RealNetworks Streamlines And Axes More Jobs

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RealNetworks is to axe about 5 percent of its workforce, including management, to streamline its operations

More pain in the tech job market after Seattle-based RealNetworks announced it was once again scaling back its operations, which included laying off 85 employees.

RealNetworks is a digital entertainment company best known for its RealPlayer streaming platform, but it is also involved in the mobile and casual gaming markets with its GameHouse studio.

The layoffs include a 25 percent reduction in its executive ranks and the reorganisation seeks to streamline its technology and media services divisions.

Company ‘Transformation’

“This reorganisation marks a significant milestone in our transformation of RealNetworks,” said Bob Kimball, president and acting CEO in a statement. “Restructuring RealNetworks into functional groups creates a far more efficient organisation focused on developing great products that can be delivered through any of our distribution partners.”

In February this year, Real announced another organisational restructuring which included the stepping down of its founder Rob Glaser and the partial-spinoff of its Rhapsody music subscription service in to an independent company. Real also has offices in Asia and Europe. The company is now down to 1,365 employees from 1,700, with roughly 65 layoffs coming out of the Seattle office, according to The Seattle Times.

According to fourth quarter results from 2009, the company saw its subscriber base in Rhapsody fall by 25,000 from 675,000 to 650,000. In an effort to keep customers and attract new ones, Rhapsody reduced its monthly subscription fee by $5 (£3.31) to $9.99 (£6.62), and announced in April an iPhone service that would allow users to save music to the popular device.

Money Matters

Real posted a profit in the first quarter with net income of $3.2 million (£2.1 million), or 5 cents a share after the Rhapsody spinoff. Revenue was $128.6 million (£85 million), down from $140.8 million (£93 million) from the previous quarter.

The partial spinoff of Rhapsody included a 49 percent minority stake of ownership by media giant Viacom, which owns MTV Networks; RealNetworks owns the other 51 percent minority stake.

“Separating Rhapsody into its own independent company is a significant first step in making RealNetworks a more focused and profitable company,” said Kimball in a 9 February statement. “Rhapsody will be the largest pure play digital music service in the market. We have provided Rhapsody with the right team, and financial and intellectual property assets to succeed in the competitive market for digital music.”

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