Net revenues for the quarter were $50.4 million, compared to $53.5 million in the first quarter of 2000. The Company reported pro forma net earnings for the quarter of $3.5 million, or $0.02 per diluted share, compared to pro forma net earnings of $8.8 million, or $0.05 per diluted share, in the first quarter last year.
Including non-cash goodwill and acquisition-related charges, net loss in the first quarter was $24.4 million, or $0.15 per share, compared to a net loss of $18.8 million, or $0.12 per share, for the first quarter a year ago.
Rob Glaser, chairman and CEO, RealNetworks, Inc., said, RealNetworks continued to demonstrate the long-term strength of our business model by expanding our universal media delivery platform, increasing the amount of compelling content available on the Internet and helping our partners and customers make money. Moreover, I’m very encouraged by several major strategic initiatives we kicked off this quarter. While these initiatives will take time to bear fruit, they position RealNetworks very well for the tremendous opportunities in front of us. We are built to last, and this quarter’s activities underscore that.
GoldPass Counts More than 200,000 Subscribers, Signs Exclusive Sports Content Deals
Last week, RealNetworks announced that RealPlayer GoldPass, the premium Internet subscription service launched by RealNetworks last August, now counts more than 200,000 paying subscribers. In the first quarter, RealNetworks signed agreements with the NBA and Major League Baseball Advanced Media (MLBAM). The MLBAM agreement makes RealNetworks the exclusive platform for a broad range of MLBAM’s online services, including live audio webcasts of all MLB games and a customizable, on-demand video highlight service available exclusively to GoldPass subscribers. In January, RealNetworks announced a multi-year relationship with the NBA to offer NBA.com TV, the league’s 24-hour digital television network, and NBA.com Audio League Pass, a package of exclusive home and away audio feeds of every NBA game, to the RealPlayer GoldPass subscriber basethe first time ever that premium cable television content will be available live, 24 hours a day, through an Internet content subscription service.
Larry Jacobson, president and chief operating officer, RealNetworks, Inc., said, Through our pioneering agreements with the NBA and MLBAM, RealNetworks is leading the way to make the Internet a great, practical medium for distributing sports programming. Premium sports content has driven consumer adoption of other new media distribution platforms like cable and satellite TV. By offering such premium content to our installed base of over 200 million unique registered users, we feel optimistic about our ability to build growing, profitable subscription services on the Internet.
On April 2, 2001, RealNetworks announced the launch of MusicNet, a new joint venture formed with AOL Time Warner, Bertelsmann and EMI to create a breakthrough platform for online music subscription services. MusicNet will combine an extensive collection of downloadable and streaming music with RealNetworks’ industry-leading Internet media delivery technology. Under the agreement, RealNetworks, EMI, Bertelsmann, and AOL Time Warner will each own a minority stake in MusicNet. The latter three companies’ music subsidiariesEMI Recorded Music, BMG Entertainment, and Warner Music Groupwill each separately license their music to MusicNet.
MusicNet will initially license its platform to RealNetworks and America Online, each of which plans to launch branded online music subscription services later this year. MusicNet will also seek to license music from other record companies and will seek to license its platform to other distribution outlets, potentially including Napster, provided such outlets satisfy legal, copyright and security concerns.
Mr. Glaser said, By combining great technology, incredible content and the worldwide reach of the licensees, MusicNet will transform how consumers experience music and provide a new distribution channel for record companies and their artists. RealNetworks was uniquely qualified to bring this exciting venture together due to our technology leadership position, our huge worldwide base of RealPlayer users, our strong relationships with the record companies and rights-holders, and our experience building a successful Internet subscription service.
RealSystem iQ, the universal Internet media delivery platform launched by RealNetworks last December, continues to earn broad support among key technology companies and content delivery networks, including Adobe, Deutsche Telekom, Digital Island, iBEAM, Macromedia, and NET-36. RealSystem iQ received an eWEEK eXcellence Award in February as the winner in the category of Internet-based Multimedia. Also in February, RealNetworks announced the immediate availability of RealSystem iQ Server and Proxy on Hewlett-Packard’s HP-UX, IBM’s AIX, and Sun’s Solaris Operating Environment, providing unmatched flexibility in network and enterprise deployments and underscoring the platform-independent power of RealSystem iQ. RealNetworks also recently expanded to 48 the number of media formats supported by RealPlayer.
Strategic Agreements, Product Introductions Strengthen Consumer Reach
RealNetworks’ leadership role in making the best Internet media content available to consumers was further extended during the first quarter with key product introductions and strategic agreements with consumer device makers.
In March, RealNetworks announced the introduction of RealArcade a powerful, new end-to-end platform that strongly positions RealNetworks in the fast-growing market for digitally distributed PC games. The RealArcade developer service is currently available and the RealArcade consumer service is scheduled to launch in the second quarter. More than 40 game developers and publishers have already announced support for RealArcade, including developers such as Valve Software, Monolith, Zombie Entertainment and Small Rockets, and top game publishers like Sierra Online, Midas Interactive and ARUSH Entertainment.
RealNetworks also announced agreements in the first quarter to bring its streaming media technology to a range of next-generation consumer devices. In March, Nokia unveiled Mobile RealPlayer, the wireless version of the world’s most popular digital media player, for the Nokia 9210 Communicator. RealNetworks also announced agreements with Hewlett-Packard (HP) and Intel to integrate a Linux-based RealPlayer into consumer digital entertainment products.
