Explosive Growth in 1998 Will Propel HEAT.NET toOnline Gaming Leadership in 1999 and Beyond.

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 23, 1999--

HEAT.NET roars into 1999 with key partnerships,

exclusive games, player incentives

Who says online gaming hasn't taken off? With a near quintupling of its membership, a tripling of its selection of multiplayer games, a

meteoric increase in advertising impressions, a new network deal and two major strategic agreements to secure national broadband distribution, SegaSoft's HEAT.NET experienced explosive growth in 1998 and is well-positioned to lead the online gaming market into the new millennium.

HEAT.NET, the fast, free online gaming service with the largest selection of games, will continue to lead Internet gaming - a category that industry analysts estimate will be worth $1.6 billion in 2001, a better than tenfold increase over 1998 revenues(1) - by putting together winning combinations of games, strategic partnerships, and player incentives.

"At HEAT.NET our focus is on providing our core gamers with the very best online community. Offering broader content might give us a numbers boost, but our long-term objective is to build the Web's best gaming community," said Sarah Anderson, SegaSoft vice president and general manager of HEAT.NET. "Through the right mix of technology, partnerships, incentives and, above all, games, we have achieved everything we set out to do in 1998, and are well on our way to building that community. Our formula works, our numbers prove it, and we're ready to keep on rocking into 1999 and beyond."

HEAT.NET 1998 Milestones

Membership in HEAT.NET has quintupled to nearly one million users, fueled by excellent word-of-mouth in the gaming community about its technology, services and topnotch multiplayer titles. Already in 1999, HEAT.NET membership grew by an additional 20 percent in January alone.

The roster of games available at HEAT.NET more than tripled in 1998. More than 100 titles are available for play, compared with 26 titles one year earlier. HEAT.NET worked in partnership with some of the industry's top developers and publishers, such as id Software, GT Interactive, 3DO, Interplay and Activision, among others, with exclusive agreements and special promotions for titles and launch activities throughout 1998.

HEAT.NET's growth was also spurred by such incentives as Degrees, frequent player points redeemable for goods and services throughout the entire site. HEAT.NET players earned Degrees, cash and other prizes worth more than $500,000 in 1998. Tournaments and other special events drew many additional new members to the network.

Broadband Leadership - The Need for Speed

Core gamers want speed, and HEAT.NET streaked into the online gaming fast lane by signing two exclusive partnerships in the emerging broadband category in 1998. HEAT.NET is now the exclusive provider of gaming content to the @Home Network, the nation's leader in high-speed Internet services via the cable infrastructure, and Road Runner, a joint venture between Time Warner, MediaOne, Microsoft, Compaq and Advance Newhouse.

These two agreements afford HEAT.NET an early and significant lead in the broadband category, making the online gaming service available to 80 percent of cable modem users in the US. (Industry analysts predict 15 million users, or 30 percent of the online population, will access the Internet via broadband connection in 2002.(2))

Broadband connections, which deliver gaming services at speeds up to 100 times faster than conventional Internet connections, enhance online play by reducing latency, the delay between a player's physical action and the corresponding on-screen action.

HEAT.NET Goes to College - "Big Network on Campus"

To further cement its relationship with its core college demographic of 18- to 24-year-old males, HEAT.NET followed them to school in 1998. Unveiled in October, the HEAT Collegiate Internet Gaming League (HEATCIGL) is the largest, free online multiplayer gaming league designed specifically for college and university students in the United States and Canada. Supported by television advertising and an innovative on-campus leadership program, HEATCIGL will expand into thousands of college campuses with tournaments, parties and other events throughout 1999.

HEAT.NET Business Model

The HEAT.NET business model is built for flexibility and growth, with multiple revenue streams from advertising, premium memberships, e-commerce and future network development.

HEAT.NET is proving itself capable of consistently delivering to advertisers an audience of core gamers - a demographic 'sweet spot' of 15-to-34-year-old males. Ad impressions in 1998 rose in step with memberships, increasing from 27 million in 3Q98 to 45 million in 4Q98 (and projecting to 90 million for 1Q99).

Premium players and advertisers will also be drawn by HEAT.NET's exclusive Degrees program. With Degrees burning holes in their virtual pockets, HEAT.NET players will look to buy an array of goods and services from advertisers eager to tap into a captive online economy.

SegaSoft Networks plans to leverage HEAT.NET's success and infrastructure by building game networks for others. The company has signed a working partnership agreement with Sega to build Sega's network arm for the new Dreamcast console, the "Ultimate Gaming Machine." The first Internet-ready video game console, Dreamcast is scheduled to arrive in North America later in 1999. SegaSoft will be ready to welcome North American Dreamcast players and their new gaming machines.

"It has been an incredible year for HEAT.NET," said Anderson. "We believe we are setting the standard for a successful network. Through great games, player incentives, technology and partnerships, HEAT.NET is the online gaming network to beat in 1999."

ABOUT HEAT.NET

HEAT.NET (www.heat.net) is the free online multi-player gaming service with the largest selection of games. HEAT.NET combines the best selection of multi-player PC games (over 100 are featured) with a thriving community of online gamers (nearly one million) and offers hundreds of competitive online gaming events and unique competitive features including the only rewards system for online gamers (frequent player points known as Degrees). While gameplay is free for all members, Premium membership allows players to redeem their frequent player points for prizes and make purchases in the HEAT.NET store. Premium members can also wager their points against one another in games of skill. HEAT.NET is the exclusive games provider for the @Home Network, Road Runner and MediaOne. HEAT.NET also operates the HEAT Collegiate Internet Gaming League (www.heatcigl.net).

ABOUT SEGASOFT NETWORKS INC.

SegaSoft Networks, Inc. (SNI) develops and operates online gaming technology and services, including its flagship network HEAT.NET. Located in San Francisco, SNI is a privately held company whose shareholders include CSK and Sega Enterprises. For more information about SNI please visit www.segasoft.com.

(1) Forrester Research, as reported in The New York Times Oct. 29, 1998.

(2) Forrester Research: Consumers Are Ready for Broadband Technologies (www.forrester.com/marketing/tvresearch.htm)