Microsoft to Unveil Microsoft TV Foundation Edition Version 1.5 To Meet Growing Demand for Better Consumer Digital Cable Experience

REDMOND, Wash., Jan. 6, 2004 — Microsoft Corp. today announced it will unveil the latest version of its digital cable software platform, Microsoft®
TV Foundation Edition, at the 2004 International Consumer Electronics Show (CES) this week in Las Vegas (Booth No. 8323 in the Central Hall). Microsoft TV Foundation Edition version 1.5 enhances the consumer viewing experience by providing fully integrated support for high-definition television (HDTV) and digital video recording (DVR), while enabling network operators to better market and merchandize new and existing digital cable services including video on demand (VOD).

Microsoft also will unveil Microsoft TV Best Bets, a new digital TV application for Foundation 1.5 that helps consumers more easily find VOD movies of interest by recommending titles based on viewing history, providing critics’ choices, and highlighting popular titles that are soon to be removed from the service.

These latest enhancements to the digital cable software family demonstrate Microsoft TV’s commitment to helping cable operators get more value from their digital video investments using today’s hardware and network infrastructure.

Microsoft TV Foundation is a powerful but flexible digital cable software platform that promotes increased consumer satisfaction, loyalty and purchasing. Foundation 1.5 builds on version 1.0 and enables network operators to offer a better consumer experience that includes helping viewers more easily find and use services with an innovative interactive program guide (IPG), and to better package and promote premium services such as VOD, HDTV and DVR with features such as on-demand storefronts and Best Bets.

Foundation 1.5 provides a fluid, integrated experience across broadcast, on- demand, HD and digital video recorded content. It is easy for consumers to find HD programming through the search, menu and guide features, and the smart series DVR feature automatically adjusts to accommodate changes in series broadcast start and finish times. With Foundation, multiple service operators (MSOs) also can offer games and information services including local news, weather and sports content, bringing new benefits to consumers. The Foundation platform is customizable by the MSO and scales from today’s thin-client set-top boxes to future-generation devices, providing a consistent consumer experience in which cable operators can promote services as their digital video offering evolves.

Microsoft TV Foundation Edition version 1.5 is designed to meet the rapidly growing consumer demand for DVR and HDTV. The Yankee Group estimates that by 2007 the number of in-home DVRs will jump to nearly 25 million from about 3 million this year,* and that the number of households viewing HDTV programming will reach 41.6 million, compared with around 0.7 million in 2003.**

“High-definition television and digital video recording will be critical business drivers for cable operators in the next half-decade,” said Adi Kishore, analyst for the Media and Entertainment Strategies Group at the Yankee Group. “MSOs that invest in effectively supporting, managing and merchandizing these two services stand to reap substantial return on investment through increased revenue opportunities and decreased churn.”

“With Microsoft TV Foundation Edition 1.5 and Microsoft TV Best Bets we continue to innovate in the areas that matter most to our MSO customers,” said Moshe Lichtman, corporate vice president of the Microsoft TV Division at Microsoft. “With Microsoft TV, network operators now have more opportunities than ever to merchandize the premium services that differentiate their offerings from competitive satellite services, while consumers get a seamless digital cable experience that spans a full range of features including high-definition TV, video on demand and digital video recording.”

About the Microsoft TV Platform

Microsoft TV provides software solutions that help pay TV operators create new services that delight consumers and derive more value from digital video investments. The Microsoft TV product family supports a range of digital video services including interactive program guides, digital video recording, high-definition TV and on-demand programming. The Microsoft TV platform works across a full range of set-top boxes and TV devices. More information about Microsoft TV can be found at .

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software — any time, any place and on any device.

* “Digital Video Recorders Will Reach 24.7 Million Homes by Year-End 2007,” The Yankee Group, October 2003

** “HDTV Finally Overcomes Industry Inertia, Set For Rapid Growth,” The Yankee Group, April 2003

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