Speculation Continues Over Real/AOL Relationship

By | June 5, 2001 at 12:00 AM

RealNetworks is scrambling to stem investor jitters that the online streaming-media giant is about to lose its exclusive agreement to provide streaming media services to users of AOL, the world’s most popular ISP.

The company’s stock tumbled nearly 20 percent early last week on speculation that AOL Time Warner is poised to dump Real and provide Microsoft the opportunity to replace RealNetworks’ technology as media player of choice for AOL’s estimated 29 million subscribers.

Analysts believe that AOL is unlikely to dump RealNetworks anytime soon, but ongoing talks between AOL and Microsoft over a key co-distribution deal within Microsoft’s new Windows XP operating system could open the door for the software giant to carve out a bigger chunk for Microsoft’s Windows Media Player on AOL.

Nonetheless, RealNetworks is not in much danger of losing it’s leadership spot in the market. RealNetworks claims that 85 percent of streaming content on the Internet is formatted for its software. It also says its media player has been downloaded by 140 million Net users worldwide. It has struck a key deal with Sony to have its streaming media technology integrated with the popular PlayStation 2 game console. Additionally, RealNetworks has signed Internet content-distribution deals to stream audio broadcasts of Major League Baseball and National Basketball Association games as part of its GoldPass subscription service. Moreover, RealNetworks is a 40 percent investor in MusicNet, a partnership with AOL Time Warner, EMI, and Bertelsmann, aimed at creating a new commercial digital-music service based on RealNetworks technology.  

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