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3DO Inks $100 Million Pact with Matsushita for 64-Bit M2 Technology

REDWOOD CITY, Calif., Oct. 25, 1995 -- The 3DO Company and Matsushita Electrical Industrial Co., Ltd. today announced that they have signed a Memorandum of Understanding to be followed by a definitive agreement to become partners in the development and exploitation of 3DO's 64-bit M2 graphics technology. Under the agreement, Matsushita will pay 3DO a $100 million license fee plus additional royalties. Matsushita in turn will have the exclusive rights to use the M2 technology to power next-generation consumer and commercial products including 64-bit video games, Digital Video Disc (DVD) players, and interactive television set-top boxes.

Matsushita will also receive the sublicense rights from 3DO that will allow Matsushita to sublicense the M2 technology to hardware companies and software developers. Matsushita is currently in discussions with several potential partner companies and is likely to expand the M2 alliance over the course of the next two years.

"Today's announcement combines the vast resources of a consumer electronics leader with the industry's most powerful 64-bit technology," said Trip Hawkins, Chairman and Chief Executive Officer of The 3DO Company. "Matsushita has been a world leader in audio and video and is again poised for success with their central role in the emerging DVD standard. By combining these capabilities with 3DO's interactive graphics and computing technology, Matsushita is well positioned for success in many new digital businesses."

"In order to succeed in this business, we need to acquire the rights and become the licenser of interactive, high-speed, high-performance graphics processing and operating system technology offered by the M2 architecture," said Mikio Higashi, Managing Director and Member of the Board of Matsushita Electric Industrial Co., Ltd. "We will implement this technology in a wide variety of applications in both the consumer and commercial AVC (Audio, Video & Computer) businesses."

Matsushita's exclusive licensed rights under the agreement will include consumer CD, DVD, interactive TV set-top box, portable, car navigation, and kiosk hardware products. Matsushita will grant 3DO a non-exclusive license for coin-operated arcade game, personal computer applications, general computing, and software development tools. With 3DO's help, Matsushita will manage a licensing program for third-party software products and 3DO will receive a part of royalties on such products.

As part of the agreement, 3DO has committed to delivering all M2 custom ASIC semiconductors, reference designs for M2 CD and M2 DVD systems, MPEG-1 and MPEG-2 decoders, hardware development systems, operating system software and software development tools. 3DO is making good progress on completing its M2 technology. 3DO has been supplying development systems to third-party software developers since July, and Studio 3DO has several M2 software titles already underway.

Matsushita expects that the first M2 consumer product, a CD-ROM system, will be available in the second half of 1996. A system based on Matsushita's Super Density (SD) DVD system is expected at a later date. The companies believe that M2 will be the first real 64-bit CD-ROM system to reach the consumer market.

The transaction has been approved by both companies but is subject to normal conditions of closing including required regulatory approvals.

Matsushita Electric Industrial Co., Ltd. (MEI), established in Osaka, Japan in 1918, is one of the world's leading producers of electronic and electric products for consumer, business and industrial use. Annual sales for the fiscal year ended March 31, 1995 reached $78.07 billion. Matsushita has more than 260,000 employees worldwide. Overseas operations include 161 companies in 39 countries. Matsushita's products are marketed under the Panasonic, Technics, Quasar and National brand names in 160 countries.

The 3DO Company (NASDAQ: THDO), headquartered in Redwood City, Calif., invents and designs cutting-edge graphics technologies and develops and publishes interactive entertainment software, under the Studio 3DO label, for the mass market. With offices in North America, Europe and Asia, the company is a leader in the 32-bit interactive entertainment industry and is well positioned for the upcoming 64-bit market with its M2 technology. 3DO also plans to develop products for the personal computer market and the Internet. Additional company information is available on the World Wide Web (http://www.3do.com) and on America Online (keyword: 3DO).

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