At a gaming conference in Los Angeles, Electronic Entertainment Expo or E3, the two companies will announce a non-exclusive partnership.
"This is a non-exclusive partnership with Sony to get RealNetwork technology built into PlayStation2," said RealNetworks spokesman Joe Cerrell. "This is a huge win that shows we're delivering on our commitment to get RealNetworks technology off of the PC and onto other platforms."
For Sony the alliance is a preemptive strike against Microsoft and its upcoming Xbox gaming system. For RealNetworks the agreement is another part of its beyond the PC strategy, where the company is trying to embed its software in devices other than PCs.
Sony will include RealNetwork's RealPlayer and RealJukebox software on hard drives that can be added to PlayStation 2 consoles. The drives are currently available in Japan and are expected to hit the states this year.
To aid developers in the creation of applications using Real's software, Sony will include Real's software developer tools with its own software development kit.
According to Jai Jaisimha, a director of consumer appliances at RealNetworks, consumers will be able to view video on demand, download music to be played off the PlayStation 2 and use the console as an Internet radio.
RealNetworks' software will be added to the drives in the fall and applications will be available in the months that follow, according to Jaisimha.
Sony's PlayStation 2 has shipped more than 10 million units worldwide since its Japanese introduction in March of last year.
"The PlayStation 2 is already out there in broad use," said Jaisimha, "and this will only help to fuel our beyond the PC strategy."
The PlayStation 2's lead rival, Microsoft's Xbox, has not even hit store shelves, but news of its official ship date and pricing are expected at this week at E3. Analysts expect the pricing to be in the $300 range to remain competitive with the PlayStation 2.
With the muscle of software behemoth Microsoft behind it, as well as a $500 million marketing budget, the Xbox is expected to make big splash.
RealNetworks also counts Microsoft as a competitor in the media player arena on the PC.
Both Sony and Microsoft view their gaming systems as entertainment hubs of the future home enabling more than just games, but also allowing owners to surf the Web, play online games and gather news and information.
On Tuesday, America Online and Sony announced they will work together to combine AOL Internet features such as instant messaging, chat and e-mail with the PlayStation 2. Sony will provide the network adapter for PlayStation 2 that will let consumers access AOL Internet features and play Net-enabled games.
The RealPlayer will be included in Nokia's upcoming Media Terminal, which will be released in the United States early next year. The Media Terminal is an Internet appliance and the RealPlayer will allow the device to stream video.