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RealNetworks has expanded an existing relationship with Sony to move its popular Internet audio and video playing software beyond the traditional PC and into other hardware devices. Sony has agreed to acquire 1% of Real, worth roughly $11 million, as part of the multiyear deal.

The duo, which initially paired up in 2000 to digitally distrib entertainment content, including music and movies, to the PC, already have collaborated on integrating Sony’s ATRAC3 sound compression format and OpenMG copyright protection technology with RealNetworks’ RealPlayer and RealJukebox software. The companies also are developing a media player for the PlayStation 2 vidgame console.

But now, the two companies’ plan to incorporate RealNetworks’ audio and video software into Sony’s other consumer electronics products, such as networked handheld CE devices, audio players and its NetMD mini-disc player, for example.

The idea is for Sony to have a way to distrib the entertainment content it develops to all of its electronics products. And pacting with a company like RealNetworks, which makes software that has been downloaded by 270 million people and can operate on multiple devices, helps create more demand for digital content and digital devices.

RealNetworks gets outlet

For RealNetworks, the Sony deal will offer a new outlet for its RealOne software, and almost guarantee prime placement and distribution for its music subscription service MusicNet.

“Most of what we’ve done is based on distribution on the PC,” said Richard Wolpert, a strategic adviser for RealNetworks. “We think that there’s a lot of desire for networked consumer-electronic products, meaning other devices in the home which may at times access digital media.”

As for the investment, RealNetworks said it wasn’t looking for additional funding, considering that it has $360 million in the bank, as of the end of the first quarter.

RealNetworks has been building other relationships to deliver its RealOne player on non-PC platforms. The company recently announced a partnership with Nokia so cell phone customers can access audio and video on their wireless devices. It is also building home-networked products with AOL.