RealNetworks Eyes the Tube Warily

Separately, says Ryan, RealNetworks sees itself as a partner with cable operators, not a competitor. Putting together programming services has traditionally required expertise in choosing content, packaging it and handling customer service, and cable operators have turned to outside programmers to do all those tasks. "We believe strongly they will partner with outside partners such as ourselves," says Ryan.

It's a little too early to tell exactly what the on-demand landscape will look like, says Ryan. "We just know we're going to be a leading supplier of those kinds of services," he says.

One outsider also agrees that cablers' move toward on-demand programming won't freeze out RealNetworks. Theoretically, cable operators could do what RealNetworks is doing, says Bill Niemeyer, an analyst with the DiMA Group, a digital media consulting firm. But they tend to leave content aggregation to outsiders. RealNetworks' experience in this area "counts for something," he says.

Or maybe it doesn't.

Dana Serman, an analyst at JHC Capital, says that as on-demand programming becomes more prevalent among cable operators, the only companies able to collect any money will be cable operators, the manufacturers of DVR-equipped set-top boxes and current programmers. Using a baseball example, that means the ESPN sports channel is the winner, not RealNetworks, since ESPN is already aggregating the relevant content. The operator, box manufacturer and -- in this example -- ESPN "are the only three beneficiaries I see in the equation." Serman's firm doesn't hold any RealNetworks stock, but is a holder of cable-equipment manufacturer Scientific-Atlanta (SFA).

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