SEGA Partners With Silicon Knights To Create Next Generation Content

SEGA | FOR IMMEDIATE RELEASE

SAN FRANCISCO & LONDON (March 23, 2005) - SEGA of America, Inc. and SEGA, Europe Ltd. today announced an agreement to acquire and publish next-generation game content from Silicon Knights, the Ontario, Canada-based development team responsible for such hits as Metal Gear Solid: The Twin Snakes, Blood Omen: Legacy of Kain, and Eternal Darkness. The partnership brings SEGA more Western-developed content in preparation for high-growth opportunities presented by next-generation hardware platforms.

Under the terms of the worldwide exclusive deal, SEGA and Silicon Knights will collaborate on creating a new franchise for next generation console systems. This agreement, along with recent partnerships with publisher, Warner Bros. Interactive Entertainment (project: The Matrix Online); developer, Monolith Productions (project: Condemned); and the acquisition of esteemed developer, The Creative Assembly (project: Spartan: Total Warrior) continues to highlight SEGA's emphasis on the Western market.

"We intend to establish SEGA as a leading publisher on the next generation of game hardware and only the highest possible quality of Western-developed content will get us there," said Simon Jeffery, President and COO, SEGA of America. "Silicon Knights has a rich history of developing great games that push hardware technology, so we expect this relationship will result in a powerful, new, and highly commercial franchise."

"Silicon Knights believes that the next generation systems will be the catalyst propelling video games as the dominant form of entertainment in this century," said Denis Dyack, President of Silicon Knights. "We are very excited to collaborate with SEGA on a next generation project because we share a vision - to take the medium of games to new heights and move people as never before."

SEGA will manage all marketing and distribution activities and work in hand with Silicon Knights to supervise ongoing game development. Both companies have decided not to release product, platform, or release details at this time.

About Silicon Knights:

Silicon Knights^® is a guild of talented individuals who are dedicated to creating state-of-the-art and superior original video games through strong educational backgrounds, professional artists, and unique game design. The company believes that its culture has only begun to explore the potential of computer games and that computer games will evolve into the dominant art form of the 21st century. Silicon Knights aims to completely engage and immerse the game player by combining the very best elements of technology, art, music, game play, and story line. Silicon Knights Inc, incorporated in July 1992, is located in St. Catharines, Ontario, Canada. For more information about Silicon Knights or any Silicon Knights product, please visit the company's web site at www.siliconknights.com.

About SEGA^® Europe:

SEGA Europe Ltd. is the European Publishing arm of Tokyo, Japan-based SEGA Corporation, and a worldwide leader in interactive entertainment both inside and outside the home. The company develops, publishes and distributes interactive entertainment software products for a variety of hardware platforms including PC, wireless devices, and those manufactured by Nintendo, Microsoft and Sony Computer Entertainment Europe. SEGA Europe's web site is located at www.sega-europe.com.

About SEGA^® of America:

SEGA of America. is the American Publishing arm of Tokyo, Japan-based SEGA Corporation, a worldwide leader in interactive entertainment both inside and outside the home. The company develops, publishes and distributes interactive entertainment software products for a variety of hardware platforms including PC, wireless devices, and those manufactured by Nintendo, Microsoft and Sony Computer Entertainment. SEGA of America's web site is located at www.sega.com/usa .