Parks Associates Blog

Friday, February 22, 2008

RealNetworks' Puzzling Buy of Trymedia

RealNetworks just announced that it is buying Trymedia from Macrovision, for an undisclosed amount. I bet the price is much lower than the $34 million Macrovision paid two and half years ago. Macrovision has done a very poor job in integrating the Trymedia division and executing its gaming strategy. Most of the original Trymedia team members left the company after the acquisition and the company hasn't really announced any significant new customers in the past two years. Therefore, it's not surprising that Macrovision is offloading the division as part of its refocusing efforts.

However, it's not clear why RealNetworks wanted to buy Trymedia. The price must be really cheap. Is it for the DRM technology? ActiveMARK is indeed a very good DRM technology but also regarded as expensive. Many of casual games companies, especially the big ones such as Wild Tangent and Big Fish Games, have developed their own DRM solutions. RealNetworks also has its own DRM solutions. Maybe it wasn't as good as ActiveMARK?

Did Real buy Trymedia for a bigger distribution network? Possibly. But many of Trymedia's customers are Real's competitors on the retail front, since Trymedia mainly functioned as a white-label platform. Will these customers stay with Trymedia now it's owned by the the casual gaming powerhouse? RealNetworks used to have a white-label platform itself but it was not widely deployed since many of the potential customers did not like Real's terms and the fact that it wants to accentuate its own brands on the storefront.

Did Real buy for digital distribution of core games? Trymedia did have some business in distributing core games. However, it seems we are still far from having a big market for digitally distributed core games. Valve's Steam has been very successful and is gathering some traction. IGN's Direct2Drive follows. But overall physical retail still dominates the market.

So why did RealNetworks buy Trymedia? The official reason cited in the press release is "doubling its games syndication". Maybe with Real's new focus on advertising models, having a big library will be increasingly important.

I'll be interested in finding out the price tag when Real announces it in its SEC filings.

2 Comments:

Anonymous Anonymous said...

Macrovision stated on their analyst call Thursday they sold the Trymedia games BU for $4 million.

I agree with your post and while you may question Real's motive I have to say that anything must be better than MVSN. Trymedia was on top, had innovative technology and were telling users at conferences all the great things they were going to be able to do because of the macrovision acquisition. In-game advertising (back in 2005 it was innovative), a new and improved commerce and merchandising platform and a better DRM. NONE of these ever materialized. So MVSN just didn't do anything for Trymedia and they probably should have sold them sooner.

8:19 PM  
Blogger Michael Cai said...

The price tag is apparently $4 million. ROI for Macrovision is -88%...

11:25 AM  

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