The maker of digital media delivery software reported $80.2 million in revenue for the fourth quarter of 2011, a decrease of 5 percent from the previous quarter and an 18 percent year-over-year decrease. That included a 21 percent decrease in games revenue to $21.6 million.

And its net loss for the year was $27.1 million, compared to a $5 million profit a year ago. In its outlook, RealNetworks said it expects revenue from each of its segments to decline sequentially and year over year, as new CEO Thomas Nielsen continues to restructure and simplify its businesses.

But, amid a growing social gaming market, RealNetworks is clinging to its GameHouse business — at least for now. The company has said twice before it was planning to spin off the unit, but is still holding on to what it believes could be a social gaming “powerhouse.”

While RealNetworks doesn’t break out gaming data other than the aggregate games revenue, the company’s declines were offset somewhat by gains in its social gaming business, it said.

RealNetworks’ GameHouse, as my colleague Tricia Duryee explains here, concentrates on casual games, such as puzzle games, slot machines or what might be described as “match-three” games. Currently some of its best titles are UNO, Scrabble, Collapse! Blast and its latest, Bayou Blast. Its revenues are generated from microtransactions of virtual goods.

Over the past year, GameHouse has been edging toward a top 10 ranking in terms of game makers on Facebook.

And it’s seeing a boost in daily and monthly active users that is encouraging to Matt Hulett, who’s been running the gaming arm as its president for the past year.

GameHouse’s daily active users have now hit 1.3 million, up from 700,000, Hulett said, and its monthly active users increased around 3 million to more 7.5 million. (For perspective, Zynga now has 240 million monthly active users.)

Hulett also said that GameHouse’s daily user traffic is up 75 percent quarter over quarter. Users seem to like the new Blast games, Hulett said, which he’s hoping will drive growth in the first quarter, and GameHouse plans to introduce two or three new games in the next few months, including a slots game. It also plans to expand its 270-person staff by about 45 people by the end of this year.

But on the earnings call, RealNetworks’ Nielsen would say only that GameHouse “could” be a business the company might anchor itself around, and that if it focuses entirely on gaming, the other parts of RealNetworks, which include digital video delivery and download tools and the Rhapsody subscription music service, would no longer fit into RealNetworks. (In January, RealNetworks successfully sold $120 million worth of software and patents to Intel, as the chip maker looks to use the technology in current and upcoming video streaming products.)

Another scenario could be that previously mentioned spinoff as RealNetworks looks to streamline. And the market is ripe for social gaming companies: In recent months, DoubleDown and PopCap have sold to bigger gaming companies for $500 million and $1 billion, respectively.

“We have perhaps been sniffed more times than a dog at a dog park,” Hulett said, reiterating that there’s been a lot of inbound interest for GameHouse.

Whether one of those sniffs has come from a gaming company named after a dog — Zynga — Hulett declined to say. “When we’re ready to do something, we’ll do it.”

Michael Bloom joined the publisher, which owns Rolling Stone, Us Weekly, and Men’s Journal, in May. On Friday afternoon, he sent out a memo announcing his departure. Here’s the bulk of the note:

As some of you already know, I’m moving on from Wenner Media. While it’s been a relatively short time, I’ve really enjoyed working with so many talented and creative people across Wenner’s incredible brands.

Over the past six months, a new digital leadership team has been put in place, and a lot of great work has been done to set the foundation of what will be a terrific digital future. I’m proud of what you guys have accomplished and I know that you will go on to do great things in 2012. I’ll certainly be rooting for you from the sidelines.

Unlike many of his competitors, Wenner Media owner Jann Wenner has never rushed to embrace digital publishing. For a long time, he did very little with the Web beyond handing over his flagship RollingStone.com site to RealNetworks.

That deal made him money, but it also allowed upstarts like Pitchfork to grab lots of territory and mindshare over the years. Last year, Wenner got control of the site again and moved to put most of it behind a pay wall.

Around the same time, Wenner declared himself unimpressed with the commercial upside of the iPad for magazine publishers, a position that put him at odds with the conventional wisdom. Since then, many of his peers have become much more sympathetic to his take.

Bloom, who had previously put in time at Sharecare, MTV, and AOL Time Warner, didn’t mention a new job in his note; Wenner Media hasn’t announced a replacement. I’ve asked Bloom and a Wenner rep for comment.

In a blog post aimed at developers, Facebook wrote: “We have begun working with a few developers to test the ability to offer Facebook Credits on websites, with the goal of helping them offer a more unified app experience to users beyond apps on Facebook.”

One of the first partners is GameHouse, a division of Seattle-based RealNetworks. GameHouse will be using credits for both Collapse! Blast and UNO Boost on its own game network at GameHouse.com. By integrating credits, GameHouse says players will now be able to switch back and forth between Facebook and GameHouse.com, while maintaining their scores and data.

“We truly believe that every game will be social someday, whether it’s played on Facebook, Google+, or at GameHouse.com,” wrote GameHouse in a blog post.

Since users will still log in to their Facebook accounts to play the games, technically the credits will be purchased directly from Facebook. GameHouse will still have to share 30 percent of the revenue from the sale of Facebook Credits, which is the standard cut on the social network.

GameHouse is one of the first to try using Credits off of the network, but there will likely be others following.

Earlier this month, Zynga announced Project Z, its own gaming platform, which will provide a seamless game experience between Facebook and its own Web site. Despite creating a separate game network, as we wrote at the time of the announcement, Facebook’s influence will be everywhere.

Zynga will use Facebook Connect to enable game players to log in and play the games seamlessly between Facebook and Project Z, and although it declined to comment on the use of Facebook Credits, we can imagine with this trial there will be a role for them on the new platform, as well.

I was on the phone with its two founders: Alon Maor, CEO; and Dan Sahar, VP of marketing. They had just started telling me about how they plan to sell network appliances that network operators — like, say, Comcast or Time Warner or Verizon — might put on their network in order to help them meet the growing demand for video content. The aim, Maor told me, is to get the most popular content as close as you can to the customer.

The first thing that popped into my mind was creating an appliance that sits on the network; close to, but not in the customer’s house. Maybe in the nearest network hub or central office. It turns out I was right. Then I wondered aloud what Qwilt might be using as storage technology. Could it be, maybe … flash memory? The chips that have so revolutionized the data centers of companies like Facebook and Apple and the banking systems of Credit Suisse, among others, when put to use by the likes of Fusion-io and Violin Technology?

Why yes, it does use flash memory, they told me, making them the latest member of the steadily growing “Flash Madness” club, which gives me yet another excuse to use the image taken from the cover of Flash Comics #1, circa 1940. For reference, the other members are Fusion, Violin Memory and Pure Storage.

Maor and Sahar laughed on the other end of the line at my guesses. “Would you like a job in our engineering department?” Sahar kidded me. I didn’t answer, because I wasn’t done guessing things like how Qwilt does what it does. “You must use some kind of algorithm to figure out what’s popular,” I said. Right again, mostly. The interview hadn’t been going for as much as five minutes, and I hadn’t even asked a single question and pretty much had it all figured out.

Well, not everything. There was the small matter of funding. Qwilt has raised $24 million in two rounds from Accel Partners, Redpoint Ventures and the Crescent Point Group, a fund based in Singapore. Maor is a Cisco veteran who got absorbed into that company following its $200 million acquisition of P-Cube. Before that, he was an engineer at Seabridge, which is now known as Nokia Siemens Networks. Sahar was director of marketing at Crescendo Networks, now part of F5 Networks. Tom Dyal, a Redpoint partner, is on Qwilt’s board.

Video is so popular with consumers that Internet services providers are struggling to get their networks scaled up to meet the demand, Maor says. The traditional way to solve that problem when everyone is watching the same show on Hulu, or the same movie on Netflix, is to just add routers and pray. That’s expensive. What if you could add some extra piece of gear that works with the existing network infrastructure? If you could figure out what was the most popular show in a particular neighborhood, make a copy of it right in that very neighborhood, and deliver it from there rather than all the way back from Hulu’s or Netflix’s data center, you’d lessen the network’s burden.

So that’s exactly what Qwilt does: It has three patents pending on processes for determining what video applications are being used on a network, and for figuring out what content is most popular in a particular area. So if you’re in a neighborhood full of “Jersey Shore” fans, the Qwilt box would figure that fairly quickly, and keep copies of it close at hand so that everyone gets their required daily dose of Snooki.

Also on Qwilt’s board is Rich Wong of Accel; Peter Wagner, an independent board member who has previously worked at Accel; Ohad Finkelstein, a partner at Crescent Point; and Giora Yaron, the former chairman of Mercury Interactive, which is now part of Hewlett-Packard. Also investing is Rob Glaser, the former CEO of RealNetworks.

Got all that? I told you it was an easy interview.

So what happens if you cut directly to the chase and build true casino games like slots, poker or bingo?

It turns out that rings up a pretty healthy business, too. The best part is that because of U.S. gambling laws, game players don’t ever get to cash out their winnings.

In other words, the house always wins.

In July, Sean Ryan, the director of game partnerships at Facebook, said the casino category is creating “unbelievable monsters,” and is still largely untapped by developers. “It turns out that people are completely okay winning virtual currency that they can never cash out,” he said.

But the category giant is no longer sleeping.

Earlier this year, Playtika, the developer behind popular Slotomania, was acquired by Caesars Entertainment Corp. for $80 million, and others are scrambling to keep up.

Today, Berlin-based Crowdpark has announced that it has raised $6 million in capital to help fuel its concept of social betting, where people can bet with friends on everything from who will win a football game to whether Angelina Jolie and Brad Pitt are getting married.

“This is just an entertainment product. You pay with Facebook Credits, so the players do know they don’t get any money back,” said Crowdpark’s co-founder and Chief Product Officer Ingo Hinterding. “It’s 100 percent legal.”

And there are many other players in the space, too.

Arguably, the first to establish the category was industry leader Zynga. In 2007, it launched Texas HoldEm Poker, a game that continues to attract close to 6.4 million users a day and is one of the company’s Top 3 revenue-generating titles. Two weeks ago, Zynga said it was expanding its casino games with an upcoming launch of Bingo.

Meanwhile, a number of lesser-known companies are literally hearing bells and whistles going off.

Seattle-based DoubleDown Casino, which has slots, video poker, blackjack and roulette in the same app, today launched a new game called Photo Booth Friends.

It falls under the “slots” category, which means you click to replicate the effect of pulling down the handle to see the reels spin on the screen. Photo Booth Friends lets you customize the reels with photos of your friends.

DoubleDown recently celebrated achieving one million daily active users, and has eclipsed other popular games like Zynga’s Mafia Wars, based on monthly active users.

Ryan name-dropped DoubleDown as one of the unbelievable monsters, and according to sources familiar with the company’s financials, we hear the game is now generating $140,000 a day in revenue. For reasons of competition reasons, the company declined to comment.

Others exploring the casino category include RealNetwork’s GameHouse and Electronic Arts through its recent acquisition of PopCap Games.

Here’s an infographic from Crowdpark, breaking down the social betting opportunity on Facebook:

Casino photo credit: FreeRishad.

Under the terms of the agreement, Rhapsody will give the big box electronics retailer a stake in its company in return for its Napster subscribers and certain other assets. Best Buy acquired the digital music company for $121 million in 2008.

The transaction is expected to close by the end of November.

The companies, which are claiming to have the two largest music subscriber bases in the U.S., did not disclose how many they will have together. Rhapsody said it will also use the assets to add to its product line. Separately, Rhapsody has reported that it has surpassed 800,000 subscribers.

In a statement, Jon Irwin, Rhapsody’s president, said, “There’s substantial value in bringing Napster’s subscribers and robust IP portfolio to Rhapsody as we execute on our strategy to expand our business via direct acquisition of members and distribution deals.”

The two companies likely have felt additional pressure as new subscription and ad-supported music services enter the U.S. market, such as Rdio and Spotify.

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 King.com — 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.

What does Nettle do? That’s not clear yet. The company plans to launch “a next-generation social/local/mobile application and website for the global entertainment market” next month, starting with an iPhone app.

Dear, who is CEO of La Jolla, Calif.-based Nettle, elaborated that it is focused on “a very specific consumer vertical.”

Dear founded Eventful, an event aggregation site, in 2004, but resigned as chairman last year after being inspired to do something on the mobile Internet, he said. His co-founder, Dan O’Neill, who is CTO of Nettle, previously co-founded music company Trusonic.

Despite the heads-up, a few slackers were still busily updating their games this week in time for today’s deadline.

Facebook Credits is a currency used to buy virtual goods inside many games on Facebook. Users can pay with a credit card, PayPal or by using their mobile phone.

Going forward, that means a player must purchase virtual goods with Credits, instead of paying for them directly using a credit card or other payment service, like PayPal. Once Credits have been purchased they can be used in any application on Facebook.

Many developers started implementing Credits more than a year ago, and by the time the announcement was made in January, many were already on board. At that time, Facebook said 350 applications, from 150 developers, were already using the payment system, representing more than 70 percent of virtual-goods transactions.

But this week, I talked to two companies — RockYou and RealNetwork’s GameHouse — that were scrambling to get their final implementations done in time. Other big players, such as Zynga, Playfish, CrowdStar, Digital Chocolate, Lolapps and PopCap, jumped on board early and have been up and running for a while.

Facebook said the primary purpose behind Credits was to make payment more straightforward for the consumer.

But it would be an oversight not to mention that the company is also generating big bucks from implementing the program, since Facebook takes a 30 percent cut of all sales. (See Liz Gannes’ interview with Dan Rose for the latest on the program.)

In fact, Facebook Credits is a lot like Apple’s iTunes, which keeps 30 percent of the revenues and shares 70 percent with application developers.

When first introduced, the program met a lot of criticism from game developers, but over time they’ve been pleasantly surprised at how easy Facebook Credits is to implement and how well it monetizes.

Take GameHouse, for example.

The Seattle-based game developer has some 15 games on the social network, and was working up until yesterday to get all of its games on board. Ian Fliflet, RealNetwork’s senior director of corporate strategy, said some of them weren’t worth the time to convert. So some games won’t be monetized going forward, but will be kept up to generate traffic.

He said in the case of the games that have already been updated, the conversion has definitely been worth it.

“We’ve seen an increase in the number of people paying, so it’s been net positive for us. There’s an advantage to players already having Facebook Credits in their account — the biggest hurdle is to get them to get their credit card out of their wallet,” he said.

In the case of UNO, since implementing credits, the number of people now paying to play the game has increased 10 times, which more than makes up for the 30 percent they are paying to Facebook.

RockYou, a Redwood City, Calif.-based developer of social games, switched over most of its games earlier this year, but waited until yesterday to transition Zoo World over to Credits, for several reasons.

Lisa Marino, RockYou’s CEO, said the company did not have enough developer time to get it done earlier, and it is reluctant to switch because the two-year-old game was monetizing well using PayPal. She said the game accounts for about a third of the company’s digital goods revenue.

In general, she’s found that if you have to completely retrofit a game to accept Credits, revenues will decrease. But when you have the opportunity to build a game from scratch with Credits built in, it does better than any other payment platforms.

As for cutting a check to Facebook, Marino calls the 30 percent “pretty standard.”

“If you are looking for eyeballs, then you have to be willing to pay the toll,” she said. “I don’t lose any sleep over it. It’s my operating environment and I optimize for it.”

Marino can also share her opinion as a gamer who spends $300 to $400 a month of her personal money on social games. ”I don’t have an issue with Credits … as long as I can do things quickly and conveniently, then I’m good.”

Photo Credit: BeingSelfEmployed.org.

It’s okay, you are probably not alone, but RealNetworks has not given up on its cloud ambitions. The Seattle company said Wednesday that the service is debuting now for Vodaphone customers in Germany and should come to the U.S. this fall.

Though clearly overshadowed by Apple’s iCloud, and to some extent by cloud services from Google and Amazon, RealNetworks said the promise of its service is the fact that it works on many different types of devices. The service is designed to allow users to do things such as play their iTunes library on their Android phone or share photos to Facebook.

“Customers want to be able to easily find and enjoy the media they own, no matter where it resides,” Interim CEO Mike Lunsford said in a statement. “With Unifi, they have the freedom to choose the phones, computers, tablets, services and platforms that best meet their changing needs -– and still have access to all of the media they love.”

RealNetworks demonstrated the technology at our D: Dive Into Mobile conference in December.

]]> http://allthingsd.com/20110629/realnetworks-unifi-cloud-sync-service-lives-in-germany/feed/ 0 http://allthingsd.com/20110425/realnetworks-rinse-offers-a-tune-up-for-itunes/ http://allthingsd.com/20110425/realnetworks-rinse-offers-a-tune-up-for-itunes/#comments Mon, 25 Apr 2011 13:15:07 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=32121 RealNetworks used to try to compete with Apple. Now it’s in the Apple accessories business.

The software company is rolling out Rinse, a $39 program that promises to “seamlessly organize and repair your iTunes music library”.

The idea is that most iTunes users’ collections are full of music they didn’t buy from Apple’s digital store, and are very often mislabeled, or not labeled at all. Real says Rinse can fix that, with software that can also “find the matching artwork, remove duplicates and clean things up.”

I’m not clear how this differs dramatically from features iTunes already offers, especially since both iTunes and Rinse rely on the CDDB database owned by Sony’s Gracenote to identify songs.

But I took Rinse for a spin yesterday and found that it could find some songs in my collection that had previously been mislabeled–while it was stumped by some others.

Rinse looks like a product aimed a subset of a subset: iTunes power users who care about the way their collection looks and works–and who have the time to do something about it.

That said, it’s worth noting that if Apple starts moving iTunes to the cloud, identifying exactly what’s on your hard drive may become much more important to you and to Apple.

That will be particularly true if Apple uses a “scan-and-match” technology, which won’t actually make copies of your files, but simply provide a single master copy that many song owners can access remotely.

In any event, Rinse is a good example of Real’s overall strategy shift. As Geekwire, which tracked down Rinse over the weekend, notes: “The program is part of the Seattle technology company’s bid to reinvent itself by providing technologies for managing and distributing digital media–shifting away from being an actual content provider.”

]]> http://allthingsd.com/20110425/realnetworks-rinse-offers-a-tune-up-for-itunes/feed/ 6 http://allthingsd.com/20110328/realnetworks-ceo-resigns-hunt-underway-for-replacement/ http://allthingsd.com/20110328/realnetworks-ceo-resigns-hunt-underway-for-replacement/#comments Mon, 28 Mar 2011 23:06:25 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=3934 That was quick. Bob Kimball has resigned as president and CEO at RealNetworks after being promoted to the position a year ago in January.

A search is underway for a replacement, and in the interim, the board has appointed Mike Lunsford as a temporary replacement.

In a statement, Kimball said: “I took on this role to lead a restructuring and transformation of RealNetworks into a more lean, efficient and effective business and we have completed that phase of RealNetworks’ transformation.”

During his watch, he has eliminated more than $70 million in annualized operating expenses and created a product called Unifi, which is a digital locker on mobile phones. “All this work has set the stage for Real to embark on its next phase with a clean bill of health and a strong foundation,” he added.

Many of the cuts came in the form of layoffs, including cutting 25 percent of the VPs earlier this year. He’s had a no-nonsense approach to telling shareholders that the company has a lot of catching up to do since it had a nearly nonexistent product pipeline. “Because some of our past products failed, we have work to do to rebuild our pipeline,” he previously said.

Kimball has been at Real for the past 12 years, and was appointed to the CEO role after Founder Rob Glaser stepped down.

Glaser, who is currently chairman, was also quoted in the release: “Bob has made a real difference at RealNetworks over the years and we thank him for his great contributions. We are pleased to have Mike Lunsford in place to lead the company in the coming months while we search for a permanent CEO.”

Lunsford, who joined the company in 2008, is currently Real’s executive vice president.

]]> http://allthingsd.com/20110328/realnetworks-ceo-resigns-hunt-underway-for-replacement/feed/ 1 http://allthingsd.com/20110322/mr-jobs-would-be-happy-to-respond-if-someone-could-please-remind-him-what-fairplay-was/ http://allthingsd.com/20110322/mr-jobs-would-be-happy-to-respond-if-someone-could-please-remind-him-what-fairplay-was/#comments Tue, 22 Mar 2011 21:24:49 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=58967

“We are stunned that RealNetworks has adopted the tactics and ethics of a hacker to break into the iPod, and we are investigating the implications of their actions under the DMCA and other laws. We strongly caution Real and their customers that when we update our iPod software from time to time it is highly likely that Real’s Harmony technology will cease to work with current and future iPods.”

–Apple July 2004

Has the dispute over the FairPlay Digital Rights Management technology Apple once used in iTunes really dragged on this long? Impossibly, it seems it has. More than three years after the company discontinued its use, the now six-year-old lawsuit is back in the headlines again. The judge hearing the case on Monday ordered Apple CEO Steve Jobs to testify, Bloomberg reports.

Under the terms of the mandate, Jobs must sit for a two-hour deposition, answering questions about a 2004 software update that that made songs purchased from RealNetworks unplayable on the iPod, thwarting Harmony, the software RealNetworks developed to mimic FairPlay and outraging iTunes user Thomas Slattery who sued Apple in 2005 (for further detail, see the ancient posts I wrote about these issues for GMSV below). “The court finds that Jobs has unique, non-repetitive, firsthand knowledge about the issues at the center of the dispute over RealNetworks software,” U.S. Magistrate Judge Howard R. Lloyd wrote in a court filing.

Which is almost certainly true.

But at this point, who cares? Aside, that is, from the folks who in 2005 accused Apple of “rigging” the iPod so that only music purchased from iTunes could be played on it. Evidently, they’d still like to be able to play RealNetworks files on their iPods.

Reached for comment, Apple declined. Below, some very dusty background on the case …

Yeah, you’re Real alright … real annoying …

In a recent e-mail to Steve Jobs, RealNetworks CEO Rob Glaser asked the Apple CEO to consider a “tactical alliance” with his company. License us your Fairplay digital rights management system, allow our customers to play their digital music collections on the iPod, wrote Glaser, and we’ll make the iPod our primary device for the RealNetworks store and for RealPlayer software.

It was an astonishing offer, especially coming from Glaser, who had been a vocal critic of Apple and its decision to make digital music sold through its iTunes store playable only on iPod (“I bought an iPod and can only shop at one store,” Glaser once said. “What is this? The Soviet Union?”) But it was an offer that Jobs found unappealing. The Apple CEO rebuffed Glaser, declining even to meet with him over lunch to discuss it. So Real’s announcement today of a new technology that makes its online music service compatible with the iPod isn’t likely to go over well at Apple HQ. This morning Real rolled out RealPlayer 10.5 and with it Harmony, technology that will allow people to play music purchased at its Rhapsody store on Apple’s iPod as well as music players that support only Microsoft’s WMA (Windows Media Audio) format.

For Real this is quite a coup, and one that, assuming it’s not thwarted by Apple, may well give it a much needed leg up in the online music market. “This is very important for RealNetworks, because it overcomes one of the biggest issues they have had: lack of popular device support,” said Michael Gartenberg, an analyst with Jupiter Research. “It’s the device that drives the music store, not the other way around. Now the challenge is for Real to provide a compelling reason for users to come over–an extended catalog, more attractive pricing. It has solved the technological problem. Now it has to persuade customers from a content perspective.”

Hey, I’ve got a great idea! Let’s do an online petition!
When Real Networks’ launched its “Hey Apple, Don’t Break My iPod!” petition, it hoped for an outpouring of support for its new Harmony technology, which allows consumers to download music to all new music devices, including the iPod. What it got instead was a merciless tarring and feathering that will no doubt give the Real PR team nightmares for years to come. Appended to the hundreds of digital signatures on petition were hundreds of comments, most of them critical of Real, its technology and its business practices.

“When Real makes their songs available for sale to Mac users, then we can talk about limiting choice,” wrote one signatory. “Hulk smash Real player!!! Apple good for strong bones!!!! Glaser weak, Hulk Strong. Hulk smash Glasers head with fist for insulting Hulks intelligence!!! Hulk Smart!!! Glaser Dumb!!!,” wrote another. Not all of the comments added to the petition were so staid or tongue in cheek. “Selling on a loss to gain market share might work for large profitable giants with money to burn,” wrote one signatory. “But for a worthless company like Real, with history of losses quarter after quarter, it is a short-cut to Chapter 11. And I say more power to Real, please spend your way to bankruptcy ASAP. The whole market will heave a collective sigh of relief and your 49c customers will get what they paid for, support or rather lack thereof, from a bankrupt company.”

Its first petition gone horribly awry, Real launched a second, this one with comments disabled. But it too drew the ire of those viewing it and inspired an alternate petition that pretty much captured the spirit of the entire debacle.

]]> http://allthingsd.com/20110322/mr-jobs-would-be-happy-to-respond-if-someone-could-please-remind-him-what-fairplay-was/feed/ 4 http://allthingsd.com/20110208/realnetworks-lays-off-10-percent/ http://allthingsd.com/20110208/realnetworks-lays-off-10-percent/#comments Tue, 08 Feb 2011 23:00:55 +0000 Beth Callaghan http://voices.allthingsd.com/?p=36074 In its third round of layoffs under a restructuring by CEO Bob Kimball, RealNetworks cut 130 jobs, equal to 10 percent of its workforce. Kimball took over from CEO Rob Glaser last year. In an announcement today, the company stated that it has “completed the restructuring required to create a more efficient and focused company.”

]]> http://allthingsd.com/20110208/realnetworks-lays-off-10-percent/feed/ 0 http://allthingsd.com/20110203/hipmunk-raises-4-2-million-from-vcs-online-travel-experts/ http://allthingsd.com/20110203/hipmunk-raises-4-2-million-from-vcs-online-travel-experts/#comments Thu, 03 Feb 2011 19:40:15 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=2342 New York-based Travel Web site Hipmunk has raised $4.2 million from Ignition Partners and a slew of former executives from the online travel industry. Others participating include Rich Barton and Erik Blachford, two former CEOs of Expedia; Jim Hornthal, founder of Preview Travel; Simon Breakwell, co-founder of TravelPost; and Rob Glaser, founder of RealNetworks. CEO Adam Goldstein said it would use the cash to hire more programmers to help take “the agony out of travel search.”

]]> http://allthingsd.com/20110203/hipmunk-raises-4-2-million-from-vcs-online-travel-experts/feed/ 1 http://allthingsd.com/20101217/realnetworks-ceo-talks-about-companys-turnaround-troubles/ http://allthingsd.com/20101217/realnetworks-ceo-talks-about-companys-turnaround-troubles/#comments Fri, 17 Dec 2010 17:35:27 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=768 Robert Kimball joined RealNetworks 11 years ago, serving mostly as the senior executive responsible for all legal matters and business development.

Now Kimball is CEO, and is responsible for leading the company through a massive turnaround that includes spinning off its Rhapsody division, eventually selling off its game division and figuring out what the company has left of value.

In doing so, the process has taken a lot of candor.

Earlier this year he eliminated 85 jobs, cut 25 percent of the VPs and was frank in telling shareholders during a quarterly conference call that the company had a nearly nonexistent product pipeline. “Because some of our past products failed, we have work to do to rebuild our pipeline,” he had said.

Yesterday, he explained what it was like to open the kimono: “I believe you have to be able to recognize your weaknesses in order to show you have the confidence on how to deal with them.”

These days, Kimball spends a lot of time educating people on what RealNetworks does. For example, RealPlayer only generates 10 percent of the company’s revenues, and the remaining chunk comes from selling ringtones, ring-back tones and full-track music through its 90 carrier partnerships worldwide. It recently launched its storefront services with MetroPCS and a ringtone service for Boost Mobile. It is currently building a storefront for Sprint.

In the first quarter, Kimball’s launching the first big product push under his leadership: Unifi, which let’s you access content stored on your computer on any device, via the cloud. The company hopes to gain traction for the service through its carrier partnerships and by connecting it to RealPlayer, which has 25 million active users on a monthly basis.

Kimball joined us last week onstage at D: Dive Into Mobile, where he provided a demo of Unifi.

Here’s the video from that session:

]]> http://allthingsd.com/20101217/realnetworks-ceo-talks-about-companys-turnaround-troubles/feed/ 0 http://allthingsd.com/20101207/dive-tech-realnetworks-unifis-media-in-the-cloud/ http://allthingsd.com/20101207/dive-tech-realnetworks-unifis-media-in-the-cloud/#comments Tue, 07 Dec 2010 19:34:48 +0000 Drake Martinet http://voices.allthingsd.com/?p=33603 Many Web 1.0 veterans remember RealNetworks as the company that played all those MP3s we ripped from our CD collection. We distinctly remember listening to some Beastie Boys on a RealPlayer while cruising MySpace and updating our GeoCities site.

Today, the Web media staple is releasing, and demoing live onstage, its newest product–named Unifi.

The cloud media service automatically catalogs your collection (a la iTunes) and lets you stream it to any device, on demand.

Live Blog

11:35 am: RealNetworks CEO Bob Kimball and VP Peter Kellogg-Smith take the stage to introduce Unifi.

11:36 am: Kimball says Unifi is “a cloud media management service that treats every device as a first-class citizen.”

11:37 am: Now they are demoing the Web interface. This view is heavy on the album art, but separates out different devices you have synched–so you can see what you have on your iPad or your Android phone from the same device.

11:39 am: Now we are seeing albums playing on the network.

Interface merges media that’s on a device to the cloud. You can also pull content from one device to the cloud to another device.

So, if you have a song on your iPad, and were away from it, you could call the song to the cloud from your Android phone–as long as that device is on and connected.

11:42 am: Walt and Kara pounce on the DRM implications. The RealNetworks guys say they will respect the DRM rules, barring multiple copies when they apply.

11:43 am: Now they turn to photos.

11:43 am: The photo is snapped, and it uploads to the cloud, much like taking a picture inside DropBox.

There is a connection issue, but the intent is to show how the photo would quickly appear on all the connected devices.

11:45 am: Now they open iTunes and are showing how iTunes playlists are synched to the application.

The RealNetworks guys keep using the “librarian” metaphor for the process they use to organize the cloud-synched data.

11:47 am: They say the “librarian” only synchs things every five minutes, unless you force a synch. They say it is a processor-intensive application and so they “put her to sleep.”

11:48 am: Connection issues plague the demo, but the RealNetworks team says the service will be available in Q1 of 2011 and it will be freemium.

• 
• 
• 
• 
• 
• 
• 
• 

]]> http://allthingsd.com/20101207/dive-tech-realnetworks-unifis-media-in-the-cloud/feed/ 0 http://allthingsd.com/20101104/realnetworks-q3-revs-miss-profits-beat-on-large-tax-refund/ http://allthingsd.com/20101104/realnetworks-q3-revs-miss-profits-beat-on-large-tax-refund/#comments Thu, 04 Nov 2010 22:45:59 +0000 Eric Savitz http://voices.allthingsd.com/?p=32080 RealNetworks this afternoon reported Q3 revenue of $86.4 million, down three percent sequentially, off 38 percent year-over-year, and below the Street consensus at $88 million. But the company posted a profit for the quarter of $24.5 million or 18 cents a share largely due to a $33.9 million tax benefit, including a $30 million refund from the IRS. (I wish I had a $30 million refund from the IRS.) The Street had been expecting a loss of seven cents a share, which is roughly what they would have reported without the gain.

Read the rest of this post on the original site

]]> http://allthingsd.com/20101104/realnetworks-q3-revs-miss-profits-beat-on-large-tax-refund/feed/ 0 http://allthingsd.com/20100730/boomtown-gets-ping-ponged-in-seattle-by-techflash/ http://allthingsd.com/20100730/boomtown-gets-ping-ponged-in-seattle-by-techflash/#comments Fri, 30 Jul 2010 21:33:32 +0000 Kara Swisher http://kara.allthingsd.com/?p=31565 On my trip to Seattle this week to attend Microsoft’s Financial Analyst Meeting, the fine folks at the most excellent tech news site TechFlash dragooned me into a ping-pong tournament they were holding.

The Second Annual TechFlash Summer BBQ and Ping-Pong Tournament, held at the Showbox SoDo, is really a big schmoozefest for techies in the Pacific Northwest.

While a little more laid back–well, less frantic, at least–than the relentless glad-handing of Silicon Valley, it’s still the same promising start-ups, enthusiastic entrepreneurs, aggressive venture capitalists and a dousing of big company types from locals Microsoft (MSFT), Amazon (AMZN) and RealNetworks (RNWK).

Except they have better coffee.

I made it through one round in the tourney, which is not that bad since I have not played ping pong for any length of time since I had braids.

(Yes, braids–and also matching ribbons. I try to erase the nightmare of it all every day.)

Here’s a video I did of the event, to which I am going back next year after some rigorous training.

I also added TechFlash’s video of the event, in which I convince the gullible editors that Walt Mossberg plays polo rather than ping pong.

Enjoy:

]]> http://allthingsd.com/20100730/boomtown-gets-ping-ponged-in-seattle-by-techflash/feed/ 0 http://allthingsd.com/20100730/the-spotify-song-has-a-familiar-chorus-us-launch-talks-back-to-square-one/ http://allthingsd.com/20100730/the-spotify-song-has-a-familiar-chorus-us-launch-talks-back-to-square-one/#comments Fri, 30 Jul 2010 11:47:34 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=22001
UPDATE: Spotify tells the Telegraph that the Billboard piece is wrong, and insists that it will make it to the U.S. by the end of the year.
——
When will Spotify, the best music service Americans can’t use, finally make it to the U.S.? No time soon, according to a new report from Billboard. The trade magazine says the much-hyped service has gone “back to square one” in its negotiations with the big music labels, who have licensed their catalogs for a European version but not a stateside one.

Billboard also cites sources suggesting that Spotify still hopes for a U.S. launch this year. But Spotify has been hoping for/promising a U.S. launch for so long that there’s a Tumblr site dedicated to cataloging those unfulfilled aspirations. It’s called Not-ify.

What gives? Ask around and you’ll hear two different theories about the holdup. They’re not mutually exclusive:

• Spotify wants to replicate the model it has in Europe, where users can listen for free, then pay for upgrades like mobile and/or ad-free access. But the labels are no longer interested in supporting free streaming sites: Now that Lala and Imeem have gone away, the only free on-demand service in the U.S. is News Corp.’s MySpace Music, and they don’t seem that enthusiastic about that one.
• Spotify has raised a big pile of money from VCs, and the labels are demanding a big chunk of that for themselves.

I’m also not clear whether the holdup is with all the labels, or just some of them. Sources close to Spotify have hinted to me in the past that the company has had deals in place with some of the big four music labels for some time but was waiting to lock up at least three of them before launching.

Then again, those same sources suggest that Spotify is willing to avoid the U.S. altogether if it can’t get the deal it wants. Choose the story you like, I guess.

Meanwhile, if you’re itching to subscribe to a music service that lets you listen to all the music you want, without ads and on your PC and on mobile devices like Google’s (GOOG) Android handsets and Apple’s (AAPL) iPhone, you’re in luck! There are plenty of options.

Go ahead and try any of the following, which offer more or less the same stuff, at the same $10 a month price point:

• Rhapsody
• MOG
• Rdio (still in beta)
• Thumbplay

$10 a month too much? Okay. Best Buy’s (BBY) Napster offers an ad-free, all-you-can-eat service, without mobile access for $5 a month. Meanwhile, MySpace Music, which is co-owned by News Corp. (NWS) and the labels themselves, remains free and ad-supported. And the company’s line is that will remain so (though it doesn’t rule out a paid option).

]]> http://allthingsd.com/20100730/the-spotify-song-has-a-familiar-chorus-us-launch-talks-back-to-square-one/feed/ 1 http://allthingsd.com/20100722/realnetworks-names-bob-kimball-president-and-ceo/ http://allthingsd.com/20100722/realnetworks-names-bob-kimball-president-and-ceo/#comments Thu, 22 Jul 2010 22:53:52 +0000 Beth Callaghan http://voices.allthingsd.com/?p=27477 RealNetworks announced today that effective immediately, Bob Kimball has been named President and CEO of the company. Kimball has been serving as President and Acting CEO since January of this year, after Founder Rob Glaser stepped down as CEO. Kimball formerly served as the company’s senior legal executive. He joined Real in 1999.

]]> http://allthingsd.com/20100722/realnetworks-names-bob-kimball-president-and-ceo/feed/ 0 http://allthingsd.com/20100622/realnetworks-reorganizes-again-including-the-standard-layoffs-and-rejiggering/ http://allthingsd.com/20100622/realnetworks-reorganizes-again-including-the-standard-layoffs-and-rejiggering/#comments Tue, 22 Jun 2010 20:21:13 +0000 Kara Swisher http://kara.allthingsd.com/?p=29652

This is just hitting the wires: Yet another restructuring of RealNetworks, complete with layoffs, office closures and a new organizational look.

The beleaguered Internet media software company, based in Seattle, is cutting 85 jobs, including a good chunk of its exec team, along with dumping some global offices. This means about $10 million in restructuring charges, said RealNetworks (RNWK) in a statement.

RealNetworks has been on a rocky road of late, including the departure of founder and longtime CEO Rob Glaser in January.

Here’s the official press release with all the reorg deets:

RealNetworks Reorganizes Business; Focuses on Growth Initiatives

SEATTLE–June 22, 2010–RealNetworks, Inc. (Nasdaq: RNWK) announced today a significant reorganization of its business and operational structure. The reorganization is a key milestone in Real’s execution of its previously announced strategy to simplify, restructure and grow.

Real has consolidated its Technology Products and Solutions and Media Software and Services business units and organized them into functional teams that represent product development, sales and marketing, and service delivery over a carrier-grade delivery platform.

“This reorganization marks a significant milestone in our transformation of RealNetworks,” said Bob Kimball, president and acting CEO of Real. “Restructuring RealNetworks into functional groups creates a far more efficient organization focused on developing great products that can be delivered through any of our distribution partners.”

As part of this reorganization, the company eliminated about 85 positions, including about 25% of its executive ranks. The new organizational structure is designed to reduce the spans and layers of management to create greater efficiency, teamwork and customer focus.

Real also reduced its office space in Europe, Asia and its Seattle headquarters. As a result of the reorganization and reduction in office space, Real expects to record restructuring charges of approximately $10 million for the quarter ending June 30, 2010. Of these charges, approximately $3 million is related to the reduction in force and approximately $7 million will be recorded as a loss on excess office facilities.

]]> http://allthingsd.com/20100622/realnetworks-reorganizes-again-including-the-standard-layoffs-and-rejiggering/feed/ 2 http://allthingsd.com/20100525/realnetworks-founder-glaser-becomes-vc-at-firm-that-backed-him-15-years-ago/ http://allthingsd.com/20100525/realnetworks-founder-glaser-becomes-vc-at-firm-that-backed-him-15-years-ago/#comments Wed, 26 May 2010 03:50:06 +0000 Kara Swisher http://kara.allthingsd.com/?p=28834 Rob Glaser, the founder of RealNetworks, is joining Accel Partners as a part-time venture partner.

Ironically, it was Accel that first funded the digital media pioneer, leading a critical $5.7 million round for RealNetworks (RNWK) in 1995.

Glaser said in an interview with BoomTown this afternoon that he will focus on digital media, as well as social and mobile start-ups, especially in Seattle and the Pacific Northwest area where he lives and where he founded RealNetworks.

As for becoming a VC after years of being an entrepreneur, Glaser (pictured here) said he was looking forward to being on the other side, especially at Silicon Valley-based Accel.

“I have never seen a more entrepreneurially-aligned venture firm,” he said. “And it is a really exciting time to be investing in a firm with that kind of high-density intelligence.”

The rest of Glaser’s time will be devoted to his board duties, as well as other political and charitable pursuits, including focusing on new baby: 10-day-old son, Max.

Glaser stepped down as longtime CEO of RealNetworks earlier this year, but has remained its chairman and owns more than one-third of its shares.

Although the company has struggled in recent years, RealNetworks has been a genuine and innovative pioneer in Web audio and video software and an early player in Web music services, although not everyone was a fan of the technology, because of its aggressive deployment.

The company was originally called Progressive Networks after Glaser’s political bent.

There have been several well-known entrepreneurs who have turned into VCs–most recently, Netscape Communications founder Marc Andreessen, who started a firm.

Here’s the official press release:

Rob Glaser, Founder of RealNetworks, joins Accel Partners

Palo Alto, CA, May 25, 2010: Accel Partners, a leading global venture capital and growth equity firm operating in Silicon Valley, Europe, Israel, China and India, today announced that Rob Glaser has joined the firm as a Venture Partner. At Accel, Rob will focus on digital media technology, social media, and mobile service investments.

Rob currently serves as Chairman of RealNetworks, which he founded in 1994. Rob has been a member of the Accel Partners family since it invested in Real(Nasdaq: RNWK) in 1995. In addition to his role as Chairman, Rob served as Real’s CEO from February 1994 through January 2010, leading the company from scratch to over $500 Million in revenue. Real went public in 1997.

Rob’s extensive experience as a digital and social media pioneer should prove to be an asset for Accel’s renowned and growing technology portfolio. Jim Breyer, a Managing Partner in Accel’s Palo Alto office, said “We have been delighted to work with Rob as an entrepreneur and CEO since 1995. His thought-leadership in the world of digital media and the consumer internet are well known, and we are very excited to have him join the Accel team in his new role as “Venture Partner.”

“After years of working with Accel as an entrepreneur, I look forward to working side-by-side with the Accel team to help identify companies which will benefit from the same kind of resources and partnership RealNetworks was so fortunate to have,” said Rob. “There are a wealth of promising startups in the world of digital media and I am thrilled to have the opportunity to work with Accel to help them succeed.”

Prior to founding RealNetworks, Rob worked for Microsoft for 10 years in a number of executive positions, including Vice President of Multimedia and Consumer Systems. Before joining Microsoft, Rob founded his first company, Ivy Research, in 1981 to make games for the newly launched IBM PC. Rob has also been an early stage investor in several successful technology companies including TellMe, PlanetOut, and SmileBox. Rob’s relationship with Accel is parttime, enabling him to keep time open for other engagements, including continuing to serve as Chairman of RealNetworks.

Rob is a 1983 graduate of Yale University, with a B.A. and M.A. in Economics and a B.S. in Computer Science.

]]> http://allthingsd.com/20100525/realnetworks-founder-glaser-becomes-vc-at-firm-that-backed-him-15-years-ago/feed/ 0