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RealNetworks is spinning off its games business into a separate company, with the possibility of an initial public offering.
The games business was the second-biggest revenue generator for RealNetworks during the first quarter, with $31.8 million in sales. Last year, the games business grew 26 percent and accounted for $108.5 million in sales.

"RealNetworks was a pioneer and has been a leader in the casual games industry since we introduced RealArcade in 2001," said RealNetworks Chief Executive Rob Glaser in a news release. "We believe that spinning off our casual games business will give it the best opportunity to continue to flourish and lead."
The release does not say what the new company will be called, but a frequently asked questions sheet indicates that it most likely will be located in Seattle.
RealNetworks plans to make a decision about the spinoff and potential IPO by the end of the year, with the company writing that a separate company could more easily attract talent.
The company anticipates that spinning off its casual games business will result in two more flexible and focused companies. In addition, the separation will provide the games business an industry-specific currency for future acquisitions and enhance its ability to attract and retain the best talent in the industry.
Real also announced its first-quarter results, reporting revenue of $147.6 million and net income of $2.4 million.
RealNetworks has used some of its cash from the Microsoft antitrust settlement to invest heavily in games.
Here's a look at the acquisitions with links to the press releases:
2008:
2007
2006
2005
2004
UPDATE: I just chatted with FlowPlay's Derrick Morton, a former executive in RealNetworks' games business. He told me that a games spin off was a common topic of conversation among employees when he worked there.
At times, he said employees in the games business felt like they "were fighting a losing battle" because their fortunes were tied to less profitable and slower growing products.
"Certainly, among the staff there was always this what if scenario. What if we got spun off or there was a tracking stock or something so that the results of our activity and the success we are having was actually rewarded in some way," said Morton, the former general manager of mobile games at RealNetworks. "I definitely think it is a great move, for the games guys and for RealNetworks too."
In many ways, Morton said that RealNetworks may be more valuable broken up. And he noted that RealNetworks may want to spin off its Rhapsody online music business as well.
"If you valued the individual pieces, you probably would come up with a greater valuation than the whole company itself put together," he said.
RealNetworks senior vice president Harold Zeitz tells P-I reporter Dan Richman that the company would do what was in the best interest of shareholders, but there's no plan at this time to shed additional business units.
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My, my how we've fallen! Doug Walker, the "W" in WRQ, and it's former CEO is known for philanthropy, environmentalism, the highest of ethics, and is currently the chairman of the board of REI. Now, with the merged Attachmate/WRQ company, its new CEO is known for *this*?? The board of Attachmate should call for his resignation immediately, before he further damages what was once a great company."
I find this worse than what Michael Vick did yet I doubt he'll get anywhere near the amount of scrutiny or penalty."
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Posted by 8bitjoystick at 5/8/08 1:54 p.m.
Good. They have not had a hit… well ever.
Seriously why is Real Networks even still in existance. My Step Brother used to be a programmer there but hasn't Microsoft, Apple, Adobe and MPEG killed them yet?