Move over Microsoft: RealNetworks has a GOOGLE problem

Analysis “When you start a company that has good success, then you step away from it and it doesn’t continue on the trajectory you would like it to be on, your pride kicks in,” says RealNetworks chairman and interim chief executive Rob Glaser.

Glaser was explaining why he returned to the company in mid-2012 after a two-and-a-half year absence.

He was speaking at the recent Mobile World Congress in Barcelona, where his company announced the global availability of RealPlayer Cloud, following its 2013 US launch. RealPlayer Cloud combines a cloud storage and streaming service for personal videos with client apps for PCs and mobile devices.

The users can create videos on their smartphones or tablets, upload them to the internet, and share them with friends via social networks, email or SMS messaging. Users get two gigabytes of storage free, and subscribe to get additional space. RealNetworks is using Amazon Web Services for cloud storage under the covers.

Hasn’t YouTube already got this market sewn up?

“One difference is that we keep it private,” says Glaser. “We don’t insert ads in front of it. I really don’t want to see an ad for nappies in front of the video for my dad’s memorial service. It is a very moving personal document and I don’t want to be perturbed with advertising. There are a set of things are different about personal video than public video. YouTube is the king of public video, we want RealPlayer Cloud to be the leader of personal video.

“RealPlayer Cloud does three things. It creates a permanent place to store videos. We automatically make four or five different file formats, different bitrates, so we have at least one version that will play on any device. The third thing is that it is easy to share out the video. We think of it as Dropbox for video.”

I asked Glaser why RealNetworks lost its way. In its heyday, RealPlayer was everywhere, required for watching BBC videos and more. Why did it get beaten to the punch by YouTube?

People want their video to work EVERYWHERE...

The key issue, says Glaser, was the decline of standalone video players. “YouTube became a way to do embedded video largely based on industry standards. If you look at us, if you look at Microsoft, the standalone players became less important.”

That said, he believes that media clients are becoming significant again in the mobile era. “Increasing numbers of consumers want their video to work anywhere. It doesn’t take us back to the era of media players, but it does mean media client software adds a lot of value in the context of a cloud.” RealPlayer is also still around today. “RealPlayer is used by 25 million people a month,” says Glaser. “They use it to download over 100 million videos.”

Fifteen years ago, Glaser fought with Microsoft for a fair market in video players. His company then sued Microsoft for $1bn in 2003, accusing the Redmond giant of using its relationship with OEMs through control over access to Windows to make them accept Windows Media Player rather than take Real Player.

Glaser was a former Microsoft executive who helped found RealNetworks as Progressive Audio in 1993 in Microsoft’s hometown of Seattle, Washington. The company cooked up the Real Audio and Real Video proprietary formats needed to consume media with its various players.

“We believe our business would be substantially larger today if Microsoft were playing by the rules,” Glaser said at the time.

He settled two years later in a deal worth $761m with Microsoft agreeing to promote Real’s Rhapsody music service on MSN ad offer RealNetworks’ games via MSN Games and Xbox Live Arcade. The agreement was unveiled at a press event and sealed in a handshake with Microsoft co-founder Bill Gates.

That was then, and today even Microsoft is struggling – now against a new breed of threat from Apple and Google.

Is Glaser concerned about Apple or Google today making it difficult for third parties to compete?

“RealPlayer Cloud is out in the Google Play store, and in the iPhone and iPad store, so I don’t have a specific concern. I do think that the amount of control those platforms have on what software is listed in their stores is an issue that the industry and government watchdogs should keep an eye on. For instance, Apple doesn’t let you have any of those keyboard substitutes like Swype.

"Google has a business policy that if you want to ship one Google app which a phone, you have to ship all of them. These platforms are more open than not open, but there are things to be mindful of.”

Back in the day, a common complaint about RealPlayer was that users got more than they expected, with ads and download services coming along for the ride. Is that reputation a problem today?

“I don’t think so,” says Glaser. “We did a brand study with RealPlayer, it had high recognition and very positive attributes. People understand that we are the people who helped bring audio and video to life. I am sure we had a few times where we were active in putting advertising up, but we moved away from that. People are willing to judge the product on its own merits.”

After meeting Glaser, I put RealPlayer Cloud to the test. Sign-up is easy, but uploading videos was slow for me, half the speed of Microsoft’s SkyDrive – which also offers private video sharing, as in fact does YouTube, making RealPlayer’s differentiation challenging. The company is early in supporting Google’s Chromecast, and the PC software (Mac is on the way) lets you stream videos stored on a local network as well as on the cloud, which works well.

However there are still signs of the RealNetworks of old. The RealPlayer Cloud offered to install the Google Toolbar by default. I clicked a link for “accelerated transfer” and got an offer for RealPlayer Plus 16. I clicked No Thanks and got another offer, this time for free software if I completed a third-party product trial.

Monetisation is hard when Google and even Microsoft give so much away to support their respective ecosystems, but these details spoil the user experience. However, Glaser says advertising is not on the table for RealPlayer Cloud. “We have no plan at all for advertising. The model is we wanted it to be free and to consumers to have comfort that there would not be inappropriate adverts put in front of their poignant personal videos.”

What is it like to be back in the fray? “It’s actually been a blast,” says Glaser. “Everyone is very motivated to reinvent the company.”

That is just as well, since it will not be easy. ®