Real and Microsoft Kiss and Make Up, So What’s Next for Real?

Long-time bitter rivals Microsoft and Real Networks decided to bury the hatchet yesterday, with Real settling its $1 billion lawsuit against Microsoft. Real had filed suit claiming that MS was using its monopoly power to prevent PC makers from installing competing media players, like Real’s.

Now that MS has given up on the music download business–a place where Real trudges on–the two companies are going to cooperate in that business, integrating the Real player and Windows Media Player. They’re also going to offer Real’s downloadable RealArcade games on through MSN Games and Xbox Live Arcade for Xbox 360.

It’s kind of a coup for Real to get MS to settle, given the power you’d think MS has to squash Real. But it looks like Real may have engineering that MS wants, and the price of $301 million in cash plus other incentives is worth it.

But what’s this mean for streaming media producers, like myself? …

I often get crap from other video producers, especially indie-minded folks, because I am a long-standing user of the Real Server at work. The criticisms I hear are usually that it’s bad because it’s proprietary, that it costs money, and that you have to use the Real Player, which throws all sorts of ads and crap at you.

My answer to those criticisms, is first: it works, it works better and with fewer administration hassles than either Windows Media Server or Darwin Server, it easily allows you to stream the same content to multiple bandwidth clients, and it’s worked this way since 1996. It’s only partially proprietary, since Real did open up some of the source to the Helix server. And, I don’t want to be an apologist for the Real Player, but it’s gotten less yucky this year, while Quicktime and Windows Media have gotten more yucky with their spam spew.

Finally, the Real Server does use an open protocol for streaming, RTSP, which is also used by Darwin and streaming Quicktime. This means that if you have a Real Server you can stream Quicktime in addition to Real Audio/Video and Windows Media. You otherwise need to run two different platforms and servers to do this with the Windows Media Server and Darwin.

But, that leads to the question: what will happen to the Real Helix Server? If nothing else, I think it’s safe to predict that it’s not going away. What remains to be seen is if and how it gets integrated with the Windows Media Server, and if it remains a for-pay product.

The one thing that I’d like to see is Real and MS embrace MPEG4 and other open (though not free) standards. While the RealServer will serve out MPEG4 video, Apple’s embraced the standard as its primary video codec family in Quicktime. Real and MS might be able to enhance their position by joining Apple and maybe even doing it better by combining it with Real’s SureStream technology.

ZDNet’s Russell Shaw has some very cogent analysis of the deal, recounting the history of Real and Microsoft’s bad relationship. He observes that,

Companies like Real don’t make their profits on media players they distribute to you and me, but via servers and encoding utilities of varied sophistication. So if you are a streaming media content developer and feel the demographics of your users require you to develop content for both Real and Windows Media players and platforms, being able to use one set of encoding tools means you don’t have to buy the competitor’s product.

But goes on to note,

But now, with this settlement, things may be changing. Not because they ought to but because they have to. The competitive landscape has changed. Microsoft’s main competitor is no longer Real, but Google. And Real’s main competitor is no longer Microsoft, but Apple.

“It’s one of those good deals for both companies,” JupiterResearch analyst Michael Gartenberg said. “For Microsoft, it frees them up to focus on the competitors of the 21st century, like Google, or Apple (Computer) in the music space.”

Maybe. But if nothing else, Real’s got itself $300 million more in funding to help it stay alive a little while longer.