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RealNetworks Spins Off Game Studio, Posts Q1 Profit

RealNetworks Spins Off Game Studio, Posts Q1 Profit

May 8, 2008 | By Brandon Sheffield

RealNetworks, which owns the RealPlayer, RealMedia, and RealArcade brands today announced intentions to spin off its games division into a separate corporate entity, with shares distributed to existing shareholders and public purchase, from an available 20% of the new company's stock offerings. RealNetworks will retain the remaining 80%.

This announcement was made on the heels of an announced 14% growth on 2008 Q1 revenue, up from $129.5 million in 2007 to $147.6 million in 2008.

First quarter net income was down from $40 million in Q1 2007 to $2.4 million in 2008, but Q1 2007 also included Microsoft's final antitrust payment to Real as part of a lengthy settlement, in the order o $61 million.

The company claims that the reported increased revenue is due in part to a 33% rise in revenue for its games division, which now includes a recent acquisition of casual games developer Trymedia. The new company will remain headquartered in Seattle, and will continue to focus on the casual games market.

Said senior VP and CFO Michael Eggers, "Today's announcement demonstrates our commitment to create long-term value for RealNetworks' shareholders. For investors, we anticipate that the spin off will create a pure-play casual games business with increased transparency, and that it will result in lower complexity in understanding and tracking RealNetworks' performance. We also think that the new structure will provide current and potential shareholders with two attractive investment options that may be more closely aligned with their various investment objectives."

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