Post updated at 7:45 a.m.
Intel will pay RealNetworks $120 million in cash for a portfolio of 190 patents, 170 patent applications and the Seattle company’s next-generation video-codec software, under a deal announced this morning.
RealNetworks says the deal represents a “significant number” of its patents, but the company will retain the right to use the technology in its current and future products as part of the deal with Intel. The companies also signed a deal to collaborate on future development of the video codec software.
“Selling these patents to Intel unlocks some of the substantial and unrealized value of RealNetworks assets,” said Thomas Nielsen, RealNetworks President and CEO, in a news release announcing the acquisition. “It represents an extraordinary opportunity for us to generate additional capital to boost investments in new businesses and markets while still protecting our existing business.”
The deal represents a big boost for RealNetworks’ financial position. The company reported $183 million in cash and short-term investments as of Sept. 30.
It’s also the first big deal for Nielsen since the former Adobe exec took over as RealNetworks CEO in November. The Seattle company’s shares are up more than 30 percent in trading as of 7:45 a.m. Pacific time.
Seven members of RealNetworks’ video codec team will shift to Intel as part of the deal. A codec is technology for encoding and decoding media and other data for transmission and then playback.
Renée James, Intel senior vice president and general manager, said in the news release that the agreement “enhances our ability to continue to offer richer experiences and innovative solutions to end users across a wide spectrum of devices, including through Ultrabook devices, smartphones and digital media.”
The deal highlights the rising focus on patents across the technology industry, in many cases as a legal defense against competitors.
RealNetworks says the sale of the patents shouldn’t have a material impact on its businesses, which include services for wireless carriers, RealPlayer, the Helix media platform, GameHouse, and SuperPass.