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Concerns over the fate of the US digital media group, which brought streaming video to the internet, were heightened when AOL Time Warner and Microsoft ended their internet browser war late last month.

The two giants recently agreed to jointly develop digital media software that enables consumers to securely download video and audio from the web.

AOL currently depends on RealNetworks software, but investors have questioned whether the Microsoft agreement is a sign AOL's commitment to RealNetworks is wavering. Could the deal help Microsoft dominate the streaming media software market - and crush Real Networks in the same way it smashed Netscape's pioneering browser?

Not so, says Dan Sheeran, RealNetworks vice-president for marketing. Like many industry analysts, he points out that AOL, which has 35m subscribers and serves as an important platform for digital media, is under no obligation to switch to Microsoft software.

He says there are several reasons why his company should be able to avoid Netscape's fate. First, there is a notable mistrust of Microsoft in many corners of the technology industry. The software group, having escaped its legal battles virtually unscathed, still believes it can dominate all markets it enters.

Content providers such as movie studios and record labels, as well as consumer hardware makers, are extremely wary of giving Microsoft too much power in the digital media domain. And these companies have a lot of say because they must choose which software they use to encrypt and stream video and audio signals.

"None of the big media companies wants to become dependent on any one technology for their physical media delivery. They don't want any one company to become a toll collector for their business," Mr Sheeran says.

Content providers are just one of the groups that will have a say in determining who controls digital media delivery standards. It will not be long before digital media technology becomes a common feature in a range of consumer electronic devices, and hardware manufacturers such as Japan's Sony and Finland's Nokia are wary of Microsoft.

Some believe that within two years consumers will be able to download movie trailers, on-demand newscasts, music videos and live sports through their handsets. Microsoft has suffered a particularly rocky start in the mobile phone software market and trails its chief rival in next generation smart phones - Symbian, a consortium comprised of handset makers including the market leader Nokia.

Microsoft's difficulties have given RealNetworks a critical early edge. It has already struck deals that will make its media player the de facto standard in mobile phones made by Nokia, Samsung, Siemens and Panasonic operating on Symbian software.

But RealNetworks has also diversified beyond software by striking up partnerships with content providers that have transformed the group into something of a cable company that broadcasts over the internet.

It has signed up more than 1m customers willing to pay for premium internet broadcasts of professional baseball games as well as content from television networks ABC, Playboy, CNN and other media groups.

Almost 60 per cent of RealNetworks' $183m in revenues last year were derived from subscription services.

RealNetworks is also in the process of buying Listen.com, a subscription music service similar to Apple Computer's new online music store.

"They need some big hits and I think digital music will be one of those," says Phil Leigh, analyst at Raymond James.