedly won’t have offline capability yet.
Assuming Rhapsody is approved it will remain to be seen if the iPhone will generate additional subscribers for RealNetworks. Subscription music services make a lot of sense, but consumers generally prefer to download their tunes.
August 12th, 2009
Court upholds RealDVD injunction; supports outdated laws and Hollywood business model
I have to admit that I am blown away by a judge’s decision to grant a preliminary injunction on sales of RealDVD, RealNetworks’ controversial software that allows consumers to rip DVD movies into a computer much the same way that CDs can be ripped.
Even though I didn’t like it, I understood why Judge Marilyn Hall Patel agreed back in October to grant a temporary restraining order against RealDVD. She wanted to review the facts of the case and discover what I’ve been saying for some time: the Motion Picture Association of America - which is representing the Hollywood studios - is using this case to stifle innovation, preserve an outdated business model and keep consumers from fair use of products that they own.
Now, the Wall Street Journal reports that the judge granted the studios a preliminary injunction, pending a full trial - which isn’t expected to begin for another year or two. In her 57-page ruling, quoted in the WSJ, the judge weighed issues such as fair use in her decision. According to an AP report, the judge said that RealNetworks failed to show that the RealDVD products are to be used by consumers primarily for legitimate purposes. She wrote:
The court appreciates Real’s argument that a consumer has a right to make a backup copy of a DVD for their own personal use… While it may well be fair use for an individual consumer to store a backup copy of a personally-owned DVD on that individual’s computer, a federal law has nonetheless made it illegal to manufacture or traffic in a device or tool that permits a consumer to make such copies.
One might think that RealDVD is just a free-for-all piece of software that immediately enables consumers to rip, burn and resell copies of the DVDs. But that’s not what the software does. RealDVD was supposed to address concerns about piracy because the software preserved encryption to block widespread distribution and digital rights management software to restrict what could be done with the content.
The MPAA - and the courts - make an assumption that consumers could abuse the software and find ways around its restrictions to pirate movies. I hate to break it to anyone, but movie piracy is alive and well - even without RealDVD. To punish honest consumers who could use the software for its intended use just because others might - repeat, might - misuse it is just plain wrong.
Also see: RealDVD hearing: Don’t block the software because of what-ifs
June 24th, 2009
Real unleashes video for mobile with Real Player SP
Real Networks today announced the release of a free upgrade to its popular Real Player application. But the importance of this beta release, called Real Player SP, isnt just about the player itself. It’s about the technology that allows it to take video from the Web or a computer and put it through an on-the-fly conversion for playback on other devices, including the Blackberry and Palm Pre.
That becomes a big deal because one of the biggest selling points of the iPhone is the simplicity that comes with transferring multimedia files between the computer and mobile device. As Blackberry maker Research in Motion, Palm and Google go head-first into the competitive smartphone business, the ability to easily bring video to the device becomes critical.
The new Real Player also has a feature that allows videos to be shared via Twitter, Facebook or email with an extra click. It also comes with some customization options, which allows for specific device profiles or settings for the video format or size. And it creates audio-only version of videos for playback on audio-only devices.
The company said the player is designed to format for the existing media players on the various devices so that the user doesn’t have to download and install anything from the device itself.
For now, it’s just for Windows but Real says a Mac version is expected by the year’s end. There’s also a premium version for $39.99 that offers support for features such as DVD playback and DVD burning. It’s also worth noting that it will only work with Web video that is not DRM-protected.
May 13th, 2009
Real files antitrust countersuit against Hollywood's "illegal cartel"
Real Networks has turned the tables on Hollywood movie studios, filing a countersuit in U.S. District Court today that accuses the studios of violating antitrust laws by collaborating to form an “illegal cartel” that’s trying to monopolize the DVD market. (PDF)
The countersuit accuses the DVD Copy Control Association and the major studios of conspiring to eliminate any competitor from being in the market for fair-use copies of DVDs. The suit went on to note that the studios refused to enter into partnerships with Real unless the studios collectively agreed.
Also see: Studio, Real trade lawsuits over RealDVD
The matter stems back to Real’s DVD-copying software product, called RealDVD. The product allows users to make a copy of a DVD and places restrictions on the playback capabilities as a means of discouraging piracy and mass distribution. Shortly after the software was released last fall, the studios filed suit, asking for - and receiving - an injunction to halt sales of the software.
The courts agreed and, since then, the software has been unavailable. The two sides have argued their points in court in recent weeks and closing arguments are scheduled for May 21.
This countersuit likely won’t affect those proceedings. In its claim, Real Networks is asking for an injunction that would bar the DVD CCA and the studios from their “anticompetitive” activities, as well as monetary damages. In the suit, Real said the studios are motivated by their own financial gain and are engaged in practices that allows them to profit from their “illegal scheme.” Specifically, the suit says:
…despite the fact that their customers have a fair-use right to make backup copies of the DVDs they already have purchased, the Studios would like to force DVD owners to pay a second time to obtain that copy. In other words, the Studios want to charge consumers to exercise their fair-use rights. If the co-conspiring Studios and the DVD CCA succeed in imposing this illegal surcharge, they will have reduced the value of the DVDs consumers already own or would buy… The Studios perceive the new products developed by RealNetworks as a significant threat to their ability to monetize the non-infringing digital copies consumers already are entitled to create, a stream of revenue to which the Studios purport they are entitled but as to which the copyright laws, in fact, give them no right…
Unless a court intervenes, the studios will face no competition in the market that allows users to to make a secure backup copy of a DVD, Real said. Without competition, studios will have no reason to make fair-use copying technology available, the company said.
The studios listed in the suit are: Disney, Paramount Pictures, Sony Pictures, 20th Century Fox, NBC Universal, Warner Bros. and Viacom.
Also see: RealDVD hearing: Don’t block the software because of what-ifs
May 8th, 2009
Are Amazon and Real one-upping Apple?
Twice this week, I’ve engaged in conversations about Apple missing the boat on potentially sweet markets that would have fit right into its iTunes growth strategy.
The first conversation came after the release of the Kindle-DX, which apparently has a pretty healthy legion of fans who are big on e-books. I posted an entry earlier this week that said - for the money - Apple’s iPod Touch is a better buy than then Kindle but readers were quick to defend the Kindle.
E-books aren’t on iTunes - unless you count ebook apps, as well as a Kindle app, for the iPhone and iPod Touch. Steve Jobs didn’t see the potential. in a blog post I came across this morning, author Mike Elgan said Jobs got it all wrong about e-books and linked back to a New York Times interview with the Apple CEO in early 2008. Talking about the Kindle, Jobs says:
It doesn’t matter how good or bad the product is, the fact is that people don’t read anymore. Forty percent of the people in the U.S. read one book or less last year. The whole conception is flawed at the top because people don’t read anymore.
A lot of my readers this week would strongly disagree with that statement.
May 7th, 2009
Real misses for Q1, swings to loss; mentions "Facet"
Real Networks today reported a first quarter loss of $12.1 million, or 10 cents a share, on sales of $140.8 million, a five percent drop from the year-ago quarter. In the year ago quarter, the company reported a net profit of $2.4 million, or 8 cents per share. (Statement)
Wall Street had been expecting a loss of 6 cents per share.
Real said that revenue from its music business grew 16 percent from the year ago quarter and the games business jumped 3 percent. But revenue dropped 15 percent in the Technology Products and Solutions division and 23 percent in Media Software and Services.
On a call with analysts today, CEO Rob Glaser said, “To be clear, I am not satisfied with these results, even considering the circumstances.”
The company remains engaged in a legal battle with Hollywood movie studios over the RealDVD software and is still under a court-ordered injunction to not sell the product. The software allows users to make digital copies of their DVDs, much like music CDs are copied to iTunes. The studios have argued that it fuels unauthorized sharing and piracy.
Also see: RealDVD hearing: Don’t block the software because of what-ifs
The court ruled last year, days after the software was released, to block the downloading of it because, if the court rules in favor of the studios, the copying of DVDs illegal, the damage would have already been done - damage that could not be reversed.
The two sides are expected to wrap up preliminary injunction hearings in the coming days and will await a judge’s decision on that matter.
Glaser also noted that the company’s latest effort, a device called Facet, was demonstrated in court last week. Facet, which appears to be Real’s version of Apple TV, was described in court documents as a product that “shares many of the functionalities of RealDVD, including DVD playback from both a physical drive and from a secure digitally-stored copy of the DVD, i.e., Facet (the New Platform), so that both products could be adjudicated at once.”
As for the company’s financial outlook, the company did not provide guidance, saying that it “expects 2009 to be a challenging year for consumer spending, online advertising and corporate infrastructure spending.” For the second quarter, Real expects overall revenue to decline year-over-year and to be flat-to-slightly down sequentially.
Shares of Real Networks slipped in regular trading, closing at $2.67.
April 28th, 2009
RealDVD hearing: Don't block the software because of what-ifs
If I could be be punished for the things I could do - instead of what I actually do - I would been behind bars years ago.
Hollywood movies studios are trying to punish RealNetworks for something that its software could do, not what it actually does, according to an early round of testimony from a court hearing surrounding an injunction on a piece of software called RealDVD. The software allows users to “rip” the contents of a DVD, presumably a movie, into a computer - similar to what’s done with music CDs and iTunes. 
The Motion Picture Association of America alleges that RealNetworks - which makes the software - is trying to circumvent copyright protection technology on DVDs, using its own protections that would impose limitations and restrictions but could be altered or removed simply by getting to the code.
During testimony, an MPAA attorney posed several what-if types of questions about the ability to remove restrictions or increase the number of copies that could be made. In a CNET report, Greg Sandoval offers insight into U.S. District Judge Marilyn Patel’s interest on those scenarios:
Real attorneys tried to stop the line of questioning and raised an objection, arguing that discussing what RealDVD could do was irrelevant and asked the judge to stick to with RealDVD’s current capabilities. But Patel wanted to hear the testimony and overruled the objection.
The MPAA continues to drum the idea that RealDVD is a piracy threat. Throughout the dispute, Patel has been most animated when discussing copyright issues and unauthorized copies. When she ruled to keep a temporary restraining order in place in October, she worried that RealDVD could lead to mass copying saying “it’s impossible to bring back copies once they’re out in the market.”
Patel is right to hear about the scenarios because they do exist - but they’re still what-if sceanrios. That’s not what the software does. That’s not how Real sells and markets it. And what-ifs aren’t reason enough to keep it off the shelves. RealDVD has copying restrictions in place and was already being marketed as a way to preserve personal DVD collections, just the way many of us have already preserved our music CD collections.
I’ve said it before and I’ll say it again. This lawsuit is Hollywood’s attempt at preserving an outdated business model. RealDVD is not the enemy, nor is it the root of piracy. On the contrary, given the other forms of black market piracy out there, RealDVD is providing a safe and responsible way for DVD owners to preserve their investments while also respecting the copyrights of the studios. Hollywood should be embracing it, not fighting it.
February 12th, 2009
Real posts Q4 loss, forecasts declining revenue for Q1
Real Networks reported a net loss for the fourth quarter and said it expects first quarter revenue to decline, compared to the same quarter a year ago. (Statement)
It reported a net loss of $240.5 million, or $1.78 per share on sales of $152.6 million, a decline of 3 percent from $156.9 million a year ago. The loss reflected charges of about $240.7 million. In the year-ago quarter, the company reported net income of $2.7 million, or 2 cents per share, in the year-earlier quarter.
For the full year, revenue was up 7 percent to $604.8 million, compared with $567.6 million in 2007. Net loss for the year was $243.9 million, or $1.74 per share, compared with net income of $48.3 million, or $0.29 per diluted share, in 2007. The company said the net income in 2007 included a gain from a $60.7 million antitrust settlement with Microsoft.
The company did not provide full year 2009 guidance, citing “the high level of uncertainty regarding consumer spending, global economic trends, foreign exchange rate fluctuations, and credit markets.” In a statement, CEO Rob Glaser said:
In spite of a difficult and turbulent macro-economic environment, RealNetworks delivered revenue in line with our fourth-quarter expectations. We believe that the high-value, low- cost digital entertainment products and services we offer consumers are a great fit for these tough financial times.
Its games and music divisions both saw increases in revenue in the fourth quarter, up 9 percent and 8 percent, respectively. But the other divisions - Music, Software and Services and Technology Products and Services - both saw declines, 11 percent and 13 percent, respectively. For the first quarter of 2009, the company expects Music to see gains, Games to remain flat and the other two businesses to post declines, compared to the year-ago quarter.
One business segment that remains uncertain is Music Software and Services, where the new RealDVD product remains unavailable to customers because of a legal battle with the Hollywood Studios.
On a conference call with analysts, Glaser said the legal battle is only the second one that the company has encountered. With Microsoft, the company anticipated a long legal battle that could potentially end with one big payoff.
With the battle against the Motion Picture Association of America, the company expects a relatively quick resolution. Assuming the company is able to get the MPAA’s injunction lifted and the product download window opened, the payoff becomes the opening of new potential business opportunities for the company, Glaser said. Given the pending litigation, Glaser declined to elaborate on future plans.
The two sides are expected to return to court in April.
Also see:
February 3rd, 2009
RealNetworks: Revenue in line; Charges pile up
RealNetworks said Tuesday that its fourth quarter revenue will be in line with its expectations, but detailed a bevy of charges.
The company (statement) said its revenue for the fourth quarter will be $151 million to $153 million. However, it will be writing down goodwill and acquired intangible assets.
RealNetworks isn’t alone. Any company that made acquisitions at higher valuations is writing off goodwill. In some cases, the goodwill carried on the books eclipsed a company’s market capitalization.
Among the charges, which total $227 million to $249 million in the fourth quarter:
- A goodwill writedown of $185 million to $200 million. That charge doesn’t hurt RealNetworks cash.
- A restructuring charge of $6 million for layoffs and a plan to separate its games business. RealNetworks, however, said it has no idea when the games business can be separated and has halted spending on the transaction.
- A $20 million write-off for project costs and royalties along with a charge of $16 million to $23 million for deferred tax assets. The latter charge doesn’t hurt RealNetworks’ cash position.
January 13th, 2009
Patent wars: RealNetworks wins; Global Crossing pays up
RealNetworks defeated a patent infringement suit that was trying to come back from the dead. Meanwhile, Global Crossing licensed a portfolio of call center patents from Ronald A. Katz Technology Licensing, an outfit that collects dough from a who’s who of corporate America.
First, RealNetworks said on Tuesday that it defeated an attempt by Friskit to revive a patent infringement suit that sought damages of $70 million. In a statement, RealNetworks outlined:
The Federal Circuit in Washington D.C. upheld a 2007 ruling in which Judge William W. Schwarzer of the Northern District of California invalidated all asserted claims. RealNetworks was one of the first patent defendants to rely upon the Supreme Court’s decision in KSR Int’l Co. v. Teleflex Inc. Judge Schwarzer agreed that Friskit’s “inventions” were nothing more than obvious combinations of elements found in the prior art, including RealNetworks’ own products.
In April 2006, Real won a similar suit.
On the other side of the patent ledger, Global Crossing said in a statement that it “will purchase a nonexclusive license under a comprehensive portfolio of patents that Katz owns relating to interactive voice applications.”
Terms weren’t disclosed, but at least Global Crossing isn’t alone. Ronald A. Katz Technology Licensing has collected dough from 275 companies including American Express, AT&T, Avon, Bank of America, Costco, CVS CareMark, First Data, HP, IBM, Microsoft, Morgan Stanley, T Rowe Price, Wal-Mart and Whirlpool to name a few.
Katz’s background is interesting. He’s a prolific patent enforcer–some would say troll.
The Katz dossier on Wikipedia has a bevy of notable nuggets including:
- A run-in with the U.S. Patent and Trademark Office;
- Claims that run 100s of pages;
- Requests to reexamine Katz’s patents abound.
Wikipedia notes:
In 1961, Ronald Katz co-founded Telecredit, Inc. This was the first company to “enable merchants to verify consumer checks over the phone using an automated system without the assistance of a live operator”. In 1998, Mr. Katz formed a partnership with American Express Company to provide call processing services. That partnership later became First Data Corporation.
Ronald Katz has since founded Ronald A. Katz Technology Licensing, L.P. (RAKTL). RAKTL’s primary purpose is to license the Katz patent portfolio to companies using automated call centers. Over 150 companies have taken a license to the patents. RAKTL has thus earned approximately a billion dollars in license fees. Katz has been characterized as a patent troll largely due to the aggressive legal tactics used by RAKTL, such as suing infringers who refuse to take a license.
And why wouldn’t you sue everyone? After all, everyone is paying up. A quick search shows a never-ending stream of press releases announcing that some outfit has licensed a Katz patent. Perhaps these patents are iron-clad. Or it could be that it’s simply cheaper to license than fight. In either way Katz has a helluva business.
January 7th, 2009
If iRecord can rip DVDs, why can't Real?
If I were one of the lawyers for Real Networks, I’d be looking a bit closer at a device called iRecord, which is being showcased this week at Macworld.
iRecord basically allows you to take video and audio clips from any source - cable/satellite, DVR, Video game console and, yes, even a DVD - and copy it to an iPod, PSP or USB device. No, you can’t transfer it to a computer - and maybe that’s the loophole that has kept the lawyers from knocking on the doors of the Streaming Networks Inc., the Silicon Valley company behind the device.
You’ll recall that the Motion Picture Association of America slapped Real Networks with a lawsuit after its September release of RealDVD, a piece of software that allowed users to “rip” their DVD collections into a computer, much the same way iTunes allows them to rip CD music tracks into the computer. A court issued an injunction and ordered RealDVD to be shuttered until the issue could be settled in court.
The folks working the iRecord booth at Macworld were very quick to brush off questions about legal issues with Hollywood, noting that while the content can be copied to an external hard drive or USB drive that can be plugged into a PC for viewing, it’s not actually copied to the PC. Ummm, what’s the difference? The location of the hard drive that stores the video content?
While RealDVD - a $30 piece of software - was destined to be a seller, iRecord - priced at $250 - has yet to take off. Part of the problem is that it records in real-time. Let’s say you wanted to rip your Season 1 DVDs of The Sopranos to your iPhone so you can watch later while on-the-go. That means you have to play the whole season to copy it. Kind of feels like it defeats the purpose.
Notice I said the lawyers at Real - not the MPAA - should be looking closer at iRecord? I always thought the lawsuits and injunctions against RealDVD were bogus. (What can I say? I’m a fan of fair use.) If a product like iRecord can be sold, shouldn’t RealDVD also be allowed to be sold? Does it make it less illegal in the eyes of Hollywood lawyers that one product is destined to be a success while the other is still too awkward to gain any traction?
December 4th, 2008
Next up for layoffs: Real
Real Networks said today that it informed 130 employees, or 7.5 percent of its worldwide workforce, that their positions would be eliminated at the end of year. In a post on the company’s official blog, the company said the layoffs were part of a larger cost cutting plan that “is intended to bring expenses in line with current and prospective economic realities.”
The company said it still expects to report record revenue for the year but, to stay healthy, it needs to get costs in line with revenue expectations. Bill Hankes, vice president for Real Networks’ Corporate Communications, wrote:
The people who are losing their jobs will have time to transition their work through the end of the year. No one is being shown the door today. Departing employees can conduct job searches for other positions at Real or elsewhere from their offices here, or, if they prefer, from home. Everyone will remain on the payroll through the end of the year, plus each will be offered a cash severance package based on their length of service. Because of the unusual and difficult economic times, these severance packages include outplacement services and six months of COBRA healthcare coverage.
October 29th, 2008
Real vows fight for RealDVD, adjusts outlook
Like everyone else, Real Networks is bracing for an uncertain economic future. But CEO Rob Glaser sees two potential bright spots that could help the company ride the storm. On an earnings call with analysts, Glaser said that the company’s latest product, the controversial RealDVD, which allows users to import DVD movies into a computer hard drive, is a product worth fighting for.
A lawsuit by the Hollywood studios has prompted a temporary restraining order on the product but Glaser said the legal fees will be worth it and that RealDVD is product worthy of more investment, especially given the favorable reviews. “We’re excited about this category,” Glaser said. The case’s next hearing is scheduled for January.
Secondly, he believes that big-ticket items will be harder hit by the economy, compared to smaller-sale items, such as individual music tracks or subscription services like the recently-launched partnership with Verizon Wireless, called VCast Music with Rhapsody. That monthly subscription is billed through Verizon Wireless.
On Wednesday, the company reported a third quarter loss of $4.5 million, or 3 cents per share, on revenue of $152.0 million. In the same quarter a year ago, Real Networks reported earnings of $4.3 million, or 3 cents, on revenue of $145.million. Gross margin was 59% in the third quarter of 2008, compared with 61% a year earlier. Analysts surveyed by Thomson Reuters had predicted a loss of 3 cents per share on revenue of $153.5 million.
The company also adjusted its guidance for the fourth quarter and full year. For the quarter, it expects a loss of 4 cents to 1 cent on revenue of $150 million to $157 million. For the year, it expects a loss of 6 cents to 3 cents on revenue of $602 million to $609 million.
RealNetworks said its fourth quarter outlook will be hurt by the stronger dollar - a common theme among companies with international operations. A strong dollar minimized international growth when revenue is converted back to the greenback. Conversely, a weak dollar boosts sales overseas. The company said 20 percent to 25 percent of its revenue is international–primarily the euro and Korean Won. While the currency fluctuations aren’t the entire story - RealNetworks expects online advertising and consumer spending to slow - they play a role.
October 2nd, 2008
VIDEO: iTunes, mp3 rippers paved the way for RealDVD
There’s another legal showdown brewing between Hollywood and the techies. RealNetworks and the motion picture studios are headed off to court over RealDVD, just-released software that allows users to rip their personal DVD collections into a PC or portable hard drive. Yeah, just like everyone’s been doing with music CDs for years.
So what’s the problem? Software that reads music CDs and converts the tracks to mp3 or other audio formats is as old as, well, mp3 players. How is it any different when the disc is holding a movie, instead of a dozen music tracks?
Fellow ZDNet blogger Richard Koman analyzed the complaint filed by the studios and noted the only real argument: Real allegedly misused a limited license that allows it to make DVD player products - not copier products. Real, in its preemptive legal strike, filed court papers before Hollywood, asking the courts to find RealDVD to be in compliance with the license.
Sam Diaz is a senior editor at ZDNet. See his full profile and disclosure of his industry affiliations.
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