RealNetworks, which has prided itself on the strength of its sports content in the past, will stop selling standalone sports packages under its own brand, like the one it currently does with Major League Baseball, the company mentioned in its Q4 earnings conference call yesterday.
The company will now focus on powering the backend for sports services, and not share the limelight…”For sports services, most of the sports leagues are now selling their own standalone services through their websites…we will be powering the backend for these services, as we are doing with NFL currently,” said Rob Glaser, CEO, in the conference call. The company still plans to include sports-related content into its overall SuperPass subscription service.
The company’s relationship with MLB has been a rocky one, with haggles over exclusivity and other issues…”Going forward, we will no longer report the approximately 142,000 subscribers of the 1.3 million subscribers we announced at the end of 2003, as part of our aggregate subscriber count,” said Glaser. The company is still talking to MLB to potentially work with them as either a technology or service provider…
“Direct standalone service represented less than 2 percent of our revenues…moreover, the cost associated with our 2003 MLB agreement has substantially exceeded the revenues it generated for us,” said Glaser. Getting out of this standalone business will save the company in excess of $5 million in 2004, according to Glaser.
Meanwhile, in Seattle PI, analysts quoted in context with this latest move have mixed feelings about this change in strategy: “Their business is evolving and they’re doing an impressive job trying to stay on this treadmill and continue to evolve with it,” said Heath Terry, an analyst at CSFB.
On the other hand, “It just seems like this company is ever changing, and sometimes that can be a good thing,” said Scott Kessler, an analyst with S&P’s Equity Research Services. “But it seems to me like the amount of change and the pace of change is maybe faster than I think a lot of people would have expected.”
RealNetworks is a high-risk company and a high-risk stock, said Jacob Kaldenbaugh, a senior analyst with Harvest Equity Research. “The company’s doing a very good job at staying agile, but at some point it needs to latch on to a business model that shows profitability,” he said, quoted in the story.
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