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MGI , Zoran in DVD pact
JUNE 28, 1999

Zoran And MGI Software Form Strategic Alliance To Deliver Comprehensive, State-Of-The-Art, DVD And Multimedia Solutions

SANTA CLARA, CALIFORNIA, and TORONTO, ONTARIO--Zoran Corporation (Nasdaq NM: ZRAN), a leading provider of integrated circuits (ICs) and embedded software for video and audio applications enabled by compression, and MGI Software (TSE: MGI), a leading digital media applications vendor, today announced a strategic partnership to address the burgeoning demand for DVD hardware and software, a market projected to be worth more than US $28 billion by 2001. As a first step, Zoran will transfer to MGI the intellectual property related to SoftDVD(TM), Zoran's leading DVD software decoder for PCs, along with some of its related software development and support resources in exchange for cash, MGI common stock, and future royalties. Net of transaction costs and restructuring charges, the transaction is not expected to have a material affect on Zoran's second quarter operating results. MGI will immediately establish Silicon Valley operations to support existing SoftDVD customers and to enhance and integrate the Zoran technology into existing and future MGI products. In addition, the two firms will collaborate on future DVD and imaging solutions including digital still cameras and other applications.

According to DVD Forum's value projection of the global DVD market, by 2001 sales will rise to $16 billion in DVD-ROM/RAM drives, $4 billion in DVD audio players, and $8 billion in DVD video players/recorders. By focusing on their respective strengths, Zoran and MGI have positioned themselves to drive the DVD revolution into new markets and applications by delivering a comprehensive set of leading DVD and multimedia solutions to consumer electronics and computer manufacturers. Zoran will continue to serve the consumer DVD player market with its IC and embedded software solutions while MGI will focus on the PC software DVD opportunity.

"The transition to DVD is well under way," said Kathleen Maher, a market research analyst with Jon Peddie & Associates (JPA) of Tiburon, California. "Zoran and MGI have complementary interests in the video market. The two companies have the resources to develop innovative solutions for the rapidly evolving consumer electronics and personal computers industries. They have the technology to capture a sizeable portion of the business represented by DVD ICs and software-only DVD solutions. By the year 2002, every device that touches the Internet will include MPEG-2 technology in the forms of ICs or software."

"We are refining our focus and resources on advancing Zoran's leadership in the rapidly growing consumer DVD market," said Dr. Levy Gerzberg, president and CEO of Zoran. "Focusing our strategic direction in this way will enable Zoran to continue to provide high-quality ICs and embedded software solutions to the leading DVD OEMs, while MGI will be able to leverage its PC software focus to lead the world in software DVD technology for PCs. In addition, we expect both companies to benefit from the strong complementary synergy which exists between Zoran's programmable compression IC technology and MGI's software capabilities."

"This deal immediately boosts MGI's position as a provider of software-only DVD solutions, while enhancing the research and development efforts we have undertaken with DVD MAX(TM) and PURE DIVA(TM), which are already reshaping the DVD marketplace," said Anthony DeCristofaro, president and CEO, MGI Software. "We are acquiring proven technology, resources, and a stellar customer base that we intend to support and cultivate. We also see tremendous opportunities with Zoran in the consumer digital photography and video editing markets."

Zoran is the leading supplier of system-on-chip decoders for the consumer DVD market, with a significant share of the world market. Its ICs are found in DVD players from leading manufacturers such as Sharp Electronics, Toshiba and others. In addition, leading PC and graphic card OEMs such as Compaq, CompUSA, Hewlett-Packard, Diamond Multimedia (S3), Matrox, Micron, and Packard Bell NEC currently use SoftDVD technology in their products.

MGI entered the DVD solutions market earlier this year with the introduction of DVD MAX and PURE DIVA, which have been recognized for innovation and quality. DVD MAX is the first product of its kind to be fully web-integrated, offering technology updating facilities and DVD-commerce opportunities, while PURE DIVA is the PC industry's first software-only digital entertainment suite, which features a digital VCR, Time-Shift TV, DVD movie theater, and CD music player.

About MGI Software

MGI Software is one of the world's leading digital media companies. The company's early focus on delivering digital media editing technology to the mass market has led to leadership in the PC photo and video editing market, with more than 19 million units of its PhotoSuite and VideoWave products shipped in retail and OEM channels spanning 25 countries. The company has recently expanded its technological leadership to encompass all digital entertainment media, including television, movies, and music, with its DVD MAX, and PURE DIVA products. Through its ever-growing network of Zoran & MGI Software Announce Partnership partnerships with major consumer electronics manufacturers, computer hardware and software vendors, photo retailers and the entertainment industry, MGI is uniquely positioned to take advantage of the revolution shaping our digital lifestyles. MGI Software is headquartered in Richmond Hill, Ontario and has sales offices in the US, UK, France, Germany, Netherlands, Australia, Taiwan and Tokyo. For more information visit http://www.mgisoft.com.

About Zoran Corporation

Zoran Corporation develops and markets integrated circuits (ICs), IC Intellectual Property (IP) cores, and embedded and PC software for digital audio and video applications enabled by compression. Zoran also provides complete reference designs based on Zoran's technology. Zoran's product lines and IP include JPEG codecs, MPEG and DVD decoders, digital still camera system on a chip and digital audio. All these standard-based products benefit from Zoran's "Standards Plus" technology. Zoran's ICs are used in numerous digital audio and video products. Leading applications incorporating Zoran's products and IP include professional and consumer video editing systems, filmless digital cameras, standalone consumer DVD players, SuperVCD players, digital speakers and audio systems.

Zoran is headquartered in Santa Clara, California with additional operations in Haifa, Israel, Toronto, Canada and offices in Tokyo, Japan and Shenzhen, China. For more information visit www.zoran.com.

(C)MGI Software Corp.,1999. MGI, MGI PhotoSuite, and MGI VideoWave, DVD MAX, PURE DIVA are trademarks or registered trademarks of MGI Software Corp.

(C)Zoran Corporation 1999. SoftDVD, StandardPlus are trademarks of Zoran Corporation. All other company and/or product names are trademarks and/or registered trademarks of their respective manufacturers.

FOR FURTHER INFORMATION PLEASE CONTACT:

MGI Software Corporation
Josef Zankowicz
905-707-3650
josefzmgisoft.com
or
Zoran Corporation
Karl Schneider
408-919-4247
irzoran.com
or
The Financial Relations Board
Catha Kawakami
Investors
415-986-1591
or
The Financial Relations Board
Hannah Bruce
General Information
415-986-1591
or
The Financial Relations Board
Lynne Farris
General Information
415-986-1591



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