July 16, 2010, 3:10 PM

RealNetworks reorganizes as it seeks to return to growth

The company eliminates about 25% of its executive ranks.

Lead Photo

The changes continue at RealNetworks Inc., which in March completed its spin-off of online music service Rhapsody America. The provider of digital music, technology and games has reorganized its business and reduced its executive ranks by 25%.

As part of the restructuring announced recently two units—technology products and solutions and media software and services—were reorganized into teams representing product development, sales and marketing, and digital service delivery. The retailer says its aim is to streamline operations and stimulate growth.

The technology unit provides media and entertainment services to wireless carriers and the media unit provides RealPlayer software and SuperPass, a subscription media service that includes movies, TV show episodes and games.

“This reorganization marks a significant milestone in our transformation of RealNetworks,” says Bob Kimball, president and acting CEO of RealNetworks, No. 99 in the Internet Retailer Top 500 Guide. “Restructuring RealNetworks into functional groups creates a far more efficient organization focused on developing great products that can be delivered through any of our distribution partners.”

As part of the reorganization, the company eliminated about 85 positions, including about 25% of its executive ranks. The new organizational structure is designed to reduce the layers of management to create greater efficiency, teamwork and customer focus, the company says.

RealNetworks also trimmed in its office space in Europe, Asia and its Seattle headquarters. As a result of the reorganization and reduction in office space, RealNetworks expects to record restructuring charges of approximately $10 million for the quarter ended June 30. Of these charges, about $3 million is related to the reduction in force and about $7 million will be recorded as a loss on excess office facilities.

RealNetworks still owns about 47.5% of Rhapsody, which was a joint venture between RealNetworks and MTV Networks.

The company reported first quarter revenue of $128.6 million, down 9% from $140.8 million in the same quarter a year earlier.

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