Outlook 2000 For Acclaim

Acclaim Entertainment Inc., a leading worldwide developer, publisher and

mass marketer of software for use with interactive entertainment, reported

its results for the first quarter of fiscal 2000 ended November 30, 1999.

Net revenues for the quarter were $101.2 million, compared with $104.8

million in the first quarter of the prior year. Net earnings for the

quarter were $0.4 million, or $0.01 per diluted share, compared with net

earnings of $10.3 million or $0.16 per diluted share for the same period in

the prior year. The quarter results were effected by the shifting of

certain product launches to the second quarter, US$6 million in royalty

expenses to extend the WWF license through November 2000 and slower than

expected sales of certain products. During the quarter, Acclaim introduced

multiple titles for the Sega Dreamcast, and introduce its first two titles

under its new brand, Club Acclaim, which targets a younger audience and

included Acclaim's Mary-Kate & Ashley titles for both Color Game Boy and

PC. Hoping to boost sales in the second quarter, Acclaim will release 13

new titles, led by the launch of ECW HARDCORE REVOLUTION, which capitalizes

on Acclaim's proven expertise in wrestling games, and SOUTH PARK RALLY,

which translates the humor of SOUTH PARK into a kart-style racing game.

Other key releases for the second fiscal quarter include SHADOW MAN and

RE-VOLT for Sega Dreamcast, ARMORINES for Nintendo 64, and two more

Mary-Kate & Ashley titles. Looking to the future, Acclaim is developing a

broad range of new titles for new and existing platforms. Key products in

development include: FURFIGHTERS for Sega Dreamcast; VANISHING POINT, a

road-rally game featuring more than two dozen licensed road cars for

PlayStation; DAVE MIRRA FREESTYLE BMX, an extreme sports title co-developed

by and featuring X-Games stars Dave Mirra and Ryan Nyquist; a sequel to

Acclaim's multi-million selling TUROK franchise; new additions to Acclaim

Sports' popular JEREMY MCGRATH SUPERCROSS, ALL-STAR BASEBALL, NBA JAM and

NFL QUARTERBACK CLUB brands; and new racing games based on both the Ferrari

and Ducati licenses. For the upcoming PlayStation 2, the company plans to

have a minimum of three titles available during the initial launch. Acclaim

also anticipates growth in its increasing investment in the Internet. A key

element of Acclaim's Internet development capability is its proprietary

NetSpine technology, which will allow the company to build games faster,

more cost-effectively and with superior functionality across multiple

platforms. Using NetSpine, Acclaim intends to make one of its core brands

the first truly Internet-playable product. Acclaim is also looking at

potential acquisitions of on-line development studios, and has initiated

discussions regarding partnership opportunities with major Internet

players. Acclaim On-line already boasts a consumer base of approximately

500,000, with traffic increasing 25% in December alone. "As the interactive

marketplace evolves, we are focused on strategic initiatives designed to

build our business for the future," said Gregory Fischbach, Co-Chairman and

CEO of Acclaim. "We have enhanced our in-house development capability to

take advantage of the growth in the industry as a result of the launch of

the next generation console systems. In addition, we are putting in place a

brand development structure that increases our responsiveness to consumers

and are expanding our on-line initiatives to take advantage of our

proprietary NetSpine Internet technology."

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Rick DeMott
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