Digital media content and technology company RealNetworks was unable to turn the corner to profitability in the third quarter but saw a boost in revenue thanks to increased subscriptions to its premium content, including digital music.
Seattle-based company brought in revs of $51.8 million, up 14% from the same quarter last year. Behind that improvement, however, lay flat growth in its technology segment, a 22% increase in advertising revs and a 30% increase in subscription fees. Overall, consumer revenue reps 70% of Real’s total, reflecting the success of its RealOne content offering and tougher competition from Microsoft in server sales.
Net loss was $3.7 million, down from $4.6 million a year ago excluding a $30.8 million restructuring charge at the time.
Total number of paying subscribers to Real’s premium video, radio and Rhapsody streaming music services was up 15% to 1.15 million.
Rhapsody, which Real recently launched based on technology it acquired from Listen.com, was particularly strong, with the number of songs streamed nearly doubling from the previous quarter and total subscribers to it and Real’s radio stations up 46% to 250,000.
“These results demonstrate both our continued momentum in paid content services and how well our model fits when applied to music,” said CEO Rob Glaser.
Although Real plans to launch an a la carte music download service later this year, it’s banking that Rhapsody, which costs $9.95 per month for unlimited streams and access to downloads at 79¢ each, will prove a strong rival to the 99¢ download offerings from Apple, Napster and MusicMatch.
Phoning it in
Company also expanded RealOne to mobile phones for the first time in the third quarter, launching on the SprintPCS network.
Real expects little growth in the fourth quarter, with revenue projected to rise slightly to $52 million-$56 million and a net loss of 1¢-4¢ per share. Company said costs would likely rise in part due to increased marketing for its music services, no doubt in response to heavy campaigns for iTunes and Napster.
After reporting its results after markets closed Tuesday, RealNetwork shares fell slightly Wednesday, down 8¢ to $7.01.