San Diego, CA----August 15, 2000

A new 700 page report from DFC Intelligence, The U.S. Market for Video Games and Interactive Electronic Entertainment, forecasts that the new generation of 128-bit video game systems will have combined U.S. sales of over 50 million by the year 2004. According to David Cole, president of DFC Intelligence, "the new 128-bit systems should have significantly stronger combined sales than the 32/64-bit systems." Overall, DFC forecasts that total U.S. revenue for interactive entertainment will exceed $11 billion by 2002.

The report contains a number of different scenarios for industry growth. "We believe that over the next few years consumers will be spending a great deal of money on video and computer games. However, there is still a great deal of uncertainty about exactly which game systems will do well," said Cole. The report claims that the competition between Sony (NYSE: SNE), Nintendo (OTC: NTDOY), Sega (OTC: SEGNY) and Microsoft (NASDAQ: MSFT) will be the most intense competition the industry has ever seen. The Sony PlayStation 2, scheduled for release this October, is forecasted to be the leading system, but it is expected to be a very close race. According to Cole, "The PlayStation 2 is not looking as strong as it was a year ago. It should do well, but Sony may be hard pressed to match the success of the original PlayStation."

DFC sees the Nintendo Dolphin and Microsoft X-Box as two very strong competitors, even though neither system is scheduled to come out until 2001. "The key battle for the 128-bit market will probably occur in 2002," said Cole. "With the Dolphin, Nintendo has a chance to once again be the market leader. Microsoft may have no record with video games, but so far with the X-Box they seem to be on the right track." As for the Sega Dreamcast, DFC does not predict the Dreamcast to be a market leader, but claims Sega has a chance to carve out a solid market share.

The U.S. Market for Video Games and Interactive Electronic Entertainment contains complete forecasts to the year 2004 for video game hardware and software, PC games, and portable game systems including the Nintendo Game Boy Advance. The report also provides a historical perspective, a discussion of industry business models, an overview of distribution and marketing and a look at consumer tastes and software genres.

KEYWORD: INTERACTIVE, MULTIMEDIA, INTERNET, CONSUMER ELECTRONICS, ELECTRONIC GAMES, ENTERTAINMENT