RealNetworks Wants a Convergence Play–Just Like Everyone Else

Why did RealNetworks buy Varia Mobile, a software company best known for producing an MP3 player that sold poorly?

To work on a mysterious cloud-computing project, which has something to do with mobility and entertainment. That’s per TechFlash, which reported on the deal Sunday.

Probably best not to make too much of this one. Given that Real didn’t announce the deal (let alone report it to the Securities and Exchange Commission), it can’t be for much money (note that the last purchase Real bothered to announce was for $4 million). And the Lala deal aside, you can “acqhire” a group of engineers without laying out a lot of cash these days.

But it is a good reminder that RealNetworks (RNWK) wants to make itself a player in the next phase of entertainment–the one where you buy or rent the stuff over the Web and consume it wherever you want.

That’s at least partly why CEO Rob Glaser is still wrangling with Hollywood over his “RealDVD” system, which is supposed to let you rip copies of DVDs you already own. Because once you’ve done that, the next logical step is moving the file to your iPod or your tablet or just to different rooms in your house.

The problem, of course, is that everyone else wants to play there, too. And many already are in some form.

There are the hardware guys like Sony (SNE), who are selling TV sets and game consoles with Web connections, and cable guys like Comcast (CMCSA), who already control the pipe that brings the stuff to your living room. And telcos like Verizon (VZ), which want to do the same thing. And, of course, retailers like Apple (AAPL), Amazon (AMZN) and Netflix (NFLX), which are already selling digital entertainment. Etc.

During the first Web boom, it seemed Real would be in this list as well, since its back-end technology and its RealPlayer were commonly used to move entertainment around the Internet. Now the company is best known for its Rhapsody music service and its collection of casual games, but it doesn’t have pole position in either sector.

You’ll hear plenty more about this stuff over the next week at the Consumer Electronics Show, which kicks off Wednesday. But Real will probably be mum.

The company doesn’t have any announcements planned and isn’t renting space at the convention’s main show floor. Not a terrible idea to lie low at CES, where lots of people make a lot of noise about stuff that never comes to pass. But at some point, it will be interesting to see how Real plans to compete.