RIP RealDVD: You never had much of a chance

RealNetworks gives up in what always looked like an ill-advised legal battle

Even before RealNetworks debuted its DVD-copying technology called RealDVD at Network World's DEMO conference in September 2008, it was abundantly clear that a legal battle was about to ensue.

Today, as RealNetworks licks its wounds in the wake of having lost that expensive battle on all fronts, what's not clear is why the company decided to roll the dice without better odds of winning.

The RealDVD announcement was made on a Monday morning, but because the news was under embargo, I had been aware of the impending legal storm and had been able to ask the parties about it. From my post that Monday morning:

Asked if the movie industry had any problems with the copying enabled by RealDVD, RealNetworks spokesman Ryan Luckin told me Friday afternoon that his company had just begun informing industry officials about the product, which despite any questions on that score was to be available for download Monday at www.realdvd.com. "They seem to be OK with it," he added.

Not so fast, says the Motion Picture Association of America.

"We really just became aware of this in the past 24 hours," Elizabeth Kaltman, a spokeswoman for the MPAA, told me late Friday. "We have nothing else to say at this time."

There was also nothing in her tone to suggest that the MPAA's acquiescence is a mere formality.

The fact RealNetworks gave the movie studios virtually no advance notification of its plans made clear immediately that it anticipated trouble. The strategy was apparently to get a jump on the studios, get the product out the door, gain support in the court of public opinion - that part worked -- and deal with the genuine legal issues later.

However, the movie studios quickly and easily obtained an injunction stopping all sales of RealDVD, and while RealNetworks indicated that it would take its appeal all the way to trial, if necessary, yesterday brought the final surrender. From an IDG News Service story on our site:

RealNetworks has agreed to pay $4.5 million and permanently stop selling its RealDVD software as part of a legal settlement with six Hollywood movie studios, the company said Wednesday.

Real will withdraw its appeal of last year's preliminary injunction and stop supporting RealDVD or any other technology that enables the duplication of copyright content, it said in a statement.

RealNetworks will pay the studios $4.5 million for legal fees and also reimburse 2,700 customers who shelled out $30 to buy RealDVD based in part on the company's assurances that the product was legal.

Say what you will about the relevant law here (I think it's tilted too far toward Hollywood) and say what you will about RealDVD (based on my limited understanding, I think it should be legal).

But RealNetworks' strategy for bringing RealDVD to market never made much sense. And if their lawyers were telling them otherwise at the time, those lawyers have some explaining to do now.

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