The software and media company receives protection on its "click to stream" technology, but "probably" won't enforce the patent on its competitors.In a development last week that may give pause to investors and media companies, software company RealNetworks received a patent for a way to stream audio and visual content over the Internet.
The patent, described by executives as "a foundation," covers the methods used when consumers select links to stream audio-visual media via Web browsers and other media players.
RealNetworks competes against a wide variety of software companies, including Adobe, Apple and Microsoft. Ostensibly the patent could allow RealNetworks to demand royalty payments from those competitors or other media companies.
"We believe this is a fundamental and broad patent that covers most of the activities around streaming media," said John Giamatteo, executive vice president of worldwide business products and services, in a telephone call with Publish.com.
Giametteo, who referred to a 35-strong "family of patents" in the interactive media field, said the company does not expect to litigate against its competitors.
Rather, RealNetworks considers the patent a value add to its negotiations with other companies that license RealNetworks' technology.
In particular, RealNetworks will use the patent to help sell its Helix media server product, which streams audio and video in multiple formats.
According to recent research from AccuStream iMedia, RealNetworks' technology is responsible for 5.8 percent of streaming media traffic. Microsoft's Windows Media Player dominates the streaming media market with 58.6 percent, while Adobe's Flash software is responsible for 19 percent and Apple's QuickTime player is responsible for 6 percent.
Despite RealNetworks' apparent desire to avoid the courtroom, the opportunity for litigation and controversy is ripe. RealNetworks' patent is at the center of one of the Internet's most competitive arenas. Thousands of companies, from video sharing site YouTube.com to ABC News, use streaming technology to provide audio and visual data to their users.
"Is this a cause for pause? Oh yeah," said Gartner analyst Mike McGuire. "But the problem with litigation is that it can take a long time, and lawsuits aren't predictable. Ultimately, [RealNetworks] may make more money over time negotiating licenses than going to court."
But the streaming media industry is no stranger to litigation. A company called Burst recently sued Apple, alleging the QuickTime player infringes on a patent for compressing and transmitting video over the Internet.
RealNetworks is different from Burst.com, however, in that the former company, in addition to owning multiple patents, also owns and operates several products and technologies.
The real consequence of RealNetworks' patent, according to McGuire, is that entrepreneurs and investors may become more wary about investing in online media properties.
"If you're a content guy, you see the opportunity in streaming media," McGuire said. "But something that makes you nervous is somebody coming out of nowhere with a patent claim."
Because RealNetworks now owns this broad patent, companies looking to distribute streaming media may need to allocate more money for licensing negotiations and fees.
Jupiter media analyst Todd Chanko sounded a note of caution. He said that because RealNetworks is not only a technology company but also a content aggregator and distributor, it's hard to pin down what its strategy is.
"This could conceivably be a sign that [CEO] Rob Glaser is determined to bring RealNetworks back to its technological roots."
Editor's Note: This story was updated to correct a statement about RealNetworks' Rhapsody product. Rhapsody is built on RealNetworks' Helix technology, not technology from Microsoft.
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