Real Networks, the distant second in the digital music, has to get an A for not giving up. The company is working on a Real everywhere strategy, which is essentially the only way it competes against the digital dominance of Apple. The company has taken a web-services approach and is pushing its subscription service on devices – most notable Sonos, and some Nokia N-Series phones.
Today the company made its move into the Vodafone mobile ecosystem: it acquired a division of Sony called Sony NetServices, that is based out of Salzburg, Austria, for approximately $9 million in cash. The acquisition is not that expensive – it generates incremental revenue of approximately $1 million for the second quarter of 2007 and approximately $7 million for the remainder of 2007, though will be dilutive from an earnings standpoint.
Sony NetServices offers mobile music to Vodafone customers in eight European countries including the UK, Germany, France, and Italy. Real is also going to provide mobile music services to Vodafone across Western Europe. A recent research report pegs the mobile music business will generate more than $9.1 billion in revenue in Western Europe by 2010, and over $32 billion globally. Real also owns WiderThan, another mobile entertainment service, which is primarily focused on US and Asia.