LOS ANGELES — May 20, 2002 — Today at the Electronic Entertainment Expo (E3), Microsoft Corp. became the first video game company ever to announce a comprehensive online game service fully dedicated to fast-action, always-connected broadband gaming experiences. The online console gaming service, named Xbox™ Live, launches in North America, Japan and Europe this fall for the Xbox video game system and ramps up with consumer beta programs starting this summer.

Xbox Live will enable all gamers to find their friends easily; talk to other players during game play through the Xbox Communicator headset; download current statistics, new levels and characters to their Xbox hard drive; and play online.

“Online technology is the next revolution in video games, and it will fundamentally transform gaming into a new form of social entertainment,” said J Allard, general manager of Xbox at Microsoft. “Together with our partners we will combine exceptional gaming experiences, a world-class service and a viable business model so all parts of the online ecosystem thrive.”

Jump-starting the online title announcements, Allard said Xbox Live will support five Xbox Live-exclusive games this year: “Unreal Championship” (Infogrames); and “MechAssault™,” “Whacked!™,” “NFL Fever 2003” and “Midtown Madness® 3” (Microsoft Game Studios).

To date, 60 game companies have committed to create games for Xbox Live, and at least 50 Xbox Live-enabled games are planned to release by the end of next year. Some upcoming Xbox Live titles include “Shaun Palmer’s Pro Snowboarder™ 2” from Activision, Inc.; “Tom Clancy’s Ghost Recon™,” “Tom Clancy’s Rainbow Six™ RavenShield™” and “XIII” from Ubi Soft; and “SEGA Sports™ NFL 2K3,” “SEGA Sports™ NBA 2K3” and “Phantasy Star™ Online” from SEGA® of America, Inc.

As the grand finale to the Xbox Live unveiling, Allard announced a lineup of games in the works for the future of the service, including “Star Wars® Galaxies™” (LucasArts Entertainment Company), “Counterstrike” (Valve Software for Microsoft Game Studios), and future versions of Xbox original blockbusters like “Halo™,” “RalliSport Challenge,” “Amped™” and “Project Gotham Racing™.”

With the service approach, Xbox Live is poised to deliver the most seamless, easy-to-use and consistent online gaming environment for gamers, developers and publishers alike. It was designed by gamers for gamers and includes features such as delivery of real-time scores and statistics so gamers can compare themselves to the best players in the world; quick and easy game launches; fast downloads; the ability to find friends online across games with only one click; and the ability to maintain a single identity across all games with a single password.

Microsoft is building four datacenters — in Seattle and Tukwila, Wash., Tokyo and London — in order to run a scalable, secure and gamer-friendly service. Xbox will assist publishers by managing the hosting, networking, security and billing so that game creators can focus on creating awesome game content.

Key, consistent features of the Xbox Live service across games include the following:

• Gamertag. Gamertag is a gamer’s unique online ID for all games across the global gaming service.

• Friends list. This feature allows gamers to find friends online and invite them to a game — no matter which Xbox Live game they’re playing.

• Xbox Communicator. Voice communication is integrated with all Xbox Live multiplayer games and enables voice interaction with teammates and opponents. Key elements of this feature exclusive to Xbox include voice masking, global muting and parental control.

• Matchmaking. QuickMatch enables players to enter a multiplay experience with a single button-click, and OptiMatch, an Xbox Live exclusive, helps them select games and opponents based on similar skill levels.

• High-speed content downloads to the Xbox hard disk. Only Xbox offers console gamers the ability to download and permanently store both free and for-a-fee content that can include new levels, characters, missions and statistics.

Allard painted a bullish picture for the future of online console gaming and the promise of Xbox to lead the category. “Within five years every important game will be online,” he said. “There will be new categories of collaborative and competitive console games that are possible only online. The ability to download new worlds, levels, characters, weapons, vehicles, teams, statistics and missions will change the way developers think about creating games, and will change the way gamers play them.”

At launch, U.S. consumers can purchase a starter kit for $49.95.* For the estimated retail price of a single game, the consumer receives a year’s subscription to Xbox Live, an Xbox Communicator that plugs into the Xbox controller and facilitates all voice communication with other players, and “ReVolt,” a fun online racing game from Acclaim Entertainment Inc. Pricing and specific offers in regions outside the United States will be announced locally at a later date.

With a hard drive, Ethernet port and slots for the Xbox Communicator built in to all controllers, Xbox was designed by Microsoft to facilitate online play right out of the box. Moreover, with more than 20 online service sites and 270 million unique monthly users worldwide on the MSN® network of Internet services, and the No. 1 online PC gaming site with Zone.com, Microsoft is uniquely qualified by its resources and experience to lead the way in online console gaming.

Microsoft will be exhibiting new games and the Xbox Live online console gaming service at E3, which begins Wednesday, May 22, and runs through Friday, May 24, at the Los Angeles Convention Center. E3 is a trade show open only to professionals in the interactive entertainment industry.

About Xbox

Xbox (http://www.xbox.com/) is Microsoft’s future-generation video game system that delivers the most powerful games experiences ever. Xbox empowers game artists by giving them the technology to fulfill their creative visions as never before, creating games that blur the lines between fantasy and reality. Xbox is now available in North America, Japan, Europe and Australia.

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.

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