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Real Media splits off casual games unit

By on May 9, 2008

Real Networks has announced that it will spin off its casual games division. It’s a pretty big business with revenues of $31.8 million in the first quarter of 2008 ($108 million for the whole of 2007), and represents about 21% of Real’s total sales.

Real also bought the Trymedia casual games distribution business from Macrovision for $4 million in cash in April 2008, quite a bargain compared with the $34 million that Macrovision paid in July 2005.

Real must believe that investors are not seeing the value of the games business within Real’s larger music activities and by spinning it off Real will “create a pure-play casual games business with increased transparency”. To put it another way, they hope that the sum of the market capitalisations of the two businesses will be greater than the current market cap of Real (approximately $1 billion). Real may also take the opportunity to raise new capital for the casual games business in an share offering in advance of the tax free spin-off.

For the casual games industry, this is good news, because it means that US investors will have a pure-play casual games business who will be active in explaining the growth opportunities and nature of the sector.

If the stock performs well, expect to see other casual games market eyeing the US capital markets, credit crunch notwithstanding.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: