On Thursday RealNetworks Inc., the company responsible for the long-standing RealAudio, RealPlayer and GameHouse platforms, said it signed an agreement to sell "a significant number" of its patents and its next generation video codec software to Intel for a purchase price of $120 million USD. The agreement grants RealNetworks certain rights to continue to use the patents in current and future products while pocketing the money.
In the early days when the Internet was creeping into consumer homes, RealNetworks was quite popular, known for streaming audio and video to desktops. As of 2000, more than 85-percent of streaming content on the Internet was in Real format. However the company, which depended on selling streaming media server software, saw Microsoft and Apple cannibalize its revenue, as both rivals offered similar solutions absolutely free.
Unable to compete, RealNetworks changed gears and purchased Rhapsody from Listen.com in 2003 which was eventually spun off as the current separate entity on April 6, 2010. In 2004, the company launched a music store which featured its own Helix DRM scheme, but was limited to just a few supporting devices. To get around this, RealNetworks then developed a "wrapper" which would essentially allow the Helix DRM to work on iPods and WMA-compatible devices. However as of September 11, 2011, all music purchased before July 2008 would no longer have renewed DRM, rendering the files unusable.
The company also released RealDVD for backing up movies from purchases DVDs, but was quickly barred from distributing the software by a court injunction because it also backed up DVDs consumers didn't legally own.
But now Intel owns approximately 190 RealNetwork patents, 170 patent applications and next generation video codec software. It will be interesting to see what the chip manufacturer will do -- embed some of this technology into its CPUs, GPUs and mobile SoCs, no less.
"As the technology industry evolves towards an experience-centric model, users are demanding more media and graphics capabilities in their computing devices. The acquisition of these foundational media patents, additional patents and video codec software expands Intel's diverse and extensive portfolio of intellectual property," said Renée James, Intel senior vice president and general manager of the Software and Services Group. "We believe this agreement enhances our ability to continue to offer richer experiences and innovative solutions to end users across a wide spectrum of devices, including through Ultrabook devices, smartphones and digital media."
RealNetworks said it also signed a memorandum of understanding with Intel to collaborate on future support and development of the next-generation video codec software and related products. The company also doesn’t believe the sale will have any material impact on its businesses.
"Selling these patents to Intel unlocks some of the substantial and unrealized value of RealNetworks assets," said Thomas Nielsen, RealNetworks President and CEO. "It represents an extraordinary opportunity for us to generate additional capital to boost investments in new businesses and markets while still protecting our existing business."