1046327--2/29/2008--REALNETWORKS

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{property, intellectual, protect}

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{personnel, key, retain}

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The integration strategy we plan to implement with respect to the assets that have been combined in Rhapsody America may fail or be less successful than anticipated and the management of these assets creates operational complexities. We and MTVN have certain contractual rights relating to the purchase and sale of MTVN s membership interest in Rhapsody America that may be settled in part through the issuance of additional shares of our capital stock, which would dilute our other shareholders voting and economic interests in us, and may require us to pay MTVN a price that exceeds the appraised value of their proportionate interest in Rhapsody America. The success of our subscription services businesses depends upon our ability to increase subscription revenue. Our digital content subscription business, and our online music services in particular, depend on our continuing ability to license compelling content on commercially reasonable terms. RealPlayer 11 may not achieve consumer or market acceptance and may be subject to legal challenge. Music publishing royalty rates for music subscription services offered through RealNetworks and Rhapsody America are not yet fully established; a determination of high royalty rates could negatively impact our operating results. An appeal of, or other industry settlement relating to, the April 2007 Copyright Royalty Board decision regarding Internet radio royalties and minimum payments could result in material expenses that would harm our operating results and our ability to provide popular radio services. Our music, games and media software and services businesses face substantial competitive challenges that may prevent us from being successful in, and negatively impact future growth in, those businesses. We may not be successful in maintaining and growing our distribution of digital media products. The success of music services offered through Rhapsody America depend, in part, on interoperability with our customers music playback hardware. Risks Related to Our Technology Products and Solutions Business Recent acquisitions in our Technology Products and Solutions business could expose us to new risks, disrupt our business and adversely impact our results of operations. Our businesses may be adversely affected by developments affecting the South Korean economy amid increased tensions with North Korea. Our traditional system software licensing business has been negatively impacted by the effects of our competitors, and our settlement agreement with Microsoft may not improve sales of our system software products. A majority of the revenue that we generate in South Korea is dependent upon our relationship with SK Telecom, the largest wireless carrier in Korea; any deterioration of this relationship could materially harm our business. Contracts with our carrier customers subject us to significant risks that could negatively impact our revenue or otherwise harm our operating results. Our carrier customers could begin developing some or all of our carrier applications services on their own, which could result in the loss of future revenues. The mobile entertainment market is highly competitive. Our Helix open source initiative is subject to risks associated with open source technology. Our patents may not improve our business prospects. Risks Related to Our Business in General Our operating results are difficult to predict and may fluctuate, which may contribute to fluctuations in our stock price. Our products and services must compete with the products and services of strong or dominant competitors. Failure to develop and introduce new products and services that achieve market acceptance could result in a loss of market opportunities and negatively affect our operating results. We are experiencing greater fluctuations in revenue due to seasonality than at any time in our past, and we expect this trend to continue. We depend upon our executive officers and key personnel, but may be unable to attract and retain them, which could significantly harm our business and results of operations. Our industry is experiencing consolidation that may cause us to lose key relationships and intensify competition. Acquisitions involve costs and risks that could harm our business and impair our ability to realize potential benefits from acquisitions. We need to develop relationships and technical standards with manufacturers of non-PC media and communication devices to grow our business. Our business and operating results will suffer if our systems or networks fail, become unavailable, unsecured or perform poorly so that current or potential users do not have adequate access to our products, services and websites. Our network is subject to security risks that could harm our business and reputation and expose us to litigation or liability. The growth of our business is dependent in part on successfully implementing our international expansion strategy. We may be unable to adequately protect our proprietary rights and may face risks associated with third-party claims relating to our intellectual property. We may be subject to market risk and legal liability in connection with the data collection capabilities of our products and services. We may be subject to assessment of sales and other taxes for the sale of our products, license of technology or provision of services. We may be subject to additional income tax assessments. We donate a portion of our net income to charity. Risks Related to the Securities Markets and Ownership of Our Common Stock Our directors and executive officers beneficially own approximately one third of our stock, which gives them significant control over certain major decisions on which our shareholders may vote, may discourage an acquisition of us, and any significant sales of stock by our officers and directors could have a negative effect on our stock price. Provisions of our charter documents, Shareholder Rights Plan, and Washington law could discourage our acquisition by a third-party. Our stock price has been volatile in the past and may continue to be volatile.

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1046327--2/29/2008--REALNETWORKS_INC