Web Content Gathers Steam

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New deals and subscriber increases may mean that the broadband content market is heating up.

Real Networks Inc. said last week its RealOne SuperPass Internet subscription package added 100,000 subscribers during the third quarter to reach the 850,000 mark, while Microsoft Corp. landed a content deal with the National Hockey League.

SuperPass, which contains news, sports, entertainment and music content, is Real's marquee premium Internet package, and one of the bright spots in Real's earnings release.

Real's subscription revenue reached $21.4 million during the third quarter — a 20 percent increase over the previous quarter — while advertising revenue was up 5 percent sequentially, to $1.7 million. The combined subscriber and advertising revenue represented more than half of Real's total company revenue.

Overall, the company posted quarterly revenue of $45.4 million and a net loss of $35.4 million.

But $30.8 million of that loss was connected to restructuring, severance and related costs, plus writedowns for certain facilities, equity investments and net deferred tax assets.

New content, including college sports, high school sports and Major League Baseball's out-of-country video highlights for playoff games, helped spur the penetration increase, Real president and chief operating officer Larry Jacobson said. "We will continue to invest in our subscription business," he said.

But "the fourth quarter is one of our slower quarters due to more limited sports availability," Jacobson said. During last year's fourth quarter, Real added about 100,000 SuperPass subscribers. It added the same number during first quarter 2002, then saw additions hit a record 150,000 during the following quarter, spurred by the start of the MLB season.

Battle spills over

It's now clear that the fight between Real and Microsoft in the media player space has spilled over to the Internet-content arena.

Microsoft last week announced that it was teaming with the NHL to offer two Internet-video subscription packages of current and past hockey highlights.

"The NHL Highlight Machine" promises to offer fans nearly every goal, save and big hit from the 2002-2003 season, for $4.95 per month or $29.95 for the entire season. Subscribers will be able to search NHL's video highlights vault by player, team, event or date.

Microsoft is supplying the underlying technology, including the Windows Media Video 9 Series package of media player and digital rights management system.

The NHL also will offer select classic games from the NHL library for $2.95 per game for non-Highlight Machine subscribers and $1.95 per game for subscribers.

Classic games include: the Montreal Canadiens clinching the Stanley Cup over the Boston Bruins in 1997, the final game of the 1967 Stanley Cup won by the Toronto Maple Leafs and the 1984 Cup final between Edmonton Oilers and the New York Islanders.

Elsewhere, Foxsports.com announced that Verizon Online digital subscriber line subscribers can play its MLB Hit the Pros
interactive Internet game for free in Verizon's Game center. Verizon serves more than 1.5 million DSL subscribers.

WildTangent supplies games to the Verizon Game center, including Blasterball 2
and Blackhawk Striker
games. The games range in price from $9.99 to $19.99. The center also contains gaming news headlines, chat rooms, tips and gaming tricks.

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