One of big problems on internet is fact that by far vast majority of people use slow dial-up connections. In spite of all of hoopla about DSL and Cable, perhaps 90% to 95% of all of people in United States is still on dial-up. In addition, most of rest of planet has not been wired for high speed access and probably will not be for some time.This introduces a real problem to companies that want to sell or distribute multimedia on web. How do you do that without requiring downloads that are hours (and even days) long? Many users will wait an hour or two for their favorite Britney Spears video once in a while, but they may not be as willing (or as able) to wait for a movie trailer or sound clip. And very, very few people will wait for an advertisement, no matter that video is wonderful.
Many video standards were created in an effort to overcome this basic problem. Two different philosophies arose: streaming and non-streaming. In streaming video (and audio) you don't have to wait for entire movie to download; movie begins playing as soon as enough of it has been received by your system to begin. Non-streaming, on other hand, must be fully downloaded in order to be played.
In 1995, a company call RealNetworks created a new standard for streaming audio and released a program called RealAudio. At first this was used to distribute pre-recorded information. On September 5th 1995, first live broadcast using RealAudio was Seattle Mariners vs. The New York Yankees game.
Over years since, RealNetworks has constantly and aggressively upgraded their technology to include video as well, and to allow for a paid and subscription model.
By distributing players for free (and later offering an upgraded, "better" paid version) was one of primary reasons that Real formats became so popular so fast. In addition, Real videos and sound files could be played on Macintosh and Windows systems, making it more cross-platform that some of competition.
The RealNetworks formats are proprietary, which means only that company and authorized agents may use them. You can purchase software to create audio and video Real format files, but they are not cheap.
Personally, I am not very fond of this format. I find constant, nagging updates to be annoying in extreme. It is very disconcerting to have purchased Real Player 7 and find that I cannot view Real Player 8 videos without downloading new FREE version (I would have to pay an upgrade fee to get paid version). This version mismatch seems to happen much too often and is so annoying that I have actually removed player from my own system.