RealNetworks, Inc., today announced that it intends to separate its global casual games business into an independent company and distribute shares of the newly created games company to its shareholders. RealNetworks may precede the spin off with an initial public offering and sale of up to 20% of the shares of the new games company.

RealNetworks’ casual games business is a leader in the casual games industry worldwide, with a vertically integrated development, publishing, licensing, distribution and retail business. Casual games are family friendly and easy-to-learn but hard-to-master. Played on personal computers, mobile devices and living room consoles, casual games include board, word and hidden-object games and puzzles. In the first quarter of 2008, RealNetworks’ games business revenue rose 33% from the first quarter of 2007 to $31.8 million. For 2007, games revenue was $108.5 million, up 26% over 2006.

"RealNetworks was a pioneer and has been a leader in the casual games industry since we introduced RealArcade in 2001," said Rob Glaser, Chairman and CEO of RealNetworks. "We believe that spinning off our casual games business will give it the best opportunity to continue to flourish and lead."

The company anticipates that spinning off its casual games business will result in two more flexible and focused companies. In addition, the separation will provide the games business with an industry-specific currency for future acquisitions and enhance its ability to attract and retain the best talent in the industry.

"Today’s announcement demonstrates our commitment to create long-term value for RealNetworks’ shareholders," said Michael Eggers, Senior Vice President and CFO of RealNetworks. "For investors, we anticipate that the spin off will create a pure-play casual games business with increased transparency, and that it will result in lower complexity in understanding and tracking RealNetworks’ performance. We also think that the new structure will provide current and potential shareholders with two attractive investment options that may be more closely aligned with their various investment objectives."

RealNetworks expects that either a spin off or an IPO and subsequent spin off will be tax-free to its shareholders. In addition to a final approval by the RealNetworks’ Board of Directors, completion of the transaction will be subject to a number of factors, including the effectiveness of a registration statement, the receipt of a favorable letter ruling from the Internal Revenue Service, the receipt of an opinion of tax counsel, market conditions, the execution of inter-company agreements and other matters.

RealNetworks expects to determine its specific course of action in time to file appropriate documents with the Securities and Exchange Commission by the end of the year.