RealNetworks Debuts Subscription Service

Internet audio and video software company RealNetworks (Nasdaq: RNWK) unveiled a new subscription service Tuesday that will deliver video and software updates monthly.

The subscription will deliver Internet games, movie trailers and news documentary footage that will change monthly. It is viewed as a bid by RealNetworks to stave off challenges by software giant Microsoft (Nasdaq: MSFT) to capture the Internet audio and video software market.

The service, called RealPlayer GoldPass, will be available for a monthly fee of $9.95 (US$) to the network’s users who have already downloaded its $29.95 premium software for playing audio and video over the Internet. A large majority of RealNetworks’ users have downloaded its free software, but they will not have access to the new service.

The bulk of RealNetworks’ revenue comes from selling server software to distribute Internet media files. Only an estimated two million of its 135 million unique registered users pay to download its premium software.

Cornering the Market

RealNetworks, based in Seattle, Washington, has delivered some impressive results in recent months as it expands both its distribution network and its content and product offering.

Last month, the company announced second quarter revenues of $62.7 million, an increase of 119 percent over the corresponding quarter of 1999. More impressively, the company reported net earnings of $10.5 million, a rarity for Web-based companies in this age of grim financial reports.

RealNetworks inked a deal last month with AOL to deploy its RealSystem 8 Internet media system throughout its network. Unveiled in May, RealSystem 8 is designed to deliver high-speed, full-motion video at mainstream broadband rates. Sun Microsystems, Akamai and other Internet content delivery companies have also announced their support for the system.

In June, the company signed a deal with wireless giant Nokia to develop and distribute technology for Nokia’s wireless devices beginning next year. The venture will give Nokia users access to audio and video content.

Broad Appeal

The company said its RealPlayer software is used by more than all of the other media players combined and was the fourth most popular software application in U.S. households. Some 200,000 new users begin using RealPlayer every day, it claims.

RealJukebox software is used by 35 million unique registered users and is the most popular digital jukebox on the market.