May 10, 2000 12:45 PM PDT

AOL taps RealNetworks for high-speed streaming

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America Online has agreed to use RealNetworks' streaming software to deliver multimedia content on its broadband offering, expanding the companies' existing distribution deal.

With the deal, the companies have created an AOL-branded multimedia player for users of AOL Plus, the online giant's broadband, or high-speed, content feature.

AOL's myriad content providers will be able to use RealNetworks software to stream audio and video content on AOL Plus. Content providers will not be required to use RealNetworks technology, and AOL has not ruled out letting its providers use other streaming technology, such as Microsoft's.

"We will certainly work with them on a case-by-case basis," said AOL spokeswoman Marta Grutka.

Although the deal is not exclusive for RealNetworks, expanding its relationship with AOL may help in its competitive wrangling with Microsoft. Given AOL's 22 million members and its objective to upgrade them from using dial-up service to broadband service, the deal gives RealNetworks an added foothold in capturing AOL's broadband customers.

RealNetworks originally inked an agreement to distribute its software through AOL in 1998. The deal allowed RealNetworks to become the default streaming provider on AOL's then-4.0 software, an arrangement that continued when AOL launched version 5.0 last fall.

The expanded relationship into AOL Plus comes as RealNetworks is engaged in a heated battle for market share against Microsoft, which also has developed streaming software, called Microsoft Windows Media.

Microsoft considers its streaming software an element of its Windows operating system, which has appealed to many content providers from a cost perspective. Content providers need only purchase a Windows 2000 server to obtain Microsoft's streaming technology but have to pay thousands of dollars to use RealNetworks' servers.

Microsoft has aggressively courted content providers with Windows Media, and its media player has gained on RealNetworks' software lead.

Former Microsoft employees and industry analysts have compared the company's tactics to its piecemeal toppling of Netscape Communications in the browser wars. Some consider RealNetworks' shift from software sales toward ad-driven media a testament to Microsoft's ability.

But with AOL on its side, RealNetworks could see an increase in the adoption of its streaming software. AOL Plus users are required to download an AOL-branded version of the RealPlayer.

AOL Plus is a feature that Swimming with sharks lets members using high-speed Internet connections watch video clips or listen to audio files. AOL Plus automatically loads as a separate window for broadband users and offers high-speed multimedia when people navigate through AOL's content areas. For example, when members visit the news section of the online service, AOL Plus offers links to multimedia streams from CNN.

AOL Plus is the company's first step in appealing to broadband users. But most of AOL's members still access the company's service through slower dial-up connections.

"I don't think AOL Plus amounts to much yet," Jupiter Communications analyst Aram Sinnreich said. "Obviously, it's still a narrowband world, and AOL is still a narrowband service."

RealNetworks becomes the latest multimedia addition to the AOL 5.0 online service. Macromedia's Flash technology is already a feature included in AOL's software.

 

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