The deal will make Real the behind-the-scenes operator of Cingular's video-programming service once it launches its third-generation wireless services later this year. It also marks a new push by the $267 million streaming media and software concern to offer end-to-end network management services.
TARGET: MICROSOFT. The news is RealNetworks' (RNWK
) second announcement with a major US-based wireless phone carrier this month. On Sept. 19, it announced a tie-up with SprintNextel (FON
) that will bring streaming music to wireless phones. Real also is working with other wireless carriers around the world on delivering wireless content, but it says this will be the first time it has taken on such a large operation.
The announcement is expected to come at The Cellular Telephone & Internet Assn. conference in San Francisco, where RealNetworks CEO Rob Glaser will be speaking.
In landing Cingular on the video front, Real has lined up against its long-term rival Microsoft (MSFT
) in a big way. Since its acquisition of AT&T Wireless last year, Cingular, a joint venture of SBC (SBC
) and BellSouth (BLS
), has eclipsed Verizon Wireless as the U.S.'s largest wireless carrier, with 50 million customers to Verizon's 47 million. Microsoft provides the video services for Verizon Wireless' V Cast wireless video service. Verizon Wireless is a joint venture of Verizon (VZ
) and Vodafone (VOD
SOUP-TO-NUTS SERVICE. It's a replay of an earlier battle, says Roger Entner, an analyst with Ovum, a Boston-based wireless industry consultancy. "It's just like in the beginning of streaming video during the dial-up days. Microsoft provides the video plumbing for Verizon. Here Real is providing the plumbing for Cingular."
Real will provide Cingular with a soup-to-nuts video service including applications, hosting of the video content, and delivering the video streams over Cingular's network. It's calling its platform Helix OnlineTV, after the Helix digital content delivery platform it introduced last year.
Helix already is used in various ways by as many as 70 different wireless carriers in 40 countries, says Real vice president John Giamatteo. "But this is the first time we'll be doing the complete end-to-end management of the hosting and streaming of the video," he says.
EMERGING STRATEGY. Financial terms of the deal have not been disclosed, and Cingular hasn't revealed plans for how it will brand the service or what kinds of content will be available. Cingular is planning to launch a high-speed wireless data network based on a technology known as UMTS/HSDPA (it stands for universal mobile telecommunications system/high speed downlink packet access) later this year. "This is the first announcement about Cingular's video strategy," Entner says. Cingular did not return calls for comment.
Separately, the two companies will also announce a deal to bring Real's gaming service to mobile phones within the next few weeks. Real's RealArcade service, which offers simple low-end games that appeal to casual players.
Hesseldahl is a writer for BusinessWeek Online in New York