The games division of RealNetworks [NASDAQ: RNWK] reported sales of $25.8 million for the three months ending September 30.

This is a 13 percent decrease year-on-year.

However, in terms of operating income, it made $2.4 million, substantially up on the $289,000 booked a year ago.

Adjusted for EBITDA, operating income was $2.9 million, up 143 percent year-on-year.

Real's game division, now rebranded as GameHouse, sells casual web games through portals such as RealArcade.com, GameHouse.com and Zylom.com, mobile games via carriers, and directly on the App Store, Ovi Store and Android Market.

Only way is up

"We've made great progress restructuring Real and we're starting to see the impact in our financial results this quarter," said Bob Kimball, Real's CEO and president.

"We generated positive free cash flow, reduced our operating expenses, and increased our cash and adjusted EBITDA sequentially. With the bulk of our restructuring work behind us, we are now focusing on growth."

He also mentioned the $5.8 million acquisition of social games company Backstage Technologies that the company expected to "help us accelerate socialising and monetising our games business."

Tax back

Overall, RealNetworks, which also includes music and technology divisions, saw revenues drop 11 percent to $86.4 million.

Net income was $24.5 million, with adjusted EBITDA operational income of $5.7 million, down 67 percent year-on-year.

The company had cash and short term investments of $329 million as of September 30, 2010, compared to $313 million three months ago, primarily due to a $30 million tax refund.

[source: RealNetworks]