RealNetworks Acting CEO Bob Kimball Speaks on Rebuilding the Company, Transforming the Culture, and Spinning Off Music and Games

2/11/10Follow @gthuang

In today’s RealNetworks earnings call, we heard from president and acting CEO Bob Kimball for the first time. Kimball recently took over from founder Rob Glaser, who stepped down as CEO a month ago.

Kimball originally joined RealNetworks (NASDAQ: RNWK) in 1999 and served for 10-plus years as the senior executive responsible for all legal matters and business development. Prior to Real, he was senior attorney and manager of business relations at IBM Global Services.

2009 was a rough year for Real financially, but Kimball is all about the future. And about getting things done quickly and decisively, starting now. He spoke on the call about the company’s retooled strategy and his plans to “transform RealNetworks” into a “far more focused and simple company” with a “strong new sense of purpose.” He also thanked Glaser for providing the leadership and innovation that “forms the bedrock of Real today.”

The bottom line is that Real is spinning out its music service, Rhapsody, as a separate company (announced earlier this week), and will separate out its games division soon after that’s complete. The ownership, financial, and legal structure of the gaming entity is yet to be determined. That leaves two main focuses for Real, both built around its media entertainment software platform: its software-as-a-service business for wireless carriers, and its RealPlayer business for consumers. (These two divisions create virtually all of Real’s cash flow today.)

Here are some more highlights from Kimball:

—“I know where our strengths are, and, perhaps more importantly, I know where our weaknesses are,” he said. “I know how we make money, and how we don’t.”

—“I haven’t seen this level of excitement in the hallways of RealNetworks in many years,” Kimball said. Besides the talent and determination of Real’s employees, he pointed to the company’s “pristine balance sheet,” which includes nearly $400 million in the bank, and no debt.

—“We plan to be content agnostic. We will make it easy and fun for consumers to enjoy their content anywhere, anytime,” he said.

—Kimball outlined a three-step plan for Real: simplify, restructure, and grow. Not necessarily one after the other, but in parallel. “We must move quickly,” he said. “By the end of the year, we will be a simpler and more focused business.”

—Interesting commentary on Real’s challenges to date: “RealNetworks’ sheer complexity slows us down and makes it difficult to innovate where it counts most,” Kimball says. “The four businesses create too much complexity for a company of our size.” He called the organization “bloated” and its focus “diluted”.

—Kimball talked about changing the culture of the organization, and both empowering employees and making them more accountable. He stressed intensity, discipline, and efficiency as being the operational keys to success.

—In terms of growth, Kimball talked about putting out more products and expanding Real’s business customer base among groups like network service providers and digital storefront owners. Real currently sells it services to more than 80 wireless carriers around the globe. (See the deal with Sprint announced today.) On the consumer front, he noted that as of the end of last month, 200 million videos have been downloaded on RealPlayer SP, which rolled out last summer.

—Some potential investment areas for Real: more cloud-based services, social-networking aspects of games, and “smart and targeted M&A is also going to generate value for us,” he says.

—Kimball’s first public comments about Real’s new strategic direction were certainly newsworthy, but of course talk is cheap. “I expect my comments alone won’t change much today,” he says. “What matters is actions, not words.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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