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Proving online subscriptions are for Real

RealNetworks is poised to reach 1 million subscribers for its RealOne SuperPass subscription service by year's end, according to an analyst report.

RealNetworks is poised to reach 1 million subscribers for its RealOne SuperPass subscription service by year's end, according to an analyst report.

In a report published Thursday, Robertson Stephens analyst Aleksandar Sasa Zorovic said RealNetworks is on track to reach the benchmark thanks to a number of factors, including the pending launch of international services, additional premium programming efforts, and broadband penetration increases. RealOne SuperPass, launched two months ago, lets people who pay between $9.95 and $19.95 per month to access premium content, including sports, news and entertainment.

RealNetworks' shares have risen since last week's report, jumping from $7.79 Thursday to $9.15 Monday.

The report comes as RealNetworks continues to court a slew of major content partners in a move to leapfrog its powerful rivals, including Microsoft. Among RealNetworks' partners are Major League Baseball, the National Basketball Association, NASCAR, CNN, and E Networks. RealNetworks has also licensed content from MusicNet, a joint venture between RealNetworks and record labels owners AOL Time Warner, Bertelsmann and EMI Group.

"With its subscription service, RealNetworks is proving that content can be monetized on the Internet by subscription," Zorovic wrote in his report. "This is a major milestone for content providers, we believe, as it makes their business models viable...We believe that, longer term, the company's ability to feature premium programming will be its competitive advantage, in particular once competing services emerge."

RealNetworks continues to face intense pressure from Microsoft, which has blended its Windows Media technologies into its operating system.

However, on the PC platform, according to Zorovic, RealNetworks has managed to "hold ground against Microsoft" even though Microsoft has been integrating its player software with the operating system for five years. Zorovic added that about 85 percent of streaming content is encoded in the RealNetworks format.

"In the post-PC era, with the proliferation of mobile phones, PDAs, MP3 players and other home entertainment devices, we believe RealNetworks is uniquely well-positioned to become a streaming delivery platform of choice," Zorovic wrote.