1. RealNetworks Strategies and PlanningBy
Margaret Johnston
RealNetworks

2. RealNetworks Three Businesses in One 3 Product lines:
Players
Servers, Tools
Three Businesses in One
For Content Producers
For Consumers
5 Web
Properties
Broadcasting Services

3. RealNetworks’ Mission
Short Term
To produce the best Internet media software technologies
Long Term
To own the software media delivery system market
All media, including TV & Radio, will run on RealSystem technology

4. Recent New Developments
Microsoft divestiture
Release of G2 Gold, Update 1 and Update 2
RealJukebox release, MP3 player
Purchase of Xing
New Competitive Pressures
WMP “better quality audio”
QuickTime “streaming media with free server”

5. Changing Market Conditions
High-bandwidth solutions coming online
ADSL and cable modems provide higher quality video and audio, making RealPlayer more valuable
Won’t have critical mass until late 2000, due to infrastruction constraints
Microsoft investing in ADSL market space
MP3 market growing - but little support from record companies
Media appliances like Web TV becoming more prominant

6. Real JukeBox Jae Kim, an analyst at Paul Kagan & Associates, says,
"This is going to do to digital music what Windows did to DOS-based computing. It takes [digital music] out of the hands of enthusiasts and into the hands of the mass market." Mark Hardie, an analyst at Forrester Research who predicts that digital music downloading will be a billion-dollar business within five years, goes even further. "It is a significant step toward leading consumers to digital consumption of music — buying and listening to it on digital devices.”
Real Jukebox

7. Music Player Positioning Map
Value to Consumer wanting Music Playback
SSpinner
RRealPlayer (free)
LOW USER COST
FREE
HIGH PRICE
User Cost*
RRealPlayer Plus
QQT 4
WWMP 6.0
WWimAmp (MP3)
TTaiko
QQT Pro 4

8. News Player Positioning Map
Value to Consumer wanting News Playback
WWMP 6.0
QQT 4
LOW USER COST
FREE
HIGH PRICE
RRealPlayer (free)
RRealPlayer Plus
QQT Pro 4

9. New Strategic Questions
Can’t rely on press to promote Real products, can’t rely on content providers to promote free player - is advertising necessary?
How can we stop Server customers from switching to NetShow?
How can we grow the RealPlayer business?
How should we position RealJukebox relative to RealPlayer?
Same customers or different?
Same Web pages or different?
Sames subscriptions program or different?
Is becoming profitable necessary this year in order to satisfy stock holders?
How can we keep up with new set-top box technologies?

10. RealNetworks’ Strategy
On Server/tools front, compete on advanced features and cross-platform support
New Ad server features
New 3D text data type
IP multicasting
On Player front, compete on access-to-content
RealChannels and Presets
Search
RealGuide
On MP3 player front, provide the most complete solution for consumers and partner with Music companies
Build distribution partnerships: Lotus, Sun, Netscape, AOL, PC OEM, ISPs.
Build technolgy partnerships: Intel, Spinner, Lotus, Sun
Explore new opportunities one by one

11. International Expansion
Feb 15, released new localized players in 6 languages
Added new international RealChannels
Adding new regional management staff
Concerns
Localizing every release is expensive - but server customers want this
Not enough regional staff to drive player promotions

12. Final Thoughts
RealNetworks is by far the market leader for Internet media players
RealNetworks is also functioning in a market where there are no obvious strategic choices
New technology trends like MP3, ADSL, and set-top boxes are cropping up everywhere
What makes us successful is that we’re really good at knowing the trends and picking the right projects. Always staying a step ahead of our competitors
Rob Glaser Clip