RealNetworks to spin off casual games unit

RealNetworks is to spin off its casual games unit into an independent company. Shares in the new firm are to be divided among RealNetwork’s shareholders on a potentially tax-free basis, although 20% may be sold on the stock market through an initial public offering (IPO), prior to the spin-off. The announcement, which came on the same day as Real revealed its Q1 2008 profits, predicts that paperwork for the move will be filed at the Securities and Exchange Commission by the end of the year.

The separation of the games business will produce two more focused firms, says Real. The cross-platform unit currently produces casual games for the PC, mobile and games console and owns some 500 titles, reports SeattlePI. In Q1 2008, revenue for the unit rose 33% year-on-year to reach USD31.8m.

“Today’s announcement demonstrates our commitment to create long-term value for RealNetworks’ shareholders,” says Real’s CFO and SVP Michael Eggers. “For investors, we anticipate that the spin off will create a pure-play casual games business with increased transparency, and that it will result in lower complexity in understanding and tracking RealNetworks’ performance.

Real, which owns subscription music service Rhapsody and the media player RealPlayer, announced overall Q1 2008 revenue growth of 14% from the same time last year hitting USD147.6m. Profit for the quarter stood at USD2.4m (USD0.02 per share), compared with USD40.0m (USD0.22 per share) in the first quarter of 2007. The large decline was due to a USD61m antitrust settlement, paid by Microsoft in 2007.

Published by Reinout te Brake

Reinout is a games investor and strategic business consultant specializing in the games industry. Reinout established his credentials through his own successful investments, start-ups, consulting and (advisory) board positions that led through time to strong bonds with key stakeholders in this fast paced industry. He is known for his outstanding results in the gaming industry. He has worked with many game studios around the globe and is therefore well known in the international gaming industry. Check out his games podcast;

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