RealNetwork’s GameHouse Focuses on Facebook Instead of Spinoff

RealNetworks is a cornucopia of businesses, ranging from ringtones to the RealPlayer.

But this story is about GameHouse, the Seattle company’s $100 million casual games business.

The facts aren’t pretty.

Revenues are down and there are 100 fewer employees than there were a year ago. Twice, RealNetworks has said it was going to spin off the division, only to cancel plans later.

But from the fourth floor of Real’s headquarters, where stained frat-house couches and Friday happy hours rule, Matt Hulett, the SVP and president of GameHouse, spins a completely different picture.

He believes he is running the next social games powerhouse.

“I’m not happy until we are in the Top 10,” he said.

Hulett isn’t necessarily delusional. He’s happy being the “restart” or “turnaround” guy who gets his hands dirty.

Since Hulett got the job about a year ago, GameHouse has become one of the top 20 game makers on Facebook.

Unlike Zynga, it concentrates on casual titles, such as puzzle games, slot machines or what you might call “match-three” games, which fit into the Tetris-like genre. Currently, some of its best titles are UNO, Scrabble and Collapse! Blast.

But its monthly active users total only 4.6 million, and its daily active users don’t even surpass one million. For an unfair comparison, Zynga has 268 million monthly users and 48 million daily users.

Today, Hulett is unveiling its latest match-three game, Bayou Blast, slated for release on Facebook at the end of October. Users blast away gems by tracing a line over matching gems in one contiguous line. Bayou Blast, which represents a culmination of the company’s social efforts to date, will be followed by Let’s Make a Deal and new slot games in the beginning of the year.

When he took the job, Hulett made some drastic decisions.

He saw the company’s traditional online download and subscription casual games business in decline. Logically speaking, fewer people are willing to pay $20 a month for a subscription when there are games on Facebook for free.

But Hulett figures if other casual game makers — like Wooga, PopCap (acquired by Electronic Arts) and — can climb their way up the charts, why can’t he?

Social now comprises up to half the company’s team, and this year Hulett plans to invest $10 million in the effort. He said he cut the headcount from 400 by more than half about a year ago, and has rehired social game developers and others with experience building infrastructure, such as analytics. Today, GameHouse is back up to almost 300 employees.

What’s more, Hulett says he can rely on a backlog of great intellectual property, which created games with very long lives on the Internet, for Facebook and eventually mobile. It can even remarket those new Facebook titles to its GameHouse member base of 20 million users.

If GameHouse does get into the Top 10, I asked Hulett if RealNetworks will announce that it’s ready to be spun off — again.

“We’ve announced that we were going to separate twice. I won’t be the one who says it for the third time,” he said. “I want our metrics to speak for themselves. If all that stuff happens, then a lot of things happen. It’s best to get inbound calls.”

At least one company that wants a bigger Seattle presence and is on pace to acquire a company every month could be the one on the other line: Zynga.

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