Realnetworks (RNWK) 10-Q 4 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 28, 2017
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
Trading Symbol	RNWK
Entity Registrant Name	REALNETWORKS INC
Entity Central Index Key	1,046,327
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		37,102,003

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 38,498	$ 33,721
Short-term investments	27,778	43,331
Trade accounts receivable, net of allowances	26,833	22,162
Deferred costs, current portion	541	760
Prepaid expenses and other current assets	4,843	4,910
Total current assets	98,493	104,884
Equipment, software, and leasehold improvements, at cost:
Equipment and software	44,640	46,231
Leasehold improvements	3,330	3,317
Total equipment, software, and leasehold improvements, at cost	47,970	49,548
Less accumulated depreciation and amortization	43,181	44,294
Net equipment, software, and leasehold improvements	4,789	5,254
Restricted cash equivalents and investments	2,700	2,700
Other assets	2,412	1,742
Deferred costs, non-current portion	1,071	1,246
Deferred tax assets, net	836	816
Other intangible assets, net	729	938
Goodwill	12,915	12,857
Total assets	123,945	130,437
Current liabilities:
Accounts payable	19,432	18,225
Accrued and other current liabilities	15,425	15,425
Commitment to Rhapsody	0	1,500
Deferred revenue, current portion	3,918	3,430
Total current liabilities	38,775	38,580
Deferred revenue, non-current portion	724	240
Deferred rent	679	748
Deferred tax liabilities, net	87	87
Other long-term liabilities	1,890	2,201
Total liabilities	42,155	41,856
Commitments and contingencies
Preferred stock, $0.001 par value, no shares issued and outstanding:
Common stock, $0.001 par value authorized 250,000 shares; issued and outstanding 37,099 shares in 2017 and 37,501 shares in 2016	37	37
Additional paid-in capital	635,963	633,928
Accumulated other comprehensive loss	(61,047)	(61,645)
Retained deficit	(493,163)	(483,739)
Total shareholders’ equity	81,790	88,581
Total liabilities and shareholders’ equity	123,945	130,437
Preferred stock, Series A
Preferred stock, $0.001 par value, no shares issued and outstanding:
Preferred stock	0	0
Preferred stock, Undesignated series
Preferred stock, $0.001 par value, no shares issued and outstanding:
Preferred stock	$ 0	$ 0

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Preferred stock, par value (USD per share)	$ 0.001	$ 0.001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (USD per share)	$ 0.001	$ 0.001
Common stock, authorized	250,000,000	250,000,000
Common stock, issued	37,099,000	37,501,000
Common stock, outstanding	37,099,000	37,501,000
Preferred stock, Series A
Preferred stock, authorized	200,000	200,000
Preferred stock, Undesignated series
Preferred stock, authorized	59,800,000	59,800,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Income Statement [Abstract]
Net revenue	[1]	$ 30,576	$ 28,230
Cost of revenue	[2]	17,293	15,172
Gross profit		13,283	13,058
Operating expenses:
Research and development		7,349	9,319
Sales and marketing		7,155	9,225
General and administrative		5,303	8,077
Restructuring and other charges		1,564	385
Lease exit and related charges		0	831
Total operating expenses		21,371	27,837
Operating income (loss)		(8,088)	(14,779)
Other income (expenses):
Interest income, net		128	117
Gain (loss) on investments, net		0	3
Equity in net loss of Rhapsody investment		(748)	0
Other income (expense), net		(226)	(287)
Total other income (expenses), net		(846)	(167)
Income (loss) before income taxes		(8,934)	(14,946)
Income tax expense (benefit)		490	225
Net income (loss)		$ (9,424)	$ (15,171)
Basic net income (loss) per share (USD per share)		$ (0.25)	$ (0.42)
Diluted net income (loss) per share (USD per share)		$ (0.25)	$ (0.42)
Shares used to compute basic net income (loss) per share		37,030	36,520
Shares used to compute diluted net income (loss) per share		37,030	36,520
Comprehensive income (loss):
Unrealized investment holding gains (losses), net of reclassification adjustments		$ 4	$ 151
Foreign currency translation adjustments, net of reclassification adjustments		594	700
Total other comprehensive income (loss)		598	851
Net income (loss)		(9,424)	(15,171)
Comprehensive income (loss)		$ (8,826)	$ (14,320)
[1]	Quarters ended March 31, Components of Revenue2017 2016License Fees6,594 5,777Service Revenue23,982 22,453Net Revenue30,576 28,230
[2]	Quarters ended March 31, Components of Cost of Revenue2017 2016License Fees1,511 1,304Service Revenue15,782 13,868Net Revenue Costs17,293 15,172

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Components of net revenue:
License fees		$ 6,594	$ 5,777
Service revenue		23,982	22,453
Net revenue	[1]	30,576	28,230
Components of cost of revenue:
License fees		1,511	1,304
Service revenue		15,782	13,868
Cost of revenue	[2]	$ 17,293	$ 15,172
[1]	Quarters ended March 31, Components of Revenue2017 2016License Fees6,594 5,777Service Revenue23,982 22,453Net Revenue30,576 28,230
[2]	Quarters ended March 31, Components of Cost of Revenue2017 2016License Fees1,511 1,304Service Revenue15,782 13,868Net Revenue Costs17,293 15,172

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income (loss)	$ (9,424)	$ (15,171)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	921	2,598
Stock-based compensation	1,434	3,171
Equity in net loss of Rhapsody	748	0
Deferred income taxes, net	(20)	(128)
Loss (gain) on investments, net	0	(3)
Fair value of warrants granted in 2015 and 2017, net of subsequent mark to market adjustments in 2017 and 2016	(471)	44
Trade accounts receivable	(3,451)	(487)
Prepaid expenses and other assets	452	1,322
Accounts payable	147	(2,106)
Accrued and other liabilities	254	(451)
Net cash provided by (used in) operating activities	(9,410)	(11,211)
Cash flows from investing activities:
Purchases of equipment, software, and leasehold improvements	(207)	(828)
Purchases of short-term investments	(6,142)	(17,876)
Proceeds from sales and maturities of short-term investments	21,695	23,401
Decrease (increase) in restricted cash equivalents and investments, net	0	(210)
Advance to Rhapsody	(1,500)	0
Net cash provided by (used in) investing activities	13,846	4,487
Cash flows from financing activities:
Proceeds from issuance of common stock (stock options and stock purchase plan)	34	16
Tax payments from shares withheld upon vesting of restricted stock	(181)	(787)
Net cash provided by (used in) financing activities	(147)	(771)
Effect of exchange rate changes on cash and cash equivalents	488	719
Net increase (decrease) in cash and cash equivalents	4,777	(6,776)
Cash and cash equivalents, beginning of period	33,721	47,315
Cash and cash equivalents, end of period	38,498	40,539
Supplemental disclosure of cash flow information:
Cash received from income tax refunds	0	389
Cash paid for income taxes	446	624
Non-cash investing activities:
Increase (decrease) in accrued purchases of equipment, software, and leasehold improvements	$ 37	$ 44

Description of Business and Sum

Description of Business and Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Description of Business and Summary of Significant Accounting Policies	Note 1 Description of Business and Summary of Significant Accounting Policies Description of Business. RealNetworks, Inc. and subsidiaries is a global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. In this Quarterly Report on Form 10-Q (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. "RealPlayer ® " and other trademarks of ours appearing in this report are our property. Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter ended March 31, 2017 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2017 . Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the 10-K). Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncement

Recent Accounting Pronouncements	3 Months Ended
	Mar. 31, 2017
Accounting Changes and Error Corrections [Abstract]
Recent Accounting Pronouncements	Note 2 Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued new revenue recognition guidance, which was subsequently updated and amended in 2015 and 2016. The guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The new guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. While we are evaluating all of our revenue streams, we currently expect the greatest impact in certain areas where we will be required to estimate usage which drives the underlying revenue. Under the current guidance, we do not recognize revenues until we achieve fixed and determinable status, which would typically be at a later date. However, our analysis is not complete and we may identify other areas of additional impact. The guidance permits two methods of adoption: the full retrospective method where the standard would be applied to each prior reporting period presented and the cumulative effect of applying the standard would be recognized at the earliest period shown, or the modified retrospective method, where the cumulative effect of applying the standard would be recognized at the date of initial application. While we are continuing to evaluate the method of adoption and the quantitative impact of the new revenue standard, as amended, we currently expect to adopt using the modified retrospective method in the first quarter of fiscal year 2018. In February 2016, the FASB issued new guidance related to the accounting for leases by lessees. A major change in the new guidance is that lessees will be required to present right-of-use assets and lease liabilities on the balance sheet. The new guidance will be effective for us on January 1, 2019. We will be evaluating the effect that the guidance will have on our consolidated financial statements and related disclosures. In January 2017, the FASB issued new guidance simplifying the test for goodwill impairment. The new guidance eliminates Step 2 from the goodwill impairment test, instead requiring an entity to recognize a goodwill impairment charge for the amount by which the reporting unit's carrying amount exceeds the reporting unit's fair value. This guidance is effective for interim and annual goodwill impairment tests beginning on December 15, 2019, with early adoption permitted. We will be evaluating the impact of the guidance, but do not currently expect the adoption to have a material impact on our consolidated financial statements and related disclosures. There have been no other recent accounting pronouncements or changes in accounting pronouncements to be implemented that are of significance or potential significance to RealNetworks.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation	Note 3 Stock-Based Compensation Total stock-based compensation expense recognized in our unaudited condensed consolidated statements of operations and comprehensive income (loss) includes amounts related to stock options, restricted stock, and employee stock purchase plans and was as follows (in thousands): Quarter Ended 2017 2016 Total stock-based compensation expense $ 1,434 $ 3,171 The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: Quarter Ended 2017 2016 Expected dividend yield 0 % 0 % Risk-free interest rate 2.23 % 1.54 % Expected life (years) 6.8 5.5 Volatility 38 % 38 % The total stock-based compensation amounts for 2017 and 2016 disclosed above are recorded in their respective line items within operating expenses in the unaudited condensed consolidated statements of operations and comprehensive income (loss). Included in the expense for the quarters ended March 31, 2017 and 2016 was stock compensation expense recorded in the first quarter of 2017 and 2016 related to our 2016 and 2015 incentive bonuses paid in fully vested restricted stock units, which were authorized and granted in the first quarter of 2017 and 2016, respectively. As of March 31, 2017 , $5.2 million of total unrecognized compensation cost, net of estimated forfeitures, related to stock awards. The unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2 years.

Rhapsody Joint Venture

Rhapsody Joint Venture	3 Months Ended
	Mar. 31, 2017
Equity Method Investments and Joint Ventures [Abstract]
Rhapsody Joint Venture	Note 4 Rhapsody Joint Venture As of March 31, 2017 we owned approximately 42% of the issued and outstanding stock of Rhapsody and account for our investment using the equity method of accounting. Rhapsody was initially formed in 2007 as a joint venture between RealNetworks and MTV Networks, a division of Viacom International Inc. (MTVN), to own and operate a business-to-consumer digital audio music service known as Rhapsody. Following certain restructuring transactions effective March 31, 2010, we began accounting for our investment in Rhapsody using the equity method of accounting. As part of the 2010 restructuring transactions, RealNetworks contributed $18.0 million in cash, the Rhapsody brand and certain other assets, including content licenses, in exchange for shares of convertible preferred stock of Rhapsody, carrying a $10.0 million preference upon certain liquidation events. We recorded our share of losses of Rhapsody of $0.7 million and $0.0 million for the quarters ended March 31, 2017 and 2016 , respectively. Because of the $10.0 million liquidation preference on the preferred stock we hold in Rhapsody, under the equity method of accounting we did not record any share of Rhapsody losses that would reduce our carrying value of Rhapsody, which is impacted by Rhapsody equity transactions, below $10.0 million , until Rhapsody's book value was reduced below $10.0 million . This occurred in the first quarter of 2015. As of March 31, 2017 , the carrying value of our Rhapsody equity investment was zero , as we do not have further commitment to provide future support to Rhapsody. Unless we commit to provide future financial support to Rhapsody, we do not record our share of Rhapsody losses that would reduce our carrying value of Rhapsody below zero, and instead we track those suspended losses separately. In December 2016, RealNetworks entered into an agreement to loan up to $5 million to Rhapsody for general operating purposes, as did the other large owner of Rhapsody, Columbus Nova. In 2016, $3.5 million of the loan was made by each lender. In January 2017, the remaining $1.5 million commitment was funded by each lender. The loan is subordinate to all existing loans, and bears an interest a rate of 10% per annum, which accretes into the outstanding principal balance and will be due at the December 7, 2017 maturity date. Under the terms of the loan agreement between RealNetworks and Rhapsody, a default by Rhapsody under its agreements with other third party lenders that would entitle such parties to accelerate repayments with an aggregate value in excess of $1 million , would constitute a cross default of the RealNetworks and Columbus Nova loans. In that case, RealNetworks and Columbus Nova could elect to declare to all outstanding obligations to us by Rhapsody to become immediately due and payable. We recognized previously suspended losses up to the amount of the commitment at the time of signing the agreement in the fourth quarter of 2016, and, consequently, we do not have a receivable recorded related to this loan. As of the date of this report, we have no further commitments for additional fundings to Rhapsody. In late March 2017, we were notified that Rhapsody would likely be in default of existing agreements with its third party lenders, which was confirmed in April 2017. We believe this default would constitute a cross default under the loan agreements between Rhapsody and RealNetworks and Rhapsody and Columbus Nova. The default with the third party lenders relates to Rhapsody's failure to meet a quarterly revenue target that included assumptions regarding the launch of a new product with a different business model than Rhapsody's subscription service. Rhapsody subsequently determined that it would not be in their best interest to continue the planned launch of the new product due to associated costs of launch and operation, thus contributing to a revenue shortfall. Rhapsody is in discussions with the third party lenders to agree on a waiver or forbearance of Rhapsody's covenant breach, however there is no assurance such waiver or forbearance will be achieved. As of the date of this report, RealNetworks and Columbus Nova have not elected to declare all amounts outstanding under our loan agreements to be immediately due and payable. No loan impairment charge to RealNetworks is required in connection with this default as we have no recorded receivable related to this loan. Summarized financial information for Rhapsody, which represents 100% of their financial information, is as follows (in thousands): Quarter Ended 2017 2016 Net revenue $ 47,462 $ 52,507 Gross profit 6,583 7,243 Net income (loss) (5,640 ) (5,148 )

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2017
Fair Value Disclosures [Abstract]
Fair Value Measurements	Note 5 Fair Value Measurements Items Measured at Fair Value on a Recurring Basis The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of March 31, 2017 and December 31, 2016 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands). Fair Value Measurements as of Amortized Cost as of March 31, 2017 March 31, 2017 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 22,671 $ — $ — $ 22,671 $ 22,671 Money market funds 15,427 — — 15,427 15,427 Corporate notes and bonds — 400 — 400 400 Total cash and cash equivalents 38,098 400 — 38,498 38,498 Short-term investments: Corporate notes and bonds 27,778 — 27,778 27,784 Total short-term investments — 27,778 — 27,778 27,784 Restricted cash equivalents and investments — 2,700 — 2,700 2,700 Warrants issued by Rhapsody (included in Other assets) — — 1,244 1,244 — Total $ 38,098 $ 30,878 $ 1,244 $ 70,220 $ 68,982 Fair Value Measurements as of Amortized Cost as of December 31, 2016 December 31, 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 32,585 $ — $ — $ 32,585 $ 32,585 Money market funds 136 — — 136 136 Corporate notes and bonds — 1,000 — 1,000 1,000 Total cash and cash equivalents 32,721 1,000 — 33,721 33,721 Short-term investments: Corporate notes and bonds — 43,331 — 43,331 43,343 Total short-term investments — 43,331 — 43,331 43,343 Restricted cash equivalents and investments — 2,700 — 2,700 2,700 Warrant issued by Rhapsody (included in Other assets) — — 773 773 — Total $ 32,721 $ 47,031 $ 773 $ 80,525 $ 79,764 Restricted cash equivalents and investments as of March 31, 2017 and December 31, 2016 relate to cash pledged as collateral against letters of credit in connection with lease agreements. Realized gains or losses on sales of short-term investment securities for the quarters ended March 31, 2017 and 2016 were not significant. Gross unrealized gains and gross unrealized losses on short-term investment securities as of March 31, 2017 and December 31, 2016 were also not significant. Investments with remaining contractual maturities of five years or less are classified as short-term because the investments are marketable and highly liquid, and we have the ability to utilize them for current operations. Contractual maturities of short-term investments as of March 31, 2017 (in thousands): Estimated Fair Value Within one year $ 27,778 Between one year and five years — Total short-term investments $ 27,778 In February 2015, Rhapsody issued warrants to purchase Rhapsody common shares to each of RealNetworks and Rhapsody's one other large stockholder, Columbus Nova. The warrants were issued as compensation for past services provided by RealNetworks and Columbus Nova, and both warrants covered the same number of underlying shares. The exercise price of the warrants was equal to the fair value of the underlying shares on the issuance date, and we used the Black-Scholes option-pricing model to calculate the fair value of the warrant, using an expected term of 5 years and expected volatility of 55% . On the date of issuance, we recognized and recorded the $1.2 million fair value of the warrant issued to RealNetworks within other assets in the unaudited condensed consolidated balance sheets, and as an expense reduction within General and administrative expense in the unaudited condensed consolidated statements of operations. The warrants are free-standing derivatives and as such their fair value is determined each quarter using updated inputs in the Black-Scholes option-pricing model. During the three months ended March 31, 2017 , the decrease in the fair value of the warrants was insignificant. In February 2017, Rhapsody issued additional warrants to purchase Rhapsody common shares to both RealNetworks and Columbus Nova. Consistent with the warrants issued in 2015, the 2017 warrants were issued as compensation for past services provided by RealNetworks and Columbus Nova, and both warrants covered the same number of underlying shares. The exercise price of the warrants exceeded the fair value of the underlying shares on the issuance date, and we used the Black-Scholes option-pricing model to calculate the fair value of the warrant, using an expected term of 5 years and expected volatility of 55% , resulting in a recognized fair value of $0.5 million in Other assets in the unaudited condensed consolidated balance sheets, and as an expense reduction within general and administrative expense in the unaudited condensed consolidated statements of operations. Items Measured at Fair Value on a Non-recurring Basis Certain of our assets and liabilities are measured at estimated fair value on a non-recurring basis, using Level 3 inputs. These instruments are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). During the three months ended March 31, 2017 and 2016 , we did not record any impairments on those assets required to be measured at fair value on a non-recurring basis. See Note 11 , Lease Exit and Related Charges , for a discussion of the losses related to reductions in the use of RealNetworks' office space, which were recorded at the estimated fair value of remaining lease obligations, less expected sub-lease income.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts Receivable and Sales Returns	3 Months Ended
	Mar. 31, 2017
Receivables [Abstract]
Allowance for Doubtful Accounts Receivable and Sales Returns	Note 6 Allowance for Doubtful Accounts Receivable and Sales Returns Activity in the allowance for doubtful accounts receivable and sales returns (in thousands): Allowance For Doubtful Accounts Receivable Sales Returns Balances, December 31, 2016 $ 633 $ 169 Addition (reduction) to allowance 9 — Amounts written off — — Foreign currency translation (15 ) (1 ) Balances, March 31, 2017 $ 627 $ 168 One customer accounted for 60% of trade accounts receivable as of March 31, 2017 . At December 31, 2016 , one customer accounted for 64% of trade accounts receivable. One customer accounted for 36% or $10.9 million of consolidated revenue during the quarter ended March 31, 2017 which is reflected in our Mobile Services segment. One customer accounted for 30% of consolidated revenue or $8.4 million during the quarter ended March 31, 2016 , which is reflected in our Mobile Services segment. One customer accounted for 12% of consolidated revenue, or $3.5 million , during the quarter ended March 31, 2016 , also reflected in our Mobile Services segment.

Other Intangible Assets

Other Intangible Assets	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Other Intangible Assets	Note 7 Other Intangible Assets Other intangible assets (in thousands): March 31, 2017 December 31, 2016 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 30,980 $ 30,512 $ 468 $ 29,308 $ 28,781 $ 527 Developed technology 24,440 24,262 178 23,574 23,263 311 Patents, trademarks and tradenames 3,715 3,632 83 3,530 3,430 100 Service contracts 5,378 5,378 — 5,205 5,205 — Total $ 64,513 $ 63,784 $ 729 $ 61,617 $ 60,679 $ 938 No impairments of other intangible assets were recognized in either of the three months ended March 31, 2017 or 2016 .

Goodwill

Goodwill	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	Note 8 Goodwill Changes in goodwill (in thousands): Balance, December 31, 2016 $ 12,857 Effects of foreign currency translation 58 Balance, March 31, 2017 $ 12,915 Goodwill by segment (in thousands): March 31, Consumer Media $ 580 Mobile Services 2,037 Games 10,298 Total goodwill $ 12,915 No impairment of goodwill was recognized in either of the three months ended March 31, 2017 or in 2016 .

Accrued and Other Current Liabi

Accrued and Other Current Liabilities	3 Months Ended
	Mar. 31, 2017
Payables and Accruals [Abstract]
Accrued and Other Current Liabilities	Note 9 Accrued and Other Current Liabilities Accrued and other current liabilities (in thousands): March 31, 2017 December 31, 2016 Royalties and other fulfillment costs $ 2,967 $ 2,629 Employee compensation, commissions and benefits 5,701 5,136 Sales, VAT and other taxes payable 2,941 3,258 Other 3,816 4,402 Total accrued and other current liabilities $ 15,425 $ 15,425

Restructuring Charges

Restructuring Charges	3 Months Ended
	Mar. 31, 2017
Restructuring and Related Activities [Abstract]
Restructuring Charges	Note 10 Restructuring Charges Restructuring and other charges in 2017 and 2016 consist of costs associated with the ongoing reorganization of our business operations and our ongoing expense re-alignment efforts. The expense amounts in both years relate primarily to severance costs due to workforce reductions. Restructuring charges are as follows (in thousands): Employee Separation Costs Costs incurred and charged to expense for the three months ended March 31, 2017 $ 1,564 Costs incurred and charged to expense for the three months ended March 31, 2016 $ 385 Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2017 (in thousands) are as follows: Employee Separation Costs Accrued liability at December 31, 2016 $ 209 Costs incurred and charged to expense for the three months ended March 31, 2017 1,564 Cash payments (664 ) Accrued liability at March 31, 2017 $ 1,109

Lease Exit and Related Charges

Lease Exit and Related Charges	3 Months Ended
	Mar. 31, 2017
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract]
Lease Exit and Related Charges	Note 11 Lease Exit and Related Charges As a result of the reduction in use of RealNetworks' office space, lease exit and related charges have been recognized representing rent and contractual operating expenses over the remaining life of the leases, including estimates of sublease income expected to be received. We continue to regularly evaluate the market for office space. If the market for such space changes further in future periods, we may have to revise our estimates which may result in future adjustments to expense for excess office facilities. Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2017 (in thousands) are as follows: Accrued loss at December 31, 2016 $ 3,186 Additions and adjustments to the lease loss accrual, including estimated sublease income — Less amounts paid, net of sublease amounts (727 ) Accrued loss at March 31, 2017 2,459 Less current portion (included in Accrued and other current liabilities) (612 ) Accrued loss, non-current portion (included in Other long term liabilities) $ 1,847

Shareholders_ Equity

Shareholders’ Equity	3 Months Ended
	Mar. 31, 2017
Equity [Abstract]
Shareholders’ Equity	Note 12 Shareholders’ Equity Accumulated Other Comprehensive Income (Loss) Changes in components of accumulated other comprehensive income (loss) (in thousands): Quarter Ended 2017 2016 Investments Accumulated other comprehensive income (loss), beginning of period $ (6 ) $ 1,297 Unrealized gains (losses), net of tax effects of $2, and $90 4 151 Net current period other comprehensive income (loss) 4 151 Accumulated other comprehensive income (loss) balance, end of period $ (2 ) $ 1,448 Foreign currency translation Accumulated other comprehensive income (loss), beginning of period $ (61,639 ) $ (60,777 ) Translation adjustments 594 700 Net current period other comprehensive income (loss) 594 700 Accumulated other comprehensive income (loss) balance, end of period $ (61,045 ) $ (60,077 ) Total accumulated other comprehensive income (loss), end of period $ (61,047 ) $ (58,629 )

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Note 13 Income Taxes As of March 31, 2017 , there have been no material changes to RealNetworks’ uncertain tax positions disclosures as provided in Note 14 of the 2016 10-K. We do not anticipate that the total amount of unrecognized tax benefits will significantly change within the next twelve months. We file numerous consolidated and separate income tax returns in the U.S. including federal, state and local, as well as foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal income tax examinations for tax years before 2013 or state, local, or foreign income tax examinations for years before 1993. We are currently under audit by various states and foreign jurisdictions for certain tax years subsequent to 1993.

Earnings (Loss) Per Share

Earnings (Loss) Per Share	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
Earnings (Loss) Per Share	Note 14 Earnings (Loss) Per Share Basic net income (loss) per share (EPS) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income (loss) by the weighted average number of common and dilutive potential common shares outstanding during the period. Basic and diluted EPS (in thousands, except per share amounts): Quarter Ended 2017 2016 Net income (loss) $ (9,424 ) $ (15,171 ) Weighted average common shares outstanding used to compute basic EPS 37,030 36,520 Dilutive effect of stock based awards — — Weighted average common shares outstanding used to compute diluted EPS 37,030 36,520 Basic EPS $ (0.25 ) $ (0.42 ) Diluted EPS $ (0.25 ) $ (0.42 ) During the quarters ended March 31, 2017 , and March 31, 2016 4.9 million and 5.3 million shares of common stock, respectively, of potentially issuable shares from stock awards were excluded from the calculation of diluted EPS because of their antidilutive effect.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 15 Commitments and Contingencies From time to time we are and may be subject to legal proceedings, governmental investigations and claims in the ordinary course of business, including employment claims, contract-related claims, and claims of alleged infringement of third-party patents, trademarks and other intellectual property rights. Although we believe that resolving such claims, individually or in aggregate, will not have a material adverse impact on our business or financial condition, these matters are subject to inherent uncertainties. Such claims, even if not meritorious, could force us to expend significant financial and managerial resources. In addition, given the broad distribution of some of our consumer products, any individual claim related to those products could give rise to liabilities that may be material to us. In the event of a determination adverse to us, we may incur substantial monetary liability, and/or be required to change our business practices. Either of these could have a material adverse effect on our consolidated financial statements.

Guarantees

Guarantees	3 Months Ended
	Mar. 31, 2017
Guarantees [Abstract]
Guarantees	Note 16 Guarantees In the ordinary course of business, RealNetworks is subject to potential obligations for standard warranty and indemnification provisions that are contained within many of our customer license and service agreements. Our warranty provisions are consistent with those prevalent in our industry, and we do not have a history of incurring losses on warranties; therefore, we do not maintain accruals for warranty-related obligations. With regard to indemnification provisions, nearly all of our carrier contracts obligate us to indemnify our carrier customers for certain liabilities that may be incurred by them. We have received in the past, and may receive in the future, claims for indemnification from some of our carrier customers. In relation to certain patents and other technology assets we sold to Intel in the second quarter of 2012, we have specific obligations to indemnify Intel for breaches of the representations and warranties that we made and covenants that we agreed to in the asset purchase agreement for certain potential future intellectual property infringement claims brought by third parties against Intel. The amount of any potential liabilities related to our indemnification obligations to Intel will not be determined until a claim has been made, but we are obligated to indemnify Intel up to the amount of the gross purchase price that we received in the sale.

Segment Information

Segment Information	3 Months Ended
	Mar. 31, 2017
Segment Reporting [Abstract]
Segment Information	Note 17 Segment Information We manage our business and report revenue and operating income (loss) in three segments: (1) Consumer Media, which includes our PC-based RealPlayer products, including RealPlayer Plus and related products and intellectual property licensing; (2) Mobile Services, which includes our SaaS services, our LISTEN ® product, and our mobile RealTimes ® product that is primarily sold through mobile carriers; and (3) Games, which includes all our games-related businesses, including sales of mobile games, sales of games licenses, online games subscription services, advertising on games sites and social network sites, and microtransactions from online games. We allocate certain corporate expenses which are directly attributable to supporting our businesses, including but not limited to a portion of finance, legal, human resources and headquarters facilities, to our reportable segments. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. Also reported in our corporate segment are restructuring charges, lease exit and related charges, as well as stock compensation charges. RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker (CODM) reviews results. The CODM reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K. Segment results for the quarters ended March 31, 2017 and 2016 (in thousands): Consumer Media Quarter Ended 2017 2016 Revenue $ 5,669 $ 5,726 Cost of revenue 1,405 2,417 Gross profit 4,264 3,309 Operating expenses 4,010 5,376 Operating income (loss) $ 254 $ (2,067 ) Mobile Services Quarter Ended 2017 2016 Revenue $ 19,084 $ 16,465 Cost of revenue 13,914 10,917 Gross profit 5,170 5,548 Operating expenses 8,119 9,794 Operating income (loss) $ (2,949 ) $ (4,246 ) Games Quarter Ended 2017 2016 Revenue $ 5,823 $ 6,039 Cost of revenue 1,937 1,845 Gross profit 3,886 4,194 Operating expenses 4,947 5,295 Operating income (loss) $ (1,061 ) $ (1,101 ) Corporate Quarter Ended 2017 2016 Cost of revenue $ 37 $ (7 ) Operating expenses 4,295 7,372 Operating income (loss) $ (4,332 ) $ (7,365 ) Our customers consist primarily of consumers and corporations located in the U.S., Europe, Republic of Korea and various foreign countries (Rest of the World). Revenue by geographic region (in thousands): Quarter Ended 2017 2016 United States $ 9,740 $ 10,383 Europe 3,195 3,384 Republic of Korea 12,853 9,233 Rest of the World 4,788 5,230 Total net revenue $ 30,576 $ 28,230 Long-lived assets (which consist of equipment, software, leasehold improvements, other intangible assets, and goodwill) by geographic region (in thousands) are as follows: March 31, December 31, United States $ 12,754 $ 13,052 Europe 3,738 3,920 Republic of Korea 156 168 Rest of the World 1,785 1,909 Total long-lived assets $ 18,433 $ 19,049

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2017
Related Party Transactions [Abstract]
Related Party Transactions	Note 18 Related Party Transactions See Note 4 , Rhapsody Joint Venture , and Note 5 , Fair Value Measurements , for details on transactions involving Rhapsody.

Description of Business and S25

Description of Business and Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2017
Accounting Policies [Abstract]
Description of Business	Description of Business. RealNetworks, Inc. and subsidiaries is a global provider of network-delivered digital media applications and services that make it easy to manage, play and share digital media. The Company also develops and markets software products and services that enable the creation, distribution and consumption of digital media, including audio and video. Inherent in our business are various risks and uncertainties, including a limited history of certain of our product and service offerings. RealNetworks' success will depend on the acceptance of our technology, products and services and the ability to generate related revenue. In this Quarterly Report on Form 10-Q (10-Q or Report), RealNetworks, Inc. and Subsidiaries is referred to as “RealNetworks”, the “Company”, “we”, “us”, or “our”. "RealPlayer ® " and other trademarks of ours appearing in this report are our property.
Basis of Presentation	Basis of Presentation. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods presented. Operating results for the quarter ended March 31, 2017 are not necessarily indicative of the results that may be expected for any subsequent period or for the year ending December 31, 2017 . Certain information and disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the 10-K).
Use of Estimates	Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Segments	We manage our business and report revenue and operating income (loss) in three segments: (1) Consumer Media, which includes our PC-based RealPlayer products, including RealPlayer Plus and related products and intellectual property licensing; (2) Mobile Services, which includes our SaaS services, our LISTEN ® product, and our mobile RealTimes ® product that is primarily sold through mobile carriers; and (3) Games, which includes all our games-related businesses, including sales of mobile games, sales of games licenses, online games subscription services, advertising on games sites and social network sites, and microtransactions from online games. We allocate certain corporate expenses which are directly attributable to supporting our businesses, including but not limited to a portion of finance, legal, human resources and headquarters facilities, to our reportable segments. Remaining expenses, which are not directly attributable to supporting the business, are reported as corporate items. Also reported in our corporate segment are restructuring charges, lease exit and related charges, as well as stock compensation charges. RealNetworks reports three reportable segments based on factors such as how we manage our operations and how our Chief Operating Decision Maker (CODM) reviews results. The CODM reviews financial information presented on both a consolidated basis and on a business segment basis. The accounting policies used to derive segment results are the same as those described in Note 1, Description of Business and Summary of Significant Accounting Policies, in the 10-K.

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation Expense	Total stock-based compensation expense recognized in our unaudited condensed consolidated statements of operations and comprehensive income (loss) includes amounts related to stock options, restricted stock, and employee stock purchase plans and was as follows (in thousands): Quarter Ended 2017 2016 Total stock-based compensation expense $ 1,434 $ 3,171
Weighted-Average Assumptions Used to Determine Fair Value of Options Granted	The fair value of options granted determined using the Black-Scholes model used the following weighted-average assumptions: Quarter Ended 2017 2016 Expected dividend yield 0 % 0 % Risk-free interest rate 2.23 % 1.54 % Expected life (years) 6.8 5.5 Volatility 38 % 38 %

Rhapsody Joint Venture (Tables)

Rhapsody Joint Venture (Tables)	3 Months Ended
	Mar. 31, 2017
Equity Method Investments and Joint Ventures [Abstract]
Summarized Financial Operating Information for Rhapsody	Summarized financial information for Rhapsody, which represents 100% of their financial information, is as follows (in thousands): Quarter Ended 2017 2016 Net revenue $ 47,462 $ 52,507 Gross profit 6,583 7,243 Net income (loss) (5,640 ) (5,148 )

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2017
Fair Value Disclosures [Abstract]
Financial Assets Measured at Fair Value on a Recurring Basis	The following table presents information about our financial assets that have been measured at fair value on a recurring basis as of March 31, 2017 and December 31, 2016 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands). Fair Value Measurements as of Amortized Cost as of March 31, 2017 March 31, 2017 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 22,671 $ — $ — $ 22,671 $ 22,671 Money market funds 15,427 — — 15,427 15,427 Corporate notes and bonds — 400 — 400 400 Total cash and cash equivalents 38,098 400 — 38,498 38,498 Short-term investments: Corporate notes and bonds 27,778 — 27,778 27,784 Total short-term investments — 27,778 — 27,778 27,784 Restricted cash equivalents and investments — 2,700 — 2,700 2,700 Warrants issued by Rhapsody (included in Other assets) — — 1,244 1,244 — Total $ 38,098 $ 30,878 $ 1,244 $ 70,220 $ 68,982 Fair Value Measurements as of Amortized Cost as of December 31, 2016 December 31, 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents: Cash $ 32,585 $ — $ — $ 32,585 $ 32,585 Money market funds 136 — — 136 136 Corporate notes and bonds — 1,000 — 1,000 1,000 Total cash and cash equivalents 32,721 1,000 — 33,721 33,721 Short-term investments: Corporate notes and bonds — 43,331 — 43,331 43,343 Total short-term investments — 43,331 — 43,331 43,343 Restricted cash equivalents and investments — 2,700 — 2,700 2,700 Warrant issued by Rhapsody (included in Other assets) — — 773 773 — Total $ 32,721 $ 47,031 $ 773 $ 80,525 $ 79,764
Schedule of Contractual Maturity Date	Contractual maturities of short-term investments as of March 31, 2017 (in thousands): Estimated Fair Value Within one year $ 27,778 Between one year and five years — Total short-term investments $ 27,778

Allowance for Doubtful Accoun29

Allowance for Doubtful Accounts Receivable and Sales Returns (Tables)	3 Months Ended
	Mar. 31, 2017
Receivables [Abstract]
Activity in Allowance for Doubtful Accounts Receivable and Sales Returns	Activity in the allowance for doubtful accounts receivable and sales returns (in thousands): Allowance For Doubtful Accounts Receivable Sales Returns Balances, December 31, 2016 $ 633 $ 169 Addition (reduction) to allowance 9 — Amounts written off — — Foreign currency translation (15 ) (1 ) Balances, March 31, 2017 $ 627 $ 168

Other Intangible Assets (Tables

Other Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Other Intangible Assets	Other intangible assets (in thousands): March 31, 2017 December 31, 2016 Gross Amount Accumulated Amortization Net Gross Amount Accumulated Amortization Net Amortizing intangible assets: Customer relationships $ 30,980 $ 30,512 $ 468 $ 29,308 $ 28,781 $ 527 Developed technology 24,440 24,262 178 23,574 23,263 311 Patents, trademarks and tradenames 3,715 3,632 83 3,530 3,430 100 Service contracts 5,378 5,378 — 5,205 5,205 — Total $ 64,513 $ 63,784 $ 729 $ 61,617 $ 60,679 $ 938

Goodwill (Tables)

Goodwill (Tables)	3 Months Ended
	Mar. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Changes in Goodwill	Changes in goodwill (in thousands): Balance, December 31, 2016 $ 12,857 Effects of foreign currency translation 58 Balance, March 31, 2017 $ 12,915
Goodwill Assigned by Segments	Goodwill by segment (in thousands): March 31, Consumer Media $ 580 Mobile Services 2,037 Games 10,298 Total goodwill $ 12,915

Accrued and Other Current Lia32

Accrued and Other Current Liabilities (Tables)	3 Months Ended
	Mar. 31, 2017
Payables and Accruals [Abstract]
Accrued and Other Liabilities	Accrued and other current liabilities (in thousands): March 31, 2017 December 31, 2016 Royalties and other fulfillment costs $ 2,967 $ 2,629 Employee compensation, commissions and benefits 5,701 5,136 Sales, VAT and other taxes payable 2,941 3,258 Other 3,816 4,402 Total accrued and other current liabilities $ 15,425 $ 15,425

Restructuring Charges (Tables)

Restructuring Charges (Tables)	3 Months Ended
	Mar. 31, 2017
Restructuring and Related Activities [Abstract]
Schedule of Restructuring Charges by Type of Cost	Restructuring charges are as follows (in thousands): Employee Separation Costs Costs incurred and charged to expense for the three months ended March 31, 2017 $ 1,564 Costs incurred and charged to expense for the three months ended March 31, 2016 $ 385 Changes to the accrued restructuring liability (which is included in Accrued and other current liabilities) for 2017 (in thousands) are as follows: Employee Separation Costs Accrued liability at December 31, 2016 $ 209 Costs incurred and charged to expense for the three months ended March 31, 2017 1,564 Cash payments (664 ) Accrued liability at March 31, 2017 $ 1,109

Lease Exit and Related Charges

Lease Exit and Related Charges (Tables)	3 Months Ended
	Mar. 31, 2017
Disclosure Changes To Accrued Loss On Excess Office Facilities [Abstract]
Changes to Accrued Loss on Excess Office Facilities	Changes to accrued lease exit and related charges (which is included in Accrued and other current liabilities) for 2017 (in thousands) are as follows: Accrued loss at December 31, 2016 $ 3,186 Additions and adjustments to the lease loss accrual, including estimated sublease income — Less amounts paid, net of sublease amounts (727 ) Accrued loss at March 31, 2017 2,459 Less current portion (included in Accrued and other current liabilities) (612 ) Accrued loss, non-current portion (included in Other long term liabilities) $ 1,847

Shareholders_ Equity (Tables)

Shareholders’ Equity (Tables)	3 Months Ended
	Mar. 31, 2017
Equity [Abstract]
Schedule of Accumulated Other Comprehensive Income (Loss)	Changes in components of accumulated other comprehensive income (loss) (in thousands): Quarter Ended 2017 2016 Investments Accumulated other comprehensive income (loss), beginning of period $ (6 ) $ 1,297 Unrealized gains (losses), net of tax effects of $2, and $90 4 151 Net current period other comprehensive income (loss) 4 151 Accumulated other comprehensive income (loss) balance, end of period $ (2 ) $ 1,448 Foreign currency translation Accumulated other comprehensive income (loss), beginning of period $ (61,639 ) $ (60,777 ) Translation adjustments 594 700 Net current period other comprehensive income (loss) 594 700 Accumulated other comprehensive income (loss) balance, end of period $ (61,045 ) $ (60,077 ) Total accumulated other comprehensive income (loss), end of period $ (61,047 ) $ (58,629 )

Earnings (Loss) Per Share (Tabl

Earnings (Loss) Per Share (Tables)	3 Months Ended
	Mar. 31, 2017
Earnings Per Share [Abstract]
Calculation of Basic and Diluted Earnings Per Share	Basic and diluted EPS (in thousands, except per share amounts): Quarter Ended 2017 2016 Net income (loss) $ (9,424 ) $ (15,171 ) Weighted average common shares outstanding used to compute basic EPS 37,030 36,520 Dilutive effect of stock based awards — — Weighted average common shares outstanding used to compute diluted EPS 37,030 36,520 Basic EPS $ (0.25 ) $ (0.42 ) Diluted EPS $ (0.25 ) $ (0.42 )

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Mar. 31, 2017
Segment Reporting [Abstract]
Segment Results	Games Quarter Ended 2017 2016 Revenue $ 5,823 $ 6,039 Cost of revenue 1,937 1,845 Gross profit 3,886 4,194 Operating expenses 4,947 5,295 Operating income (loss) $ (1,061 ) $ (1,101 ) Mobile Services Quarter Ended 2017 2016 Revenue $ 19,084 $ 16,465 Cost of revenue 13,914 10,917 Gross profit 5,170 5,548 Operating expenses 8,119 9,794 Operating income (loss) $ (2,949 ) $ (4,246 ) Corporate Quarter Ended 2017 2016 Cost of revenue $ 37 $ (7 ) Operating expenses 4,295 7,372 Operating income (loss) $ (4,332 ) $ (7,365 ) Consumer Media Quarter Ended 2017 2016 Revenue $ 5,669 $ 5,726 Cost of revenue 1,405 2,417 Gross profit 4,264 3,309 Operating expenses 4,010 5,376 Operating income (loss) $ 254 $ (2,067 )
Revenue by Geographic Region	Our customers consist primarily of consumers and corporations located in the U.S., Europe, Republic of Korea and various foreign countries (Rest of the World). Revenue by geographic region (in thousands): Quarter Ended 2017 2016 United States $ 9,740 $ 10,383 Europe 3,195 3,384 Republic of Korea 12,853 9,233 Rest of the World 4,788 5,230 Total net revenue $ 30,576 $ 28,230
Long-Lived Assets by Geographic Region	Long-lived assets (which consist of equipment, software, leasehold improvements, other intangible assets, and goodwill) by geographic region (in thousands) are as follows: March 31, December 31, United States $ 12,754 $ 13,052 Europe 3,738 3,920 Republic of Korea 156 168 Rest of the World 1,785 1,909 Total long-lived assets $ 18,433 $ 19,049

Stock-Based Compensation (Recog

Stock-Based Compensation (Recognized Stock-Based Compensation Expense) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Total stock-based compensation expense	$ 1,434	$ 3,171

Stock-Based Compensation (Weigh

Stock-Based Compensation (Weighted-Average Assumptions Used to Determine Fair Value of Options Granted) (Detail)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	2.23%	1.54%
Expected life	6 years 9 months 18 days	5 years 6 months
Volatility	38.00%	38.00%

Stock-Based Compensation (Addit

Stock-Based Compensation (Additional Information) (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2017USD ($)
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Total unrecognized compensation cost	$ 5.2
Total unrecognized compensation cost, expected recognition period (in years)	2 years

Rhapsody Joint Venture (Additio

Rhapsody Joint Venture (Additional Information) (Detail) - USD ($)	1 Months Ended		3 Months Ended
	Jan. 31, 2017	Dec. 31, 2016	Mar. 31, 2017	Mar. 31, 2016	Mar. 31, 2010	Dec. 01, 2016
Schedule of Equity Method Investments [Line Items]
Losses recorded in the operations of Rhapsody			$ 748,000	$ 0
Advance to Rhapsody			$ 1,500,000	0
Rhapsody America LLC
Schedule of Equity Method Investments [Line Items]
Percentage of ownership interest in Rhapsody			42.00%
Payments for restructuring					$ 18,000,000
Liquidation preference amount			$ 10,000,000
Losses recorded in the operations of Rhapsody			700,000	$ 0
Carrying value			0
Loan principal to related party						$ 5,000,000
Advance to Rhapsody	$ 1,500,000	$ 3,500,000
Related party loan rate		10.00%
Maximum allowable cross default allowed before receivables become immediately due			$ 1,000,000

Rhapsody Joint Venture (Summari

Rhapsody Joint Venture (Summarized Financial Operating Information for Rhapsody) (Detail) - Rhapsody America LLC - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Schedule of Equity Method Investments [Line Items]
Net revenue	$ 47,462	$ 52,507
Gross profit	6,583	7,243
Net loss	$ (5,640)	$ (5,148)

Fair Value Measurements (Financ

Fair Value Measurements (Financial Assets Measured at Fair Value on a Recurring Basis) (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	$ 70,220	$ 80,525
Amortized Cost	68,982	79,764
Cash and Cash Equivalents
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	38,498	33,721
Amortized Cost	38,498	33,721
Cash and Cash Equivalents | Cash
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	22,671	32,585
Amortized Cost	22,671	32,585
Cash and Cash Equivalents | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	15,427	136
Amortized Cost	15,427	136
Cash and Cash Equivalents | Corporate notes and bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	400	1,000
Amortized Cost	400	1,000
Short-term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	27,778	43,331
Amortized Cost	27,784	43,343
Short-term Investments | Corporate notes and bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	27,778	43,331
Amortized Cost	27,784	43,343
Restricted cash equivalents and investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	2,700	2,700
Amortized Cost	2,700	2,700
Related Party Transaction | Warrants issued by Rhapsody
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	1,244	773
Amortized Cost	0	0
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	38,098	32,721
Level 1 | Cash and Cash Equivalents
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	38,098	32,721
Level 1 | Cash and Cash Equivalents | Cash
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	22,671	32,585
Level 1 | Cash and Cash Equivalents | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	15,427	136
Level 1 | Cash and Cash Equivalents | Corporate notes and bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 1 | Short-term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 1 | Short-term Investments | Corporate notes and bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value		0
Level 1 | Restricted cash equivalents and investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 1 | Related Party Transaction | Warrants issued by Rhapsody
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	30,878	47,031
Level 2 | Cash and Cash Equivalents
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	400	1,000
Level 2 | Cash and Cash Equivalents | Cash
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 2 | Cash and Cash Equivalents | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 2 | Cash and Cash Equivalents | Corporate notes and bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	400	1,000
Level 2 | Short-term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	27,778	43,331
Level 2 | Short-term Investments | Corporate notes and bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	27,778	43,331
Level 2 | Restricted cash equivalents and investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	2,700	2,700
Level 2 | Related Party Transaction | Warrants issued by Rhapsody
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	1,244	773
Level 3 | Cash and Cash Equivalents
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 3 | Cash and Cash Equivalents | Cash
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 3 | Cash and Cash Equivalents | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 3 | Cash and Cash Equivalents | Corporate notes and bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 3 | Short-term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 3 | Short-term Investments | Corporate notes and bonds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 3 | Restricted cash equivalents and investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	0	0
Level 3 | Related Party Transaction | Warrants issued by Rhapsody
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value	$ 1,244	$ 773

Fair Value Measurements (Short-

Fair Value Measurements (Short-term Investments) (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total short-term investments	$ 70,220	$ 80,525
Short-term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Total short-term investments	27,778	$ 43,331
Estimate of Fair Value Measurement | Short-term Investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Within one year	27,778
Between one year and five years	0
Total short-term investments	$ 27,778

Fair Value Measurements - Addit

Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended
	Feb. 28, 2017	Feb. 28, 2015	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Financial assets fair value			$ 70,220	$ 80,525
Warrants issued by Rhapsody | Related Party Debt Obligation | Rhapsody America LLC
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Expected term	5 years	5 years
Expected volatility rate	55.00%	55.00%
Financial assets fair value	$ 500	$ 1,200

Allowance for Doubtful Accoun46

Allowance for Doubtful Accounts Receivable and Sales Returns (Activity in Allowance for Doubtful Accounts Receivable and Sales Returns) (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Allowance for Doubtful Accounts Receivable
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning Balance	$ 633
Addition (reduction) to allowance	9
Amounts written off	0
Foreign currency translation	(15)
Ending Balance	627
Allowance for Sales Returns
Movement in Valuation Allowances and Reserves [Roll Forward]
Beginning Balance	169
Addition (reduction) to allowance	0
Amounts written off	0
Foreign currency translation	(1)
Ending Balance	$ 168

Allowance for Doubtful Accoun47

Allowance for Doubtful Accounts Receivable and Sales Returns (Additional Information) (Detail) $ in Thousands		3 Months Ended		12 Months Ended
		Mar. 31, 2017USD ($)Customer	Mar. 31, 2016USD ($)Customer	Dec. 31, 2016Customer
Concentration Risk [Line Items]
Revenue | $	[1]	$ 30,576	$ 28,230
Accounts Receivable
Concentration Risk [Line Items]
Number of customers | Customer		1		1
Percentage by major customer		60.00%		64.00%
Revenue by Segment | Mobile Services
Concentration Risk [Line Items]
Number of customers | Customer		1
Percentage by major customer		36.00%
Revenue | $		$ 10,900
Revenue by Segment | Mobile Services | Company A
Concentration Risk [Line Items]
Number of customers | Customer			1
Percentage by major customer			30.00%
Revenue | $			$ 8,400
Revenue by Segment | Mobile Services | Company B
Concentration Risk [Line Items]
Number of customers | Customer			1
Percentage by major customer			12.00%
Revenue | $			$ 3,500
[1]	Quarters ended March 31, Components of Revenue2017 2016License Fees6,594 5,777Service Revenue23,982 22,453Net Revenue30,576 28,230

Other Intangible Assets (Detail

Other Intangible Assets (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	$ 64,513	$ 61,617
Accumulated Amortization	63,784	60,679
Net	729	938
Customer relationships
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	30,980	29,308
Accumulated Amortization	30,512	28,781
Net	468	527
Developed technology
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	24,440	23,574
Accumulated Amortization	24,262	23,263
Net	178	311
Patents, trademarks and tradenames
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	3,715	3,530
Accumulated Amortization	3,632	3,430
Net	83	100
Service contracts
Finite-Lived Intangible Assets, Net [Abstract]
Gross Amount	5,378	5,205
Accumulated Amortization	5,378	5,205
Net	$ 0	$ 0

Goodwill (Changes in Goodwill)

Goodwill (Changes in Goodwill) (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Goodwill [Roll Forward]
Beginning Balance	$ 12,857
Effects of foreign currency translation	58
Ending Balance	$ 12,915

Goodwill (Goodwill by Segments)

Goodwill (Goodwill by Segments) (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Goodwill [Line Items]
Goodwill	$ 12,915	$ 12,857
Consumer Media
Goodwill [Line Items]
Goodwill	580
Mobile Services
Goodwill [Line Items]
Goodwill	2,037
Games
Goodwill [Line Items]
Goodwill	$ 10,298

Accrued and Other Current Lia51

Accrued and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Royalties and other fulfillment costs	$ 2,967	$ 2,629
Employee compensation, commissions and benefits	5,701	5,136
Sales, VAT and other taxes payable	2,941	3,258
Other	3,816	4,402
Total accrued and other liabilities	$ 15,425	$ 15,425

Restructuring Charges (Details)

Restructuring Charges (Details) - Employee Separation Costs - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Restructuring Cost and Reserve [Line Items]
Costs incurred and charged to expense	$ 1,564	$ 385
Restructuring Reserve [Roll Forward]
Accrued liability beginning balance	209
Costs incurred and charged to expense	1,564
Cash payments	(664)
Accrued liability ending balance	$ 1,109

Lease Exit and Related Charge53

Lease Exit and Related Charges (Changes to Accrued Loss on Excess Office Facilities) (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)
Accrued Loss on Excess Office Facilities [Roll Forward]
Accrued loss at December 31, 2016	$ 3,186
Additions and adjustments to the lease loss accrual, including estimated sublease income	0
Less amounts paid, net of sublease amounts	(727)
Accrued loss at March 31, 2017	2,459
Less current portion (included in Accrued and other current liabilities)	(612)
Accrued loss, non-current portion (included in Other long term liabilities)	$ 1,847

Shareholders_ Equity (Accumulat

Shareholders’ Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated other comprehensive income (loss), beginning of period	$ 88,581
Unrealized gains (losses), net of tax effects of $2, and $90	4	$ 151
Total other comprehensive income (loss)	598	851
Accumulated other comprehensive income (loss) balance, end of period	81,790
Total accumulated other comprehensive income (loss), end of period	(61,047)	(58,629)	$ (61,645)
Investments
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated other comprehensive income (loss), beginning of period	(6)	1,297
Unrealized gains (losses), net of tax effects of $2, and $90	4	151
Total other comprehensive income (loss)	4	151
Accumulated other comprehensive income (loss) balance, end of period	(2)	1,448
Accumulated Other Comprehensive Income (Loss), Tax [Abstract]
Unrealized gains (losses), tax effects	2	90
Foreign currency translation
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated other comprehensive income (loss), beginning of period	(61,639)	(60,777)
Translation adjustments	594	700
Total other comprehensive income (loss)	594	700
Accumulated other comprehensive income (loss) balance, end of period	$ (61,045)	$ (60,077)

Earnings (Loss) Per Share (Calc

Earnings (Loss) Per Share (Calculation of Basic and Diluted Earnings Per Share) (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Net income (loss)	$ (9,424)	$ (15,171)
Weighted average common shares outstanding used to compute basic EPS	37,030	36,520
Dilutive effect of stock based awards	0	0
Weighted average common shares outstanding used to compute diluted EPS	37,030	36,520
Basic EPS (USD per share)	$ (0.25)	$ (0.42)
Diluted EPS (USD per share)	$ (0.25)	$ (0.42)

Earnings (Loss) Per Share (Addi

Earnings (Loss) Per Share (Additional Information) (Detail) - shares shares in Millions	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Earnings Per Share [Abstract]
Shares of common stock excluded from the calculation of diluted net income per share because of antidilutive effect	4.9	5.3

Segment Information (Additional

Segment Information (Additional Information) (Detail)	3 Months Ended
	Mar. 31, 2017Segment
Segment Reporting [Abstract]
Number of reporting segments	3

Segment Information (Segment Re

Segment Information (Segment Results) (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Segment Reporting Information [Line Items]
Revenue	[1]	$ 30,576	$ 28,230
Cost of revenue	[2]	17,293	15,172
Gross profit		13,283	13,058
Operating expenses		21,371	27,837
Operating income (loss)		(8,088)	(14,779)
Operating Segments | Consumer Media
Segment Reporting Information [Line Items]
Revenue		5,669	5,726
Cost of revenue		1,405	2,417
Gross profit		4,264	3,309
Operating expenses		4,010	5,376
Operating income (loss)		254	(2,067)
Operating Segments | Mobile Services
Segment Reporting Information [Line Items]
Revenue		19,084	16,465
Cost of revenue		13,914	10,917
Gross profit		5,170	5,548
Operating expenses		8,119	9,794
Operating income (loss)		(2,949)	(4,246)
Operating Segments | Games
Segment Reporting Information [Line Items]
Revenue		5,823	6,039
Cost of revenue		1,937	1,845
Gross profit		3,886	4,194
Operating expenses		4,947	5,295
Operating income (loss)		(1,061)	(1,101)
Corporate
Segment Reporting Information [Line Items]
Cost of revenue		37	(7)
Operating expenses		4,295	7,372
Operating income (loss)		$ (4,332)	$ (7,365)
[1]	Quarters ended March 31, Components of Revenue2017 2016License Fees6,594 5,777Service Revenue23,982 22,453Net Revenue30,576 28,230
[2]	Quarters ended March 31, Components of Cost of Revenue2017 2016License Fees1,511 1,304Service Revenue15,782 13,868Net Revenue Costs17,293 15,172

Segment Information (Revenue by

Segment Information (Revenue by Geographic Region) (Detail) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2017	Mar. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	[1]	$ 30,576	$ 28,230
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue		9,740	10,383
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue		3,195	3,384
Republic of Korea
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue		12,853	9,233
Rest of the World
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue		$ 4,788	$ 5,230
[1]	Quarters ended March 31, Components of Revenue2017 2016License Fees6,594 5,777Service Revenue23,982 22,453Net Revenue30,576 28,230

Segment Information (Long-Lived

Segment Information (Long-Lived Assets by Geographic Region) (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 18,433	$ 19,049
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	12,754	13,052
Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	3,738	3,920
Republic of Korea
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	156	168
Rest of the World
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 1,785	$ 1,909