RealNetworks’ Gaming Site to Expand

Itching to expand its presence in a gaming market that remains immature, RealNetworks Inc. said the success of its gaming site RealArcade has paved the way for it to commit to international expansion.

RealNetworks, which has been busy improving its RealOne software and striking up partnerships for it, reported at the Games
Developers Conference in San Jose Wednesday that it will go global with six foreign language RealArcade sites, including French,
Italian, German, Spanish, Dutch and Portuguese. To complement the international RealArcade rollouts, RealNetworks has partnered with
four service providers, including Australia Telstra, Singapore’s StarHub Internet, Europe’s Tiscali S.p.A. and Brazil’s RBS (Rede
Brasil Sul).

This decision comes on the strength of the site’s progress, which has seen 4.5 million downloads of RealArcade Player, 15 million
single game downloads and more than 450,000 game purchasers pump it for action, since it launched in May 2001. In the broader market, Jupiter
Media Metrix said more than 47 million consumers play PC games each month, with revenue forecasted to grow from
$210 million in 2001 to $2.5 billion by 2006.

One of the differentiators analysts have stressed as important to the success of online games (the adoption of broadband is a whole
separate issue) is that they target more than just the teen demographic, which is what brick-and-mortar retailers traditionally
focus on. Lest one thinks the RealArcade games are picked up by tons of teenagers seeking sporting or blood and guts thrills,
RealNetworks said it offers puzzle and card games for the less adventurous or bloodthirsty user. RealArcade is
“play-before-you-play” and shoots for multiple demographics. Pricing for games on RealArcade average $20 per pop, with a few titles priced near $15 and $10, according to RealNetworks spokeswoman Molly McCarthy.

“The pricing differs depending on our perception of the quality of the game — a $20 game often has richer graphics than a $10 game, etc,” McCarthy told

“The interest RealArcade has generated from consumers, game publishers and developers is phenomenal,” said Andrew Wright, general
manager of RealNetworks’ Games Division. “It is evident by the rapid consumer adoption and compelling economics that RealArcade is a
very attractive alternative to traditional CD retail game distribution.”

Moreover, it’s important to keep game developers happy, which the Seattle firm argues that it does by providing them with game
development and packaging tools, marketing and promotion through RealNetworks’ distribution networks and e-commerce support.

Indeed, broadband adoption is important for pushing rich media across the Internet and research firms gamble on predictions for its
future. Jupiter said some 41 percent of online households in the U.S. will subscribe to a broadband Internet connection service by
2006 — up from nine percent in 2000. And consumers are doing this for entertainment use, such as online music and gaming, and to
tap financial services, such as online trading, the research firm said.

In related news, Terra Lycos’ launched a subscription video game service through its
Gamesville on Demand section Tuesday.

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