Exhibit 99.1

REALNETWORKS ANNOUNCES THIRD QUARTER 2005 RESULTS

Achieves More Than 2.2 Million Paid Subscribers

SEATTLE, Washington — October 27, 2005 — RealNetworks®, Inc. (Nasdaq: RNWK), the leading creator of digital media services and software, today announced results for the third quarter ended September 30, 2005.

Third Quarter Highlights

• Revenue of $82.2 million, an increase of 20% from the prior year

• Net income of $11.2 million

• Increased total paid subscribers to more than 2.2 million

For the third quarter of 2005, Real reported quarterly revenue of $82.2 million, up 20 percent from $68.3 million in the third quarter of 2004. Real reported GAAP net income of $11.2 million, or $0.06 per diluted share, compared to a net loss of $7.0 million, or ($0.04) per share, in the third quarter of 2004. The results for the third quarter of 2005 include an after-tax gain of approximately $8.4 million, or approximately $0.04 per share, associated with the sale of a portion of the Company’s equity investment in a Japanese public company. Non-GAAP adjusted net income, excluding antitrust litigation expenses of approximately $3.5 million, or $0.02 per diluted share, for the third quarter was $14.7 million, or $0.08 per diluted share.

EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) was $16.0 million compared to a loss of $3.9 million in last year’s third quarter. Absent antitrust litigation expenses, EBITDA was $19.5 million for the third quarter of 2005, up from a loss of $1.0 million in the comparable period during 2004. A reconciliation of non-GAAP EBITDA and EBITDA less antitrust litigation expense with GAAP net income is provided in the financial tables accompanying this release.

“We continue to make great progress with strong year over year revenue growth, increased profitability and a base of more than 2.2 million paid subscribers, including 1.3 million paid music subscribers,” said Rob Glaser, chairman and CEO of RealNetworks. “We continue to expand our growing list of blue chip partners with new relationships with Sprint, Cingular Wireless and, most recently, Microsoft. Together with our partners we’re continuing to expand our ability to offer digital music, video and games to consumers wherever and whenever they want them.”

Earlier this month, Real announced a series of agreements with Microsoft worth at least $761 million, which settled all antitrust disputes worldwide and also include collaboration agreements around digital music and games. Real received $460 million in cash associated with the antitrust settlement and technology assurance agreement and will receive another $301 million in cash scheduled to be paid quarterly over 18 months related to the music and games agreements. Microsoft can earn pre-determined market rate bounties for delivering Rhapsody subscribers to Real, which will be netted against the scheduled quarterly cash payments. The music partnership provides for the integration of Real’s leading digital music subscription business, Rhapsody®, throughout MSN Music, MSN Search, MSN Messenger and Windowsmedia.com properties. Under the games agreement, Real is developing a subscription games service to be promoted throughout MSN Games and also will develop a series of titles for Xbox Live Arcade.

Financial Overview

Real continued to see year over year revenue growth driven by its consumer segment, including Music and Games products and services. Third quarter revenue from the Consumer Products and Services segment grew 28 percent to $71.8 million, up from $56.0 million in the third quarter of 2004.

In the third quarter, Music revenue grew 39 percent to $25.0 million, up from $18.0 million in the third quarter of 2004. Games revenue grew 62 percent to $14.7 million, up from $9.1 million in the third quarter of 2004. Media Properties revenue, which includes advertising, increased 59 percent to

$8.4 million, up from $5.3 million during the same quarter last year. Video, consumer software and other revenue was $23.6 million, flat in comparison to the same period a year ago.

Real’s Business Products and Services generated $10.5 million in revenue in the third quarter of 2005, compared to $12.3 million in the prior year’s third quarter. The decline was primarily based on a $1.4 million revenue decrease related to a previously disclosed expiring legacy systems license agreement.

The Company’s gross margin improved to 70 percent in the third quarter of 2005, as compared to 64 percent in the third quarter of 2004, due primarily to a shift in revenue mix to higher margin products as well as a reduction in content costs associated with certain products and services.

Operating expenses, including antitrust litigation, were $57.7 million for the quarter compared to $49.7 million in the third quarter of 2004 due to higher marketing costs and headcount. As of September 30, 2005, Real had approximately $347 million in cash, cash equivalents and short-term investments, which includes the proceeds from $100 million of convertible debt. In addition, the Company had approximately $47 million in public equity investments.

At the close of the third quarter of 2005, Real had over 2.2 million paid subscribers to its premium digital media services, up from over 1.55 million for the same quarter in 2004. Of the total paid subscribers, Real had more than 1.3 million paid music subscribers at the end of the third quarter of 2005, up from more than 625,000 for the same quarter in 2004. The music subscriber counts include Rhapsody on demand services, premium commercial-free radio services and, in 2005, Rhapsody radio registrations bundled with broadband internet service providers.

Last quarter, the Company announced that the Board of Directors had authorized the repurchase of up to $75 million of its outstanding stock. Real entered into a Rule 10(b)5-1 plan in order to facilitate the repurchase. As of September 30, 2005, Real had spent $29.3 million on the repurchase of approximately 5.5 million shares.

Forward Looking Guidance

For the fourth quarter of 2005, Real expects net revenue to be between $81 million and $85 million. As previously announced, Real does not expect to see any material impact to fourth quarter revenue from its Microsoft relationship due to the timing of the integration work associated with the music and games collaboration agreements. Real expects fourth quarter earnings per diluted share of $1.42 to $1.48 and EBITDA between $398 million and $410 million, which incorporates the assumptions listed below.

During the fourth quarter of 2005, the Company received $478 million in cash related to the previously announced Microsoft agreements. This gain will be offset by an estimated $40 million to $50 million in contingent legal fees and other litigation costs, along with approximately $30 million in other expenses associated with these agreements, including state occupancy taxes and amounts related to our intent to donate five percent of net income after tax to the RealNetworks Foundation.

In addition to the expenses discussed above, the Company’s guidance incorporates an income tax provision of approximately 35 percent. However, due to net operating loss (NOL) utilization, the actual cash amounts owed for income taxes are estimated to be less than five percent of net income before taxes. Absent acquisitions or additional share repurchases, Real expects cash, cash equivalents and short-term and public equity investments to be approximately $800 million at the end of the fourth quarter.

For the fiscal year 2005, the Company expects revenue to be between $322.5 million and $326.5 million, with earnings per diluted share between $1.51 and $1.57. Full year EBITDA is expected to be between $423 million and $435 million.

Webcast Information

The Company will host a webcast and conference call today at 5:00 pm (Eastern)/ 2:00 pm (Pacific). The live webcast, featuring slides and audio, will be available at http://www.realnetworks.com/company/investor/earnings.html. Listeners will require RealPlayer® to listen to the conference call, which can be downloaded for free at www.real.com. The on-demand webcast will be available approximately two hours following the conclusion of the live webcast. Participants may access the conference call by dialing 800-857-5305 (773-681-5857 for international callers). The passcode is “Third Quarter Earnings,” and the leader is Rob Glaser. A

telephonic replay will be available until 8 pm (Eastern), November 3rd, and may be accessed by dialing 866-407-9275 (203-369-0620 for international callers).

For More Information Contact

Press: Jeremy Pemble, RealNetworks, (206) 892-6614, jpemble@real.com

Financial: Caroline Hughes, RealNetworks, (206) 892-6718, carolinehughes@real.com

ABOUT REALNETWORKS

RealNetworks, Inc. is the leading creator of digital media services and software including Rhapsody®, RealPlayer 10, and casual PC and mobile games. RealNetworks has more than 2.2 million paid subscribers to its premium digital media services. Consumers can access and experience audio/video programming and download RealNetworks’ consumer software at http://www.real.com. Broadcasters, network operators, media companies and enterprises use RealNetworks’ products and services to create and deliver digital media to PCs, mobile phones and consumer electronics devices. RealNetworks’ corporate information is located at http://www.realnetworks.com/company.

Forward Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to: (a) Real’s future revenues, expenses, margins, profitability, net income, earnings per share and other measures of results of operation; (b) the growth of Real’s music and games businesses; (c) the prospects for future growth; and (d) the future success and impact on Real’s operating results and financial position resulting from the Microsoft agreements. Actual results may differ materially from the results predicted. Factors that could cause actual results to differ from the results predicted include: development and consumer acceptance of legal online music distribution services; risks associated with the sustained adoption and use of RealNetworks’ services by customers, including the uncertainty of whether consumers will continue to pay for subscription content over the Internet, which is a relatively new and unproven business model; the potential that we will be unable to continue to enter into commercially attractive agreements with third parties for the provision of compelling content for our subscription service offerings; the risk that the costs of our antitrust litigation will be greater than we anticipate; the emergence of new entrants and competition in the market for digital media subscription offerings and on-line music sales; the impact on our gross margins from content costs and from the mix of subscribers to subscription offerings with higher content costs than others; competitive risks, including competing technologies, products and services, and the competitive activities of our larger competitors, some of which have strong ties to streaming media users through other products; risks associated with the introduction of new products and services; risks inherent in strategic relationships, especially with competitors, and technology and service integrations efforts such as those contemplated by the Microsoft agreements; and risks relating to the ability of Real’s strategic partners to generate subscribers for Real’s digital content services. More information about potential risk factors that could affect RealNetworks’ business and financial results is included in RealNetworks’ annual report on Form 10-K for the most recent year ended December 31, and its quarterly reports on Form 10-Q and from time to time in other reports filed by RealNetworks with the Securities and Exchange Commission.

RealNetworks, Rhapsody and RealPlayer are trademarks or registered trademarks of RealNetworks, Inc. All other companies or products listed herein are trademarks or registered trademarks of their respective owners.

RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)

	Quarters Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
				(in thousands, except per share data)
Net revenue	$	82,233		$	68,310		$	241,491		$	194,173
Cost of revenue		24,695			24,786			74,273			68,282
Loss on content agreement		—			—			—			4,938
Gross profit		57,538			43,524			167,218			120,953
Operating expenses:
Research and development		16,334			13,046			45,296			38,516
Sales and marketing		30,745			24,721			93,809			70,171
General and administrative		7,032			7,968			21,096			23,388
Loss on excess office facilities (A)		—			866			—			866
Antitrust litigation (B)		3,531			2,974			11,925			8,051
Stock-based compensation		25			145			109			624
Total operating expenses		57,667			49,720			172,235			141,616
Operating loss		(129	)		(6,196	)		(5,017	)		(20,663	)
Other income (expense), net:
Interest income, net		2,904			1,190			7,499			2,850
Equity in net loss of MusicNet		—			(1,262	)		(1,068	)		(3,396	)
Impairment of equity investments (C)		—			(450	)		—			(450	)
Gain on sale of equity investments		11,740			—			19,330			—
Other, net		124			(109	)		(276	)		(9	)
Other income (expense), net		14,768			(631	)		25,485			(1,005	)
Income (loss) before income taxes		14,639			(6,827	)		20,468			(21,668	)
Income tax provision (D)		(3,457	)		(142	)		(3,763	)		(357	)
Net income (loss)	$	11,182		$	(6,969	)	$	16,705		$	(22,025	)
Basic net income (loss) per share	$	0.07		$	(0.04	)	$	0.10		$	(0.13	)
Diluted net income (loss) per share	$	0.06		$	(0.04	)	$	0.09		$	(0.13	)
Shares used to compute basic net income (loss) per share		170,797			169,588			170,761			168,527
Shares used to compute diluted net income (loss) per share		184,180			169,588			184,276			168,527

(A)	The loss on unoccupied excess office facilities represents the loss from rent payments over the remaining life of the lease related to the space and amounts related to the write-off of certain leasehold improvements.
(B)	Consists of legal fees, personnel costs, public relations and other professional service fees incurred related to antitrust complaints against Microsoft, including proceedings in the European Union.
(C)	Relates to other-than-temporary declines in the value of certain equity investments. These charges were recorded to reflect these investments at their estimated fair value.
(D)	Includes approimately $3.3 million for both the quarter and nine months ended September 30, 2005 related to the sale of a portion the Company’s equity investments

RealNetworks, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

	September 30,		December 31,
	2005		2004
	(in thousands)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	346,654	$	363,621
Trade accounts receivable, net of allowances for doubtful accounts and sales returns		16,793		14,501
Prepaid expenses and other current assets		7,477		8,196
Total current assets		370,924		386,318
Equipment and leasehold improvements, at cost:
Equipment and software		54,464		45,324
Leasehold improvements		27,463		25,015
Total equipment and leasehold improvements		81,927		70,339
Less accumulated depreciation and amortization		48,492		41,508
Net equipment and leasehold improvements		33,435		28,831
Restricted cash equivalents		18,056		20,151
Notes receivable from related parties		—		106
Equity investments		50,387		36,588
Goodwill, net		130,563		119,217
Other intangible assets, net		8,609		8,383
Other		2,543		2,908
Total assets	$	614,517	$	602,502
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	14,044	$	10,219
Accrued and other liabilities		60,107		50,033
Deferred revenue, current portion		25,598		30,307
Accrued loss on excess office facilities and content agreement, current portion		5,641		8,160
Total current liabilities		105,390		98,719
Deferred revenue, non-current portion		112		548
Accrued loss on excess office facilities and content agreement, non-current portion		15,306		19,017
Deferred rent		3,816		3,413
Convertible debt		100,000		100,000
Other long-term liabilities		200		—
Total shareholders’ equity		389,693		380,805
Total liabilities and shareholders’ equity	$	614,517	$	602,502

RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)

	2005									2004												2003
	Q3			Q2			Q1			Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
	(in thousands)
Net Revenue by Line of Business: *
Consumer products and services (A)	$	71,750			70,593			64,206			61,541			56,034			53,743			47,025			41,679			36,377			33,172			32,886
Business products and services (B)		10,483			12,093			12,366			11,005			12,276			11,730			13,365			12,377			15,432			16,474			13,980
Total net revenue	$	82,233			82,686			76,572			72,546			68,310			65,473			60,390			54,056			51,809			49,646			46,866
Consumer Products and Services:
Subscriptions (C)	$	47,347			47,817			44,400			42,722			38,386			35,459			32,073			30,540			27,909			25,470			23,639
E-commerce and other (D)		24,403			22,776			19,806			18,819			17,648			18,284			14,952			11,139			8,468			7,702			9,247
Total consumer products and services revenue	$	71,750			70,593			64,206			61,541			56,034			53,743			47,025			41,679			36,377			33,172			32,886
Consumer Products and Services: *
Music (E)	$	25,042			24,135			22,243			20,252			18,040			14,954			11,940			7,937			4,655			1,670			831
Video, consumer software and other (F)		23,642			24,607			24,154			25,169			23,619			23,715			24,289			26,369			26,235			27,555			28,485
Games (G)		14,699			13,648			12,189			10,330			9,098			8,352			6,755			3,930			3,150			2,672			2,410
Media Properties (H)		8,367			8,203			5,620			5,790			5,277			6,722			4,041			3,443			2,337			1,275			1,160
Total consumer products and services revenue	$	71,750			70,593			64,206			61,541			56,034			53,743			47,025			41,679			36,377			33,172			32,886
Net Revenue by Geography:
United States	$	63,478			63,443			57,757			55,608			52,054			50,949			43,963			40,175			37,660			36,009			33,769
Rest of world		18,755			19,243			18,815			16,938			16,256			14,524			16,427			13,881			14,149			13,637			13,097
Total net revenue	$	82,233			82,686			76,572			72,546			68,310			65,473			60,390			54,056			51,809			49,646			46,866
Gross Margin by Line of Business: **
Consumer products and services		68	%		68	%		65	%		64	%		59	%		63	%		58	%		55	%		54	%		61	%		63	%
Business products and services		82	%		83	%		82	%		82	%		83	%		83	%		83	%		83	%		87	%		88	%		89	%
Total gross margin		70	%		70	%		68	%		67	%		64	%		67	%		56	%		62	%		64	%		70	%		71	%
Subscribers (presented as greater than) ***
Total ****		2,200			2,000			1,850			1,550			1,550			1,400			1,300			1,300			1,150			1,000			1,000
Music		1,300			1,150			975			700			625			550			450			350			250			150			100

	*Reclassifications were made to the presentation of 2004 and 2003 data to conform to the presentation for 2005
	**For the quarter ended March 31, 2004, total gross margin includes loss on content agreement of $4.9 million
	***Beginning the quarter ended March 31, 2005, total and music subscribers reflect the inclusion of subscribers that registered for the Comcast Rhapsody Radio Plus service
	****Total subscribers as of March 31, 2004 reflect the removal of approximately 142,000 subscribers resulting from the non-renewal of the MLB contract
(A)	Revenue is derived from consumer digital media subscription services, RealPlayer Plus and related products, sales and distribution of third party software products, content such as games and music, and advertising
(B)	Revenue is derived from media delivery system software, support and maintenance services, broadcast hosting services and consulting services
(C)	Revenue is derived from consumer digital media subscription services including: SuperPass, RadioPass, Rhapsody, GamePass and stand-alone subscriptions
(D)	Revenue is derived from RealPlayer Plus and related products, sales and distribution of third party software products, content such as games and music, and advertising
(E)	Revenue is derived from RadioPass, Rhapsody subscription services and sales of music content, advertising generated from our music and music related websites and the distribution of third party products
(F)	Revenue is derived from RealOne SuperPass subscriptions, RealPlayer Plus and related products, stand-alone subscription services and sales of third party software products
(G)	Revenue is derived from the GamePass subscription service, sales of games, advertising generated from our games and game-related websites and the distribution of third party products
(H)	Revenue is derived from non-game and non-music related advertising and distribution of third party products

RealNetworks, Inc. and Subsidiaries
Supplemental Financial Information
(Unaudited)

A reconciliation of Generally Accepted Accounting Principles (“GAAP”) net income (loss) to income (loss) before interest, taxes, depreciation,
amortization and stock compensation (“EBITDA”) and EBITDA excluding antitrust litigation and loss on content agreement is as follows:

	Quarters Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			June 30,			March 31,
	2005			2005			2005			2004			2004			2004			2004
										(in thousands)
Net income (loss) in accordance with GAAP	$	11,182		$	4,709			814			(972	)		(6,969	)		(4,618	)		(10,438	)
Interest income, net		(2,904	)		(2,579	)		(2,016	)		(1,602	)		(1,190	)		(800	)		(860	)
Taxes		3,457			162			144			165			142			113			102
Depreciation, amortization and stock compensation		4,220			4,092			3,666			3,791			4,089			3,810			3,648
EBITDA		15,955			6,384			2,608			1,382			(3,928	)		(1,495	)		(7,548	)
Antitrust litigation		3,531			4,650			3,744			2,997			2,974			2,756			2,321
Loss on content agreement		—			—			—			—			—			—			4,938
EBITDA excluding antitrust litigation and loss on content agreement	$	19,486		$	11,034			6,352			4,379			(954	)		1,261			(289	)

This reconciliation has been provided as a performance measure, as the Company uses EBITDA and EBITDA excluding
antitrust litigation expense on an ongoing basis to track and assess its financial performance. The Company has calculated
EBITDA excluding loss on content agreement because it believes that the loss on content agreement is an item that
does not reflect the ongoing financial operations of the Company’s business.

Forward Looking Guidance                                                                  

A reconciliation of GAAP net income guidance for quarter and year ended December 31, 2005 to EBITDA is as follows:

	Ranges for Quarter Ending				Ranges for Year Ending
	December 31, 2005				December 31, 2005
	(in thousands)				(in thousands)
	Low		High		Low		High
Net income in accordance with GAAP	$	263,000		273,000	$	280,000		290,000
Interest, taxes, depreciation and amortization, net		135,000		137,000		143,000		145,000
EBITDA	$	398,000		410,000	$	423,000		435,000