Microsoft and Real put an end to legal battle

The antitrust lawsuit filed by RealNetworks against Microsoft almost two years ago has finally been settled in a USD 761 million deal which will see the former rivals collaborating on efforts including Xbox Live Arcade.

The deal includes an upfront cash payment of USD 460 million which resolves all damages claims and gives Real access rights to Windows Media technologies. Microsoft has agreed to pay Real USD 301 million and to offer support services for Real's development, distribution and promotion operations over the next 18 months.

One key aspect of that deal is that Real - one of the world leaders in the rapidly growing casual games sector - will be making its portfolio of titles accessible over the Xbox Live Arcade service, which will be built into the forthcoming Xbox 360 console.

Real's Rhapsody digital music subscription service will also be supported on all of Microsoft's MSN systems, with the software giant receiving a credit in an undisclosed amount for each Rhapsody subscriber who signs up via MSN.

However, there's no indication that Rhapsody will be directly accessible from the Xbox 360, even though Xbox Live is based on many MSN technologies, with Microsoft keen to position th console as an extension of the Windows XP media experience rather than as a system for accessing online content in its own right.

"This agreement will provide MSN's millions of customers with easier access to subscription services for the music and games they love," said Bill Gates, while RealNetworks CEO Rob Glaser described the deal as "closing one chapter and opening a new one in our relationship with Microsoft."

"The legal chapter is being closed with an appropriate and fair outcome that sets the stage for a very productive and collaborative relationship between our companies."

RealNetworks filed suit against Microsoft in December 2003, alleging that the Redmond giant was using restrictive licensing agreements to create a monopoly for Microsoft's digital media player. RealNetwork claimed that this had been disastrous for its own product, RealPlayer, and demanded USD 1 billion in damages.