The Readers Speak
In our collective role as community provocateur, the editorial team put the following question to the streamingmedia.com bizmodels discussion list:
"After yesterday's announcement, it seems clear to me that AOL should buy RealNetworks outright -- not because RN is hurting, mind you, but because adding RN to the AOL fold would complete a circle outlined in the Netscape --> Time Warner deals."
Responses:
Jim Jenkins
I would love for this to happen... trade in your RealNetworks stock for the bigger play... sweetness.
BUT, with Rob G owning as much of the RN stock as he does, I don't see it happening...
Rob said on a CNBC interview just after Yahoo bought Broadcast.com that RN was following an independent path. I'm not sure what this means, but took it as a strong signal that RN will stay independent for as long as Rob G wants to...
And why not? If you look at the insider trading from RealNetworks stock, it looks like Rob and his Executive Team feel RN is their own personal money machine. Since January, his team registered to sell about $265 million of personal stock with only about 54 million in revenue for Q1 and presumably about the same in Q2(?).
>From the March SEC 10Q
"REALNETWORKS' DIRECTORS AND EXECUTIVE OFFICERS BENEFICIALLY OWN APPROXIMATELY 45.8% OF OUR STOCK; THEIR INTERESTS COULD CONFLICT WITH YOURS; SIGNIFICANT SALES OF STOCK HELD BY THEM COULD HAVE A NEGATIVE EFFECT ON REALNETWORKS' STOCK PRICE; SHAREHOLDERS MAY BE UNABLE TO EXERCISE CONTROL."
So the net/net is why stop a good thing... I don't think it will happen.
Daniel Cardozo,
BroadcastHealth.com
Dude, I don't know. The word "merger" makes me edgy. In this case, itsounds like a good idea. At least, consolidating the commercial area of theweb would make it easier for consumers. I'm just afraid that consolidatingthe web companies into the online ABC, CBS, and NBC would make it hardereventually for private individuals to work on the web (have homepages, setupsmall ebusinesses, post pictures of their dead dog). True, dog pictures areboring, but so is a lot of TV.
Shelly Jacobs, Media Creations LLC
Naw, why buy the cow when the milk is free? AOL isn't in the application software biz, regardless of Netscape purchase [that one still puzzles me!]. With the pending Time Warner merger, with Time Warner content, AOL TV will obviously be competing with other streamers/downloaders. Real's technology appears to be the best . . . this month that is! IMHO MPEG-4 will be the winner, so why Media Player, Quicktime, or Real? I expect Lucent, Sarnoff, and to a lesser degree Ampex, to eventually lead the video pack, as streaming/downloading becomes more akin to living room television. Dark horses include On2, Tranz-Send, Goodstuff Technologies, Omni Dimentional Networks, and what's left over from Pixelon's technology.
John Willkie,
Digital Spot NewsJoey and all;
I don't know if AOL-TW purchasing Real would work on the same plane. Theadvantage of AOL buying TW, if the pronouncements of management are to bebelieved, is to extend T-W's editorial and other content across theinternet, without restrictions based on who's your ISP. Owning a technologycompany would not seem to compute.
People don't pay for, and really don't want to know about technology, asidefrom a few early adopters. People are interested in content. How willbuying real help AOL-T-W with content?
A real problem, Real has relationships with the BBC, which is CNN'sessentially sworn enemy.
John Willkie
BTW, the real rationale for the AOL-TW merger, IMHO, from T-W's perspectiveis for Gerry Levin to acquire a uphill path from his current position. Butthen, I think Steve Case understands this better than me.
Gary Schultz,
Multimedia Research Group, Inc.
Here's a quote we released yesterday on the topic.
RealNetworks /AOL Announcement Bigger than it Seems
AOL's announcement to use RealNetworks RealSystem 8 software is only the first in a series of partnership agreements.
This announcement is the first of what we think will be a series of partnership announcements between RealNetworks (Real) and AOL over the next 18 months. AOL and Real are natural partners because each competes heavily with Microsoft.
As time moves on and as AOL tries to bring motion video to both the PC and the TV, we expect AOL to continue working closely with Real to help make this happen. As the AOL/Time Warner merger gets implemented, expect AOL to increase its emphasis on Internet Video to both the PC (via broadband and dialup modems); to laptops, PDAs and other hand-helds (via wireless); and to the TV (via set top devices like AOLTV, now being tested in a few cities, and to be rolled out nationwide in the fall of 2000). In other words, this is AOL executing its overall strategy of "AOL Everywhere," with Real playing a central role.
By putting Real's RealVideo 8 in the AOL (version 6) browsers and in the new Netscape Navigator browsers , AOL takes a step closer to being able to stream video over its own networks. Since Version 8 should be able to stretch the "codec" (video compression/decompression) devices to where they deliver almost VHS quality at 200 Kbps, AOL comes one step closer to being able to being distributor of IP Media without going through cable or satellite.
Once VHS quality can be reached at about 100 Kbps (expected in the next 18-24 months), low priced DSL customers can, in effect, start getting the equivalent of a cable service over their AOLTV set tops (using Internet Video) and AOL-equipped PCs. This will fundamentally shift the way cable and satellite video industries work.
So, expect more announcements like this--and maybe even a merger between the two companies.
To participate in this and other discussions, join one or more of our streamingmedia.com industry discussion mailing lists.
The views expressed in "The Readers Speak" are not necessarily the views of Streamingmedia.com.