Will consumer economics have an impact on RealNetworks?

Will consumer economics have an impact on RealNetworks?

Summary: RealNetworks CEO Rob Glaser almost made it through his company's quarterly earnings call without taking a jab at Apple and the iPhone. But near the end of the call, he took a quick mathematical poke at Apple to drive home his point that there are plenty of opportunities to launch a mobile music service that utilizes a device other than the iPhone.

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RealNetworks CEO Rob Glaser almost made it through his company's quarterly earnings call without taking a jab at Apple and the iPhone. But near the end of the call, he took a quick mathematical poke at Apple to drive home his point that there are plenty of opportunities to launch a mobile music service that utilizes a device other than the iPhone.

If you measured mobile music devices by column inches. you'd think everyone has an iPhone. Apple's goal is to sell 10 million iPhones... If they sold 10 million, that would be one percent of the market. That means 99 percent of the market is not buying an iPhone.

Point taken. There's a lot of room out there for some solid competition and, on the surface, Real's latest attempt to revitalize its music business through the Music Without Limits initiative that launched one month ago has some attractive components, including the marketing message that its mp3 files are compatible with the iPod.

Rhapsody

Still, I still tend to cringe when I hear the word "subscription" and it doesn't matter if we're talking about Rhapsody or Verizon's VCAST (one of Real's partners). Glaser made an interesting point during his call with analysts today. As part of a larger point he was making, he noted that macroeconomics will have an small impact on his company, most likely by an overall advertising slowdown. Advertising, he said, is one of those expenditures that companies can reduce or eliminate for short-term savings without compromising revenues. They do it even when there's a rumor of an economic slowdown, referring to it as a sometimes knee-jerk reaction. But revenues from other sectors, notably ringtones and other small scale transactions, don't feel the pinch. "That's 1$ or $1.50 for consumers. That pocket change level of expenditure doesn't seem to change," Glaser said.

Here's the thing: Businesses aren't the only ones who make knee-jerk spending cuts when economics shift. So do consumers. And, at least in my household, some of the first things to get sacrificed are the monthly subscriptions that we can quickly eliminate without impacting our livelihood.  It's harder to cancel electricity than it is to, say, cut out HBO. It's not so easy to get out of the monthly cell phone bill these days but the Rhapsody subscription could easily go. Of course, I don't want to be a complete curmudgeon in the eyes of my kids so when they ask if they can download a ringtone to their phones, I usually give in. It's a buck or so. Pocket change.

The company also noted that it is still developing a plan for the spin-off of its games division, which was the best performer of the quarter, and how that will be conducted. The company plans to file the necessary paperwork for the spin-off by the end of the year. For the full year, it adjusted its expected revenue to a range of $620 million to $630 million and a net loss of 2 cents to 6 cents per share. For the second quarter, it reported a loss of $1.3 million, or 1 cent per share, compared to a profit of $1.3 million, or 1 cent per share, for the same quarter lsat year. Revenue was $152.6 million, up from $136.2 million a year ago. Wall Street had been expecting a net loss of 2 cents per share on $153 million in sales, according to a survey by Thomson Reuters.

Topics: iPhone, Apple, Banking, Enterprise Software, Mobility

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  • Subscriptions, ah, yes...

    I remember back in the stone age when cable was born. Then it was, well, yes you are paying for it but NO COMMERCIALS, WOW!

    Years have passed and in most markets not only are you paying monthly, but there are programs everywhere on every cable station AND you are paying EVEN FOR INFO-MERCIALS. You are paying for THEM to ADVERTISE to YOU, DAH, how stupid.

    I often hear conversations about how cable sucks and how people feel helpless. I remind them of the fact that they can just turn it off. If enough people turn it off things will change.

    So as far as I am concerned all companies that work on subscription like cable, XM radio, or companies that provide software as a service, operating in the cloud etc. etc. can put it where the sun doesn't shine.

    I dislike this "model" so much that I am learning how to use LINUX because Microsoft and even Apple are moving to this model and I can cut them loose.

    I have a unique perspective since I have worked at companies like Microsoft and I will be damned if I will be some cash cow for all those lazy, fat ass programmers etc. and allow these big companies to bleed off my cash.

    I am not addicted to email, TV, radio etc. so if this is the wave of the future I will just "cut the wire" and read more, take more walks, etc. etc. I am old enough to remember a day when there wasn't any such thing as TV or computers and radio was a hour or two of entertainment in the evening.

    Feel free to pass this on, I suspect there are many people like me and the egg heads who live in their plugged in incestuous little world haven't figured this out yet.
    mikifinaz1@...