RealNetworks filed its Q3 10-Q earlier this week, and I find this paragraph below an extraordinary admission from the company, in face of the PR bravado about the growth in revenues and subscribers for its Rhapsody music service:
“Our sequential revenue was adversely impacted by slowing growth of our premium music subscription service revenue arising in part from a shift in the focus of our marketing and promotion efforts to our ‘free-to-consumer’ products and services, such as Rhapsody 25, as well as from the fact that an increasing percentage of our new music subscribers arise from the wholesale distribution of our radio products through broadband service providers, which tend to generate less revenue per subscriber than non-wholesale providers. Our revenue growth was also impacted by an increase in the number of customer cancellations attributable primarily to our increasingly large subscriber base. Finally, our Music business continued to face intense competition in the third quarter of 2005 as certain marketing channels became more crowded with competitive offers of lower prices. We currently anticipate that these trends and factors, particularly slowing growth of our premium music subscription service revenue, will result in slowing sequential revenue growth in the fourth quarter of 2005 as compared to prior periods.”
What that means is the the rate of revenue growth has and will slow down…
Lots of other good data points in the 10-Q about other segments like Games (healthy) and premium video/SuperPass (not so healthy).
Related:
– Earnings: RNWK 3Q05 Revenues Up 20 Percent; More Than 2.2 Million Paid Subs
– RealNetworks By The Numbers
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