More than 25 years after he founded RealNetworks, Rob Glaser is investing $10 million into the digital media pioneer as it makes a major pivot into facial recognition technology.
The CEO’s personal investment, announced this week, gives the Seattle company an infusion of capital at a time when its cash had dwindled to $16.8 million as of the end of the year.
The transaction takes Glaser’s total possible ownership of the company to about 48% of its common stock, while keeping his voting shares capped at 38.5%. The deal was negotiated as an arms-length transaction with a special committee of the board, working with an outside adviser. The transaction was completed at $1.24 per share, the company’s closing share price as of Feb. 7.
“Speaking personally, I thought it would be a good investment. I very much believe in what we’re doing,” Glaser told GeekWire via phone Thursday morning. “I very much believe in the opportunities in front of us, and there are two in particular that we highlight: our free-to-play games business and our SAFR computer vision platform that I think have a particularly bright futures. And so I thought, well, given the way the public markets are pricing the company stock, I think this would be a fabulous time to make an investment.”
The Seattle company has undergone many shifts and pivots over the years as it looks to regain the prominence it had in the late 1990s as a pioneer in streaming music buoyed by its flagship RealPlayer product. It was flush with cash following a $761 million antitrust settlement with Microsoft, Glaser’s former employer, in 2005.
RealNetworks’ SAFR technology uses artificial intelligence to “detect and match millions of faces in real time, even under challenging conditions where faces are in motion, at different angles, under poor lighting conditions, or partially obscured,” according to the company RealNetworks launched the technology in 2018 for K-12 schools and later expanded it to commercial customers.
Glaser said he believes SAFR is poised to gain traction in part because of its smaller hardware footprint and better accuracy, which will help it avoid common problems with bias in facial recognition technologies.
“We can be embedded in devices like cameras much more economically and effectively than any of our competitors, lack of bias is important because this is a technology that has all kinds of powerful social implications,” he said.
RealNetworks’ partners include PwC, Digifort and Genetec. Financial results from SAFR aren’t broken out on a standalone basis, but are combined with other software license revenue on the company’s financials, along with some other products and services. That part of the company brought in $3.1 million in 2019, a 9 percent increase over the prior year.
Overall, RealNetworks posted $172.1 million in revenue in 2019, including $106.3 million from Napster, formerly known as Rhapsody, the Seattle-based streaming music service in which RealNetworks owns a majority stake. RealNetworks posted a net loss of $20 million for the year. Excluding Napster, its annual revenue was $65.8 million, down from $69.5 million in revenue in 2018 for RealNetworks on a standalone basis.
RealNetworks and Napster combined employ close to 500 people.
Glaser founded the company in 1994 and served as CEO for the next 15 years. He left that job in 2010, but remained the board chair. He returned to the CEO job in 2012 on an interim basis before moving back into the role on a permanent basis.
Editor’s Note: This post was updated on Feb. 14 to correct Glaser’s percentage ownership stake and voting shares in the company following the investment.