Digital firm grows subs, can't stem losses

Digital media content and technology company RealNetworks saw continued growth in its online subscription services in the fourth quarter, but couldn’t translate that to the bottom line, as its net loss more than doubled.

Company’s subscriber base rose 13% in the last three months of the year to 1.3 million. Most of that increase came from a 40% jump in subscribers to its Rhapsody and RadioPass music subscription services, to a total of more than 350,000. Real’s other subscription content includes its RealOne video service and its RealArcade vidgame offering.

Earlier this month it launched a pay-per-download music store.

Total revenue for the quarter was $54.1 million, up 17% from the fourth quarter of 2002. Increased revenue didn’t make for healthier profits, however, as Real’s net loss rose $2.8 million to $5.3 million. Of that, $1.6 million was due to the cost of company’s antitrust lawsuit against Microsoft, filed in December.

For the year, RealNetworks’ revenue was $202.4 million, up 11%, while net loss was down 44% to $21.5 million.

Real started as a provider of streaming-media technology, but in recent years has been shifting more toward selling content for users of its media player. That trend continued in the fourth quarter, as consumer products and services revenue rose 27% to $41.2 million while technology products and services revenue declined 7% to $12.8 million.

Company expects revenue to rise slightly, to between $56 million and $59 million in the current quarter, while additional costs for the Microsoft lawsuit should increase net loss to 4¢-5¢ per share, up from 3¢ last quarter.

RealNetworks shares fell nearly 5% to $6.14 before earnings were announced Thursday.

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