Related Party Transactions

12 Months Ended

Dec. 31, 2021


Note 19.			Related Party Transactions

The sale of Napster closed on December 30, 2020. For additional details, see Note 4. Dispositions.

In February 2020, we entered into a Series B Preferred Stock Purchase Agreement with Mr. Glaser, Chairman of the Board and Chief Executive Officer of RealNetworks, pursuant to which Mr. Glaser invested approximately $10.0 million in RealNetworks in exchange for the issuance to him of 8,064,516 shares of Series B Preferred Stock. The Series B Preferred Stock is non-voting and is convertible into common stock on a one-to-one basis, provided, however, that no conversion is permitted in the event that such conversion would cause Mr. Glaser’s beneficial ownership of our common stock to exceed the 38.5% threshold set forth in our Second Amended and Restated Shareholder Rights Plan dated November 30, 2018. The Series B Preferred Stock has no liquidation preference and no preferred dividends.

In July 2020, Mr. Glaser invested $0.7 million into a former RealNetworks subsidiary, Scener. Scener is developing a platform that transforms the experience of viewing video entertainment into a social, connected playground. The July 2020 funding was in addition to $0.8 million that Mr. Glaser had previously directly invested in 2019. In August 2020, this same subsidiary entered into agreements and received $1.4 million in cash from outside investors. The 2020 investments were in the form of SAFEs, as described in Note 5. Fair Value Measurements.

Effective June 30, 2021, RealNetworks no longer had a controlling interest in Scener and deconsolidated Scener Inc. We now account for our remaining interest in Scener using the equity method of accounting. As a result of the deconsolidation of Scener, we recognized a gain of $2.0 million in Other income (expense), net on the condensed consolidated statement of operations.

In December 2021, Scener had a qualifying equity financing which also triggered the conversion of the SAFE notes to equity. As a result, RealNetworks' ownership in Scener's outstanding equity decreased to approximately 46% and we recognized a dilution gain of $6.0 million. Additionally, we recorded our share of losses in Scener of $3.8 million for the year ended December 31, 2021. These amounts are recorded in (Loss) gain on equity and other investments, net, on the consolidated statement of operations. At December 31, 2021 the carrying value of our investment in Scener was $2.2 million and is included in Other assets on the consolidated balance sheets.