RealNetworks Inc. just has to figure out how to serve beer over the Internet.
The Seattle company has positioned itself as an online destination for men, linking to highlights of sports events, swimsuit model videos and other testosterone-heavy content.
Recently, its subscription-based Web site offered such tantalizing news headlines as “Mormon Porn Star” and “Erotic Glass Blowing.” There were also links to Super Bowl advertisements, a “Terminator 3” movie trailer and a video of a Playboy “Super bunny” party.
For years, the Internet audience was mainly technically savvy, higher-income men. They helped RealNetworks get its subscription service off the ground, especially those with the high-speed Internet connections that best showcased online video–a key element of the service and one that is becoming increasingly important to the company’s business.
Outside the Internet, the “men’s lifestyle” market was developing with the surprising success of Maxim and other male-focused magazines. But most of those magazines could not turn hot newsstand sales into Internet-related income.
RealNetworks wants to be the place where guys hang out online.
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“We’re targeting an older male audience who has an affinity for technology but really loves the entertainment and sports and news experience,” company President Larry Jacobson said.
RealNetworks developed this strategy after looking at how the Internet could be different from cable or satellite TV. The live experience on the computer stood out, and RealNetworks knew its broadcasts of live sports and news events would be key drivers of its business, he said.
Who watches sports and news video online? Usually men with high-speed Internet connections.
People online tend to pursue the same interests they do in real life, said Lisa Strand, an e-commerce analyst for Nielsen/NetRatings. Women often visit sites about the family and home, such as iVillage.com, while men tend to favor sites about sports, news and finance.
RealNetworks’ Real.com Web site already is one of the most-visited sites on the Internet. The company has 900,000 subscribers and had been adding about 100,000 every quarter for the past two years.
Few Internet companies have pulled off that kind of feat.
Sports a big draw
RealNetworks did so, in part, by working hard to develop relationships with professional sports. The company’s RealOne SuperPass subscription service, which sells for $9.95 a month, includes athlete interviews and other videos from the PGA Tour, NASCAR and the National Football League.
It partnered with the National Basketball Association to launch NBA Inside Ticket, a subscription service featuring audio play-by-play of every game, video highlights and expert analysis. The program costs $9.95 a month and can be bundled with the SuperPass service for $14.95 a month.
“Sports is something [men] consider almost up there with shelter and food and water,” said Richard Doherty, director of research firm The Envisioneering Group.
RealNetworks “is catering to an audience,” he said. “I don’t think there are bounds there.”
Certainly, the company must feel pressure to continue attracting that audience, particularly after switching its business model in recent years to one where subscribers are the main source of income.
RealNetworks has been profitable only during one year–1999–since going public in 1997, and last month it reported a $2.5 million net loss for 2002.
The company also said its subscriber growth slowed in the past quarter to about 50,000, or half its normal rate. It added that such a drop-off is typical for that time of year.
Adult tier possible
One way to boost visitors is by adding adult programming to the subscription service, perhaps as an add-on package. Adult content is a proven–albeit controversial–online moneymaker, luring subscribers while dot-com grocers and other retailers went bust.
In an August interview with news site Cnet.com, a RealNetworks vice president, David Richards, said the possibility of an adult channel would not be ruled out.
“We expect we will have different tiers” of service, Richards said. “Maybe even an adult tier.”
Sources close to the company say RealNetworks has held discussions with Playboy about adding adult programming. RealNetworks executives would not comment, and Playboy did not return telephone calls on the subject.
With major league sports on board, the company seems to be turning its focus to entertainment programming this year. It is expected to continue partnering with reality television, an entertainment phenomenon that shows no signs of slowing.
The company’s streaming video broadcasts from CBS’ “Big Brother” reality show were a success, and tens of thousands of the show’s fans subscribed for an insider’s look at the cast and their activities.
“We want to get younger, and that’s a reasonable strategy for us to have,” said Merrill Brown, RealNetworks’ senior vice president.
But don’t look to Real.com to become a must-visit destination for women anytime soon.
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“I don’t think they’re going to an Oxygen overnight,” said Doherty, referring to the cable network for women.