Patent Boosts WorldGate As WebTV Chief Departs

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Orlando, Fla. -- While WorldGate Communications Inc. was
getting a boost last week, rival Internet-television platform WebTV Networks prepared for
a new retail deployment under a new president.

WorldGate's shares jumped 18.6 percent in a single
session on the news that the company had been awarded a U.S. patent covering 62 claims
specific to its "Channel Hyperlinking" function -- a core of the company's
service offering.

The technology enables cable-television viewers with
advanced-analog or digital set-top converters to click a single remote-control button and
connect directly with interactive Web sites related to the specific program or
advertisement they are watching.

WorldGate said that besides broadly relating to its method
for getting interactive access over a network to an information source such as the
Internet, the patent also describes concepts that are fundamental to WorldGate, such as
the single-button link from TV programs to Web sites and the Channel Hyperlinking name.

WorldGate president Hal Krisbergh said the patent created
potential new revenue streams from licensing Channel Hyperlinking technology, in addition
to reassuring an investment community that had been told since before WorldGate's
initial public offering in April that the company would win patent protection for its
intellectual property.

"It's not our intention to lock up the industry
with this patent," Krisbergh said. "It's very important for us to have this
technology get out widely."

WorldGate also announced plans for its first international
deployments with 19 cable operators that signed agreements to trial or deploy the service.

Those operators are: Mexico's Cablevision S.A. de C.V.
; Cable Bahamas; Poland's Toya; Spain's Retecal and TeleCable; SuperCable in
Venezuela; Telefónica Multimedia in Peru; TVCable Ecuador; Cablevisión/TCI2
in Argentina; Image TV in Brazil; SkyCable in the Philippines; Korea's INC, DCS, NIC,
YSC, BCN and DNC TV; Singapore Cablevision; and New Zealand's Saturn Cable.

Krisbergh said 30 more U.S. sites could possibly launch by
year's end, joining the nine mostly analog systems that are already up and running.

A possible boost for further deployment came from
Scientific-Atlanta Inc., which announced a downloadable software upgrade to support
WorldGate service on 5 million deployed "8600x" advanced-analog set-tops. The
software is scheduled for release this summer.

WorldGate provides its Internet-access and Channel
Hyperlinking services via software on already deployed advanced-analog and digital set-top
boxes, with the enabling hardware installed at the headend.

At WebTV, president and cofounder Steve Perlman announced
that he was resigning at month's end to take time off and then pursue other solo
entrepreneurial endeavors, partly from a multimedia laboratory he set up in San Francisco.

WebTV, which Microsoft Corp. bought in 1997 for $425
million, has signed up more than 800,000 subscribers -- a figure some analysts have called
disappointing, but one Perlman found encouraging.

"This seemed like a pretty good time to go," said
Perlman, who remains on WebTV's advisory board. "The company's in pretty
good shape. We're approaching 1 million subscribers in the main business, and
we're the No. 2 online service in terms of usage."

Perlman, who will be replaced by cofounder Bruce Leak,
leaves as EchoStar Communications Corp. begins selling its new "DISHPlayer"
direct-broadcast satellite receiver, featuring WebTV Internet browsing and e-mail
functionality, at an aggressive $199 promotional price.

EchoStar indicated in April that the DISHPlayer -- with an
integrated hard drive for digital recording and VCR-like capabilities -- would carry a
$499 suggested retail price including a remote control and wireless keyboard.

Since EchoStar and WebTV unveiled the device last month,
rival DirecTV Inc. announced plans with its vendors for a similar receiver incorporating
America Online Inc.'s Internet-access platform, for a service to be called "AOL

Perlman characterized DISHPlayer's reduced pricing as
promotional, rather than as necessarily a permanent price point.

Leak and Perlman also said WebTV was focused on adding
digital-subscriber-line access capability -- which DirecTV plans to incorporate into the
AOL TV box -- to automatically determine whether a phone line is DSL or analog.

WebTV is doing DSL-development work with the regional Bell
operating companies, but it has not selected vendors to supply DSL capabilities. Perlman
said there was no rush because DSL availability remained limited.

"We're selling a mass-market product that's
got to be sold at any consumer-electronics store around the country," he said.
"Until there's mass availability, it's just going to frustrate customers if
we sell it to them."