Microsoft and RealNetworks Inc. announced three agreements valued at $761 million to RealNetworks to settle their antitrust case and create a new partnership to innovate and promote consumer choices in digital music and games.
The three agreements include an agreement to resolve all the companies’ antitrust disputes worldwide; an agreement for a wide-ranging digital music collaboration between the parties, including promotional and marketing support of Real’s leading digital music subscription service, Rhapsody®, on MSN properties; and an agreement to offer RealNetworks’ digital games through MSN Games and Xbox Live Arcade for Xbox 360.
Under the music and games agreements, Microsoft is scheduled to pay Real $301 million in cash and provide services over 18 months in support of Real’s product development, distribution and promotional activities. Microsoft will earn credits at predetermined market rates to be applied to the $301 million for subscribers delivered to Real through MSN. Additionally, Real will take steps to support MSN Search, and Real and Microsoft will jointly promote use of Windows Media technologies with Rhapsody to Go.
The antitrust and technology assurance agreement resolves all antitrust disputes worldwide, based on a $460 million up-front cash payment to resolve all damages claims and a series of technology licenses and commitments under which Real will obtain long-term access to important Windows Media technologies that will enhance Real’s media software solutions.
“Today we’re closing one chapter and opening a new one in our relationship with Microsoft,” said Rob Glaser, founder and CEO of RealNetworks. “The legal chapter is being closed with an appropriate and fair outcome that sets the stage for a very productive and collaborative relationship between our companies. By integrating Real’s premier music and games services into Microsoft’s very popular MSN service, we will reach more consumers today and deliver even better products and services tomorrow.”
“This agreement will provide MSN’s millions of customers with easier access to subscription services for the music and games they love,” said Bill Gates, Microsoft’s chairman and chief software architect. “Digital music is one of the fastest growing segments of the online entertainment industry, and by promoting Rhapsody’s subscription music services from within MSN, we will provide a better experience for our users.”
Working together, Microsoft and Real will bring new music experiences to consumers by featuring Rhapsody from within the MSN homepage, MSN Music, MSN Search and MSN Messenger. The music collaboration agreement specifies that MSN Messenger users will be able to share and play music while chatting, from the library of over 1 million songs in Rhapsody, legally; MSN Search will use Rhapsody’s music editorial catalog; the two companies will jointly develop and implement a search integration plan which will enable Real’s customers to easily use MSN Search within RealPlayer; MSN Search will feature Rhapsody links to music in music related search results; Real will purchase advertising on MSN Search and on the MSN Network to promote Rhapsody; and both companies will promote the use of Windows Media portable devices for use with Rhapsody to Go.
Additionally, Microsoft and Real will collaborate in the casual games arena. Casual games has become a rapidly growing segment in digital entertainment and includes such games as the very popular Bejeweled® and SuperCollapse® as well as old favorites like Scrabble® and Solitaire. In this new games partnership, Real will create a new subscription service to be offered on MSN Games and Real will also develop a series of new casual games for Xbox Live Arcade for Xbox 360.
For more specifics about the terms and outcome of the legal agreement between these companies, and for more information about any of these products, please go to www.microsoft.com and www.realnetworks.com.