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RealNetworks Tries Its Luck in Mobile Entertainment

RealNetworks Inc., a company that specializes in digital media, is trying its luck in the mobile entertainment world. The company, which is known for its RealArcade game service and Rhapsody music service, is going to pay $350 million to acquire South Korea`s WiderThan Co. Ltd., followed by the launch of the RealArcade mobile content Web site that offers video games and ringtones.

According to Juniper Research, the mobile entertainment market will grow from $15 billion in 2005 to $38 billion in 2009, at a compound annual growth rate (CAGR) around 25 percent. As for gaming, about 13.5 million wireless subscribers downloaded a mobile game between April and June 2006, Telephia Research found. Games like puzzles and card games are very easy to learn. The game industry views the casual game segment as a growing market.

D.A. Davidson & Co. analyst Alan L. Davis says: "RealNetworks is banking on the mobile space for key growth in music and games. The acquisition makes strategic sense. They appear to have a lot of excess cash from the Microsoft settlement." Davis estimates that RealNetworks` income could reach $369 million this year, and climb to $425 million in 2007.