Exhibit 99.1

FOR IMMEDIATE RELEASE

RealNetworks Announces Record Revenue for 2004

34% Revenue Growth in Q4 Fuels Return to Profitability (excluding Antitrust Litigation expenses)

SEATTLE, January 26, 2005 – RealNetworks®, Inc. (Nasdaq: RNWK), the leading creator of digital media services and software, today announced results for the quarter and year ended December 31^st, 2004.

Highlights

•   Real is reporting record revenues for the fourth quarter and full year for 2004.

•   The fourth quarter represents Real’s tenth consecutive quarter of revenue growth.

•   Real achieved its goal of profitability excluding antitrust litigation expenses for the fourth quarter of 2004.

For the fourth quarter of 2004, revenue was $72.5 million, up 34% from $54.1 million in the fourth quarter of 2003. The GAAP net loss for the fourth quarter was $1.0 million, or a loss per share of $0.01, compared to a net loss of $5.3 million, or a loss per share $0.03, in the fourth quarter of 2003. Included in the GAAP net loss for the fourth quarter of 2004 is $3.0 million, or $0.02 per share, in expenses related to antitrust litigation. Excluding the antitrust litigation expenses, the net income for the fourth quarter was $2.0 million, or $0.01 per share. EBITDA, excluding antitrust litigation expenses, was $4.4 million for the fourth quarter of 2004.

“We are pleased to report another quarter of record revenue, driven by rapid growth in our Consumer Business, particularly games and music,” said Rob Glaser, CEO of RealNetworks. “We also accomplished an important 2004 goal: to achieve profitability in the fourth quarter excluding antitrust litigation expenses. Significantly, the success of our Consumer Business has enabled us to begin to leverage our increased scale. We look forward to producing continued revenue growth and increasing profitability in 2005.”

For 2004, revenue was $266.7 million, up 32% from $202.4 million in 2003. The GAAP net loss for 2004 was $23.0 million, or a loss per share of $0.14, compared to a net loss of $21.5 million, or a loss per share of $0.13 in 2003. Included in the GAAP net loss for 2004 is $11.0 million, or $0.07 per share, in expenses related to antitrust litigation. Excluding the antitrust litigation expenses, the net loss for 2004 was $11.9 million, or a loss per share of $0.07. EBITDA, excluding antitrust litigation expenses and loss on content agreement, was $4.4 million for 2004.

Financial Discussion

In 2004, the company focused on expanding its products and services sold directly to consumers over the Internet, such as downloadable games and music subscriptions. Fourth quarter revenue from consumer products and services grew 47% to $60.8 million, from $41.2 million in the fourth quarter of 2003. Music revenue grew 172% to $21.6 million from $7.9 million in the fourth quarter of 2003. Revenue from Games sales and subscriptions grew 156% to $10.1 million from $3.9 million in the fourth quarter of 2003. Video, consumer software and other revenue was down slightly to $29.1 million compared to $29.3 million in the

fourth quarter of 2003. Revenue from business products and services was $11.8 million, down 8% from $12.8 million in the fourth quarter of 2003.

The gross margin was 67% in the fourth quarter compared to 62% in the fourth quarter of the prior year primarily as a result of lower content costs in Real’s consumer business. Operating expenses, including antitrust litigation, were $50.7 million for the fourth quarter compared to $38.6 million in the fourth quarter of 2003. As of December 31, 2004, RealNetworks had approximately $364 million in cash, cash equivalents and short-term investments, which includes the proceeds from $100 million of convertible debt.

In the fourth quarter, Real continued to build on its success in consumer services, and at December 31, 2004, had over 1.55 million paying subscribers, up from over 1.3 million at the end of 2003. Paying subscribers to Rhapsody and premium radio services increased to over 700,000 from over 625,000 at the end of the third quarter of 2004. At the beginning of 2004, Real’s music services had more than 350,000 paying subscribers. In addition, Real’s consumer revenue for 2004 included $19.1 million of revenue from Real’s ad-supported web services, up 132% from $8.2 million in 2003.

Foreign currency exchange rate fluctuations positively impacted 2004 fourth quarter revenue by approximately $1 million compared to the prior year’s fourth quarter revenue. For the full year, foreign currency exchange rate fluctuations positively impacted 2004 revenue by approximately $4 million compared to 2003 revenue.

Forward Looking Guidance

For the first quarter of 2005, Real expects to report net revenues of $73 million to $74.5 million. On a GAAP basis, which includes an estimated $3.75 million expense relating to antitrust litigation, Real expects a net loss per share of ($0.02) to ($0.01). Excluding the antitrust litigation expenses, earnings per share for the first quarter are expected to be $0.00 to $0.01. Real expects EBITDA before antitrust litigation expenses to be flat to slightly down in the first quarter as compared to the fourth quarter of 2004.

For the full year, Real expects 2005 revenue to grow 16% to 20% over 2004 results, which represents expected revenue of $310 million to $320 million for the year. Real estimates that it will spend approximately $15 million on antitrust litigation expenses during the year, which includes expenses for both domestic and international antitrust activities.

Regarding net income for 2005, Real expects that an increasing percentage of its revenue growth will drop to the bottom line. Over the course of 2005, Real expects approximately 35% of each incremental revenue dollar will go to cost of revenue, approximately 35%-40% will go to increased operating expenses and approximately 25-30% will go to operating income. As a result, Real expects to maintain quarterly profitability excluding antitrust litigation expenses in 2005. Real expects full year EBITDA excluding antitrust litigation to be between $20 million and $25 million. Real’s forward guidance for 2005 excludes the impact of accounting changes relating to stock compensation, which are currently scheduled to be effective in the third quarter, any gains or losses related to minority investments and any potential future acquisitions.

Webcast Information

The company will host a web cast and conference call today at 5:00 pm EST/ 2:00 pm (PST). 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 1-800-857-5305 (773-681-5857 for international callers). The passcode is “Fourth Quarter” and the leader is Rob Glaser. A telephonic replay will be available until 8 pm (Eastern), January 29th, and may be accessed by dialing 1-866-424-7873; (1-203-369-0863 for international callers).

For More Information Contact

Press: Scott Sutherland, SutherlandGold Communications, (866) 262-7373 ext 101, scott@sutherlandgold.com
Financial: Roy Goodman, RealNetworks, (206) 892-6841, rgoodman@real.com

About RealNetworks

RealNetworks, Inc. is the leading creator of digital media services and software including the award-winning Rhapsody® Internet jukebox service and RealPlayer 10, the first product to integrate finding, organizing, buying, playing and managing digital audio and video in a single product. 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.

FORWARD LOOKING STATEMENTS: This press release contains forward-looking statements that involve risks and uncertainties, including statements relating to: Real’s future revenues, expenses, margins, profitability and net income. 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 relating to the timely development, production, marketing and acceptance of the products, services and technologies contemplated by the GameHouse acquisition; potential funding decisions by companies in which we have a significant equity position; and RealNetworks’ independent decisions, from time to time, based on all factors it deems relevant, whether to repurchase shares under its stock buyback program. 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 year ended December 31, 2003, 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, RealAudio, RealVideo, Helix, Rhapsody, RealArcade, GameHouse 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 December 31,						Years Ended December 31,
	2004			2003			2004			2003
				(in thousands, except per share data)
Net revenue	$	72,546			54,056			266,719			202,377
Cost of revenue		23,925			20,780			92,207			68,343
Loss on content agreement		—			—			4,938			—
Gross profit		48,621			33,276			169,574			134,034
Operating expenses:
Research and development		13,091			11,922			51,607			46,763
Sales and marketing		26,608			20,638			96,779			77,335
General and administrative		7,914			4,186			31,302			21,007
Loss on excess office facilities (A)		—			—			866			7,098
Antitrust litigation (B)		2,997			1,574			11,048			1,574
Stock-based compensation		71			260			695			1,120
Total operating expenses		50,681			38,580			192,297			154,897
Operating loss		(2,060	)		(5,304	)		(22,723	)		(20,863	)
Other income (expense), net:
Interest income, net		1,602			878			4,452			4,251
Equity in net loss of MusicNet		(955	)		(1,104	)		(4,351	)		(5,378	)
Impairment of equity investments (C)		—			—			(450	)		(424	)
Other, net		606			219			597			1,107
Other income (expense), net		1,253			(7	)		248			(444	)
Loss before income taxes		(807	)		(5,311	)		(22,475	)		(21,307	)
Income tax provision		(165	)		(16	)		(522	)		(144	)
Net loss	$	(972	)		(5,327	)		(22,997	)		(21,451	)
Basic and diluted net loss per share	$	(0.01	)		(0.03	)		(0.14	)		(0.13	)
Shares used to compute basic and diluted net loss per share		170,039			163,755			168,907			160,309

(A)	The loss on unoccupied excess office facilities represents the loss from rent payments, net of sublease income, over the remaining life of the lease 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.

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

	December 31,		December 31,
	2004		2003
	(in thousands)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	363,621		373,593
Trade accounts receivable, net of allowances for doubtful accounts and sales returns		14,501		10,618
Prepaid expenses and other current assets		8,196		8,879
Total current assets		386,318		393,090
Equipment and leasehold improvements, at cost:
Equipment and software		45,324		37,110
Leasehold improvements		25,015		26,085
Total equipment and leasehold improvements		70,339		63,195
Less accumulated depreciation and amortization		41,508		33,258
Net equipment and leasehold improvements		28,831		29,937
Restricted cash equivalents		20,151		19,953
Investments		36,588		34,577
Goodwill, net		119,217		97,477
Other intangible assets, net		8,383		1,065
Other		3,014		4,840
Total assets	$	602,502		580,939
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	10,219		6,865
Accrued and other liabilities		50,033		39,400
Deferred revenue, excluding non-current portion		30,307		31,186
Accrued loss on excess office facilities and content agreement, excluding non-current portion		8,160		4,960
Total current liabilities		98,719		82,411
Deferred revenue, excluding current portion		548		4,561
Accrued loss on excess office facilities and content agreement, excluding current portion		19,017		24,099
Deferred rent		3,413		3,382
Convertible debt		100,000		100,000
Total shareholders’ equity		380,805		366,486
Total liabilities and shareholders’ equity	$	602,502		580,939

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

	2004												2003
	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1
										(in thousands)
Net Revenue by Line of Business:
Consumer products and services (A)	$	60,782			55,382			53,061			46,514			41,214			36,377			33,172			32,886
Business products and services (B)		11,764			12,928			12,412			13,876			12,842			15,432			16,474			13,980
Total net revenue	$	72,546			68,310			65,473			60,390			54,056			51,809			49,646			46,866
Consumer Products and Services:
Subscriptions (C)	$	41,963			37,734			34,777			31,562			30,075			27,909			25,470			23,639
E-commerce and other (D)		18,819			17,648			18,284			14,952			11,139			8,468			7,702			9,247
Total consumer products and services revenue	$	60,782			55,382			53,061			46,514			41,214			36,377			33,172			32,886
Consumer Products and Services:
Video, consumer software and other (E)	$	29,147			27,497			29,129			27,494			29,347			28,572			28,830			29,645
Music (F)		21,558			18,787			15,580			12,265			7,937			4,655			1,670			831
Games (G)		10,077			9,098			8,352			6,755			3,930			3,150			2,672			2,410
Total consumer products and services revenue	$	60,782			55,382			53,061			46,514			41,214			36,377			33,172			32,886
Net Revenue by Geography:
United States	$	55,608			52,054			50,949			43,963			40,175			37,660			36,009			33,769
Rest of world		16,938			16,256			14,524			16,427			13,881			14,149			13,637			13,097
Total net revenue	$	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		64	%		59	%		63	%		58	%		55	%		54	%		61	%		63	%
Business products and services		83	%		84	%		84	%		84	%		83	%		87	%		88	%		89	%
Total gross margin		67	%		64	%		67	%		64	%		62	%		64	%		70	%		71	%
Subscribers (presented as greater than)
Total **		1,550			1,550			1,400			1,300			1,300			1,150			1,000			1,000
Music		700			625			550			450			350			250			150			100

*	For the quarter ended March 31, 2004, total gross margin excludes loss on content agreement of $4.9 million. Including the loss on content agreement, total gross margin is 56%
**	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 RealOne SuperPass subscriptions, RealPlayer Plus and related products, stand-alone subscription services and sales and distribution of third party software products and non-game and non-music related advertising
(F)	Revenue is derived from RadioPass and Rhapsody subscription services, sales of music content and advertising from our music-related Web sites
(G)	Revenue is derived from the GamePass subscription service, sales of games and advertising generated from our games and game-related Web sites

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

A reconciliation of Generally Accepted Accounting Principles (“GAAP”) net 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												Years Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,
	2004			2004			2004			2004			2004			2003
	(in thousands)
Net loss in accordance with GAAP	$	(972	)		(6,969	)		(4,618	)		(10,438	)		(22,997	)		(21,451	)
Interest income, net		(1,602	)		(1,190	)		(800	)		(860	)		(4,452	)		(4,251	)
Taxes		165			142			113			102			522			144
Depreciation, amortization and stock compensation		3,791			4,089			3,810			3,648			15,338			12,370
EBITDA		1,382			(3,928	)		(1,495	)		(7,548	)		(11,589	)		(13,188	)
Antitrust litigation		2,997			2,974			2,756			2,321			11,048			1,574
Loss on content agreement		—			—			—			4,938			4,938			—
EBITDA excluding antitrust litigation and loss on content agreement	$	4,379			(954	)		1,261			(289	)		4,397			(11,614	)

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.