##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K





|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|  
|   |  | For the fiscal year ended December 31, 2004                                                 
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                             

Commission File Number 001-15473





OpenTV Corp.


(Exact name of Registrant as specified in its charter)


|                                                                    |  |                                         
|------------------------------------------------------------------- |  | ----------------------------------------
|British Virgin Islands                                              |  | 98-0212376                              
|(State or other jurisdiction of
     incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                   
|275 Sacramento Street
    San Francisco, California                 |  | 94111                                   
|(Address of principal executive offices)                            |  | (Zip Code)                              

Registrants telephone number, including area code:


(415) 962-5000





Securities registered pursuant to Section 12(b) of the
Act: None


Securities registered pursuant to Section 12(g) of the
Act:


Class A ordinary shares, no par value


Indicate by check mark whether the Registrant: þ o


o


þ o


















---










OPENTV CORP.


2004 ANNUAL REPORT ON FORM 10-K


TABLE OF CONTENTS


|                                                   |  |                                                                                                                      |  |      |        |  |  | 
|-------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ |  |  | 
|                                                   |  |                                                                                                                      |  | Page |       
|                                                   |  |                                                                                                                      |  |      |       
|Part I                                            
|Item 1.                                            |  | Business                                                                                                             |  |      | I-1    | 
|Item 2.                                            |  | Properties                                                                                                           |  |      | I-11   | 
|Item 3.                                            |  | Legal Proceedings                                                                                                    |  |      | I-11   | 
|Item 4.                                            |  | Submission of Matters to a Vote of Security
    Holders                                                              |  |      | I-14   | 
|                                                  
|Part II                                           
|Item 5.                                            |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |  |      | II-1   | 
|Item 6.                                            |  | Selected Financial Data                                                                                              |  |      | II-4   | 
|Item 7.                                            |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |  |      | II-6   | 
|Item 7A.                                           |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |  |      | II-30  | 
|Item 8.                                            |  | Financial Statements and Supplementary
    Data                                                                      |  |      | II-31  | 
|Item 9.                                            |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |  |      | II-31  | 
|Item 9A.                                           |  | Controls and Procedures                                                                                              |  |      | II-31  | 
|Item 9B.                                           |  | Other Information                                                                                                    |  |      | II-35  | 
|                                                  
|Part III                                          
|Item 10.                                           |  | Directors and Executive Officers of
    OpenTV                                                                       |  |      | III-1  | 
|Item 11.                                           |  | Executive Compensation                                                                                               |  |      | III-4  | 
|Item 12.                                           |  | Security Ownership of Certain Beneficial
    Owners and Management                                                   |  |      | III-12 | 
|Item 13.                                           |  | Certain Relationships and Related
    Transactions                                                                   |  |      | III-15 | 
|Item 14.                                           |  | Principal Accounting Fees and Services                                                                               |  |      | III-19 | 
|                                                  
|Part IV                                           
|Item 15.                                           |  | Exhibits and Financial Statement
    Schedules                                                                       |  |      | IV-1   | 
|EX-10.1: FORM OF INDEMNIFICATION AGREEMENT        
|EX-10.23: LETTER AGREEMENT                        
|EX-10.24: LETTER AGREEMENT                        
|EX-10.25: FORM OF INCENTIVE STOCK OPTION AGREEMENT
|EX-10.26: FORM OF INCENTIVE STOCK OPTION AGREEMENT
|EX-10.27: FORM OF INCENTIVE STOCK OPTION AGREEMENT
|EX-21.1: LIST OF SUBSIDIARIES                     
|EX-23.1: CONSENT OF KPMG LLP                      
|EX-31.1: CERTIFICATION                            
|EX-31.2: CERTIFICATION                            
|EX-32.1: CERTIFICATION                            



OpenTV, the OpenTV logo and our product names are trademarks
or registered trademarks of OpenTV Corp. or its subsidiaries in
the United States and other countries. Other product names
mentioned herein may be trademarks or registered trademarks of
their respective owners.




---



##### Table of Contents



This Annual Report on Form 10-K, including
Managements Discussion and Analysis of Financial
Condition and Results of Operations in Item 7,
contains forward-looking statements that involve risks and
uncertainties, as well as assumptions that, if they never
materialize or prove incorrect, could cause the results of
OpenTV Corp. and its consolidated subsidiaries to differ
materially from those expressed or implied by such
forward-looking statements. All statements other than statements
of historical fact are statements that could be deemed
forward-looking statements, including any projections of
revenue, gross margin, expenses, earnings or losses from
operations; any statements of the plans, strategies and
objectives of management for future operations; any statements
concerning developments, performance or market conditions
relating to products or services; any statements regarding
future economic conditions or performance; any statements of
expectation or belief; and any statements of assumptions
underlying any of the foregoing. You should not place undue
reliance on these forward-looking statements, which speak only
as of the date of this Annual Report on Form 10-K. All
these forward-looking statements are based on information
available to us at this time, and we assume no obligation to
update any of these statements. Actual results could differ
materially from those projected in these forward-looking
statements as a result of many factors, including those
identified in the section titled Factors That May Affect
Future Results under Item 7, Managements
Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere. We urge you to review and consider the
various disclosures made by us in this report, and those
detailed from time to time in our filings with the Securities
and Exchange Commission, that attempt to advise you of the risks
and factors that may affect our future results.





PART I







|        |         
|------- | --------
|Item 1. | Business

Overview








I-1



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##### Table of Contents















I-2



---



##### Table of Contents



Our Operating Businesses






| |                                       
| | --------------------------------------
| | Middleware and Integrated Technologies











OpenTV Embedded Set-top Box Solutions.




OpenTV Core.


I-3



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##### Table of Contents









| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Basic and Advanced Set-top Boxes. OpenTV Core can operate
    with the relatively limited processing power and memory found in
    most mass-market digital set-top boxes currently deployed by
    network operators. OpenTV Core is also suitable for more
    advanced digital set-top boxes expected to be deployed in the
    future, which contain increased processing power and memory.
    This capability permits us to offer technical solutions that
    address the limited capabilities of many set-top boxes that are
    currently deployed by various network operators, while
    simultaneously offering a solution that will position network
    operators to take advantage of more powerful set-top boxes in
    the future.                                                                                                                                                                                                                                   
|
| |  | Personal Video Recording. Our OpenTV PVR Package is an
    extension to OpenTV Core that allows network operators to
    deliver advanced personal video recording services to their
    subscribers, including the ability to record multiple broadcast
    or on-demand programs simultaneously and play back those
    programs using VCR-style controls such as pause, fast forward
    and rewind, on set-top boxes that contain internal hard drives.
    We are developing PVR technology to enable both series recording
    and the recording of an interactive TV broadcast that retains
    interactive content for future playback simultaneously with the
    recorded broadcast. We are also developing applications for a
    PVR environment that operate with interactive content. We
    recently launched our PVR 1.0 solution for FOXTEL, the largest
    pay-TV provider in Australia.                                                                           
|
| |  | HTML Applications. Our OpenTV HTML Package is an
    extension to OpenTV Core, which allows network operators to
    deliver existing Web-based HTML and JavaScript content to their
    subscribers through a digital set-top box.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Connectivity. OpenTV Core provides solutions for
    broadcast or point-to-multipoint networks as well as high
    bandwidth, bi-directional, point-to-point networks. OpenTV Core
    includes modules that support common interactive
    television-related communication protocols, including the DOCSIS
    communications protocol, which provides a data return channel
    for cable modem set-top boxes that enables viewers to retrieve
    information from the Internet at broadband speed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Localization. OpenTV Core supports text input and
    presentation of substantially all languages in common use,
    including double byte Asian languages, and allows for
    localization of interactive television services for different
    countries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | OpenTV Measure. OpenTV Core is being extended to enable
    network operators, programmers and advertisers to collect
    information and data regarding viewer preferences, viewing
    habits and other analytical information that helps to assess the
    efficacy of programming and advertising.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | OpenTV IPTV Solution. OpenTV is developing an IPTV
    solution based on the OpenTV Core 2.0 and PVR 2.0 platforms for
    cable, satellite and telecommunications operators. OpenTV Core
    IPTV Edition will be an extension to OpenTV Core which allows
    cable, satellite and telecommunications operators to deliver
    existing digital television services via two-way broadband IP
    networks, including broadcast TV programming, on-demand
    programming, PVR services, interactive TV services and
    downloadable applications. OpenTV Core with IPTV extensions will
    provide cable television operators the ability to seamlessly
    extend their existing digital TV services to new broadband IP
    customers using the same broadcast, Video-on-Demand, billing and
    conditional access systems already in place, and will provide
    telecommunications operators the ability to enter the digital TV
    market with a stand-alone IPTV solution.

OpenTV Device Mosaic.


I-4



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##### Table of Contents





OpenTV Enterprise Solutions.


OpenTV Account.


OpenTV Advertise.


OpenTV Automate.


OpenTV Gateway.


OpenTV H2O.


OpenTV Notify.


OpenTV Publisher.


OpenTV Streamer.


OpenTV Development Tools and Support for Third Party
Application Developers.


Applications Business




I-5



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##### Table of Contents









OpenTV Enhanced Content.


OpenTV Advertising Solutions.








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | OpenTV AdVision. OpenTV AdVision is an advertising
    traffic and billing system that manages various media platforms
    and outlets, simultaneously providing network operators the
    tools to manage local cable television, cable networks, and
    proprietary broadband networks by scheduling the display of
    advertising, monitoring the display of advertising, and billing
    the advertisers based upon such monitoring.
|
| |  | OpenTV SpotOn. OpenTV SpotOn enables network operators to
    offer addressable advertising that can be delivered to
    particular households based on individual profiles. OpenTV
    SpotOn is not dependent on a network operator deploying
    OpenTVs middleware solutions. Advertisers have the                                                                                                                                   

I-6



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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ability to develop different ads for the same product or service
    that are designed for specific audiences, ensuring that the
    message appeals to all of the audience for the commercial.
    Different advertising messages are then simultaneously targeted
    to households through the use of technology that permits set-top
    boxes to seamlessly jump between video signals, thereby
    invisibly tailoring the video experience to the profile of the
    viewing household. With this technology, a network operator can,
    for example, deliver an advertisement for a pick-up truck to one
    household while simultaneously delivering an advertisement, in
    the same interval, for a sedan or sports coupe to a different
    household based on demographic profiles, and can measure and
    track each addressable spot and receive valuable aggregate
    viewer data, enabling advertisers to build profiles, and help
    drive improved analysis and research for future marketing and
    planning. We carefully review and assess, with our customers,
    the privacy issues associated with this type of product, and
    expect to deploy this product in a manner that addresses the
    various privacy laws, regulations and practices that are
    evolving in the sector.

PlayJam.






BettingCorp Business




Play-for-prizes and Casino Games Applications.


Ultimate One Platform.


I-7



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##### Table of Contents



Professional Services and Support




Customer and Industry Relationships






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Network Operators. Over 44 network operators around
    the world have launched our middleware platform, including
    Austar Entertainment Pty Ltd. and FOXTEL in Australia, Bell
    ExpressVu in Canada, BSkyB in the United Kingdom, Dong Fang
    Cable Network Co. Ltd. in China, EchoStars DISH Network in
    the United States, Multichoice in Africa, TPS in France, Sky
    Italia in Italy, UnitedGlobalCom in Europe and Viasat in Sweden.
|
| |  | Set-top Box Manufacturers. Our software is available
    on over 100 models of set-top boxes, including models produced
    by Advanced Digital Broadcast (ADB), Amstrad, Matsushita
    Electric, Motorola, Inc., Nokia Satellite Systems, Pace Micro
    Technology, Sagem, S.A., Samsung, Scientific-Atlanta, Inc.,
    Thomson and UEC Technologies (Pty) Ltd.                                                                                      
|
| |  | Programming Networks. We have worked with numerous
    programming networks including American Broadcasting Company,
    Turner Broadcasting System, Inc., Discovery Communications,
    Inc., QVC Shopping Network, Playboy Enterprises, Inc. and
    Showtime Networks, Inc. to enhance programming content and
    advertising on their networks.                                                                                                    
|
| |  | Conditional Access Providers: We have integrated our
    middleware with conditional access software provided by Irdeto,
    Motorola, Nagra, NDS Group plc, Philips, Scientific-Atlanta, and
    ViAccess.                                                                                                                                                                                                                                             



Sales and Marketing




Competition




I-8



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##### Table of Contents







| |                                       
| | --------------------------------------
| | Middleware and Integrated Technologies











I-9



---



##### Table of Contents







| |             
| | ------------
| | Applications







| |            
| | -----------
| | BettingCorp



Regulations






I-10



---



##### Table of Contents







Intellectual Property and Research and Development




Employees




Available Information


http://www.opentv.com


http://www.sec.gov







|        |           
|------- | ----------
|Item 2. | Properties








|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

OpenTV, Inc. v. Liberate Technologies, Inc.


I-11



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##### Table of Contents









Initial Public Offering Securities Litigation. In re OpenTV Corp. Initial Public Offering Securities
Litigation In re Initial Public Offering Securities
Litigation




I-12



---



##### Table of Contents



In re Wink Communications, Inc. Initial Public
Offering Securities Litigation In re Initial
Public Offering Securities Litigation


Litigation Relating to the Acquisition of ACTV, Inc.


Broadcast Innovation Matter.


I-13



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##### Table of Contents





Personalized Media Communications, LLC.


Other Matters.









|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



I-14



---



##### Table of Contents






PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Information






|     |                |                 |   |      |          |  |   |      |  |  |     |      |  |  |   |      | 
|---- | -------------- | --------------- | - | ---- | -------- |  | - | ---- |  |  | --- | ---- |  |  | - | ---- | 
|     |                | Nasdaq National |   |      |         
|     |                | Market          |   |      | Euronext | 
|     |                |                 |   |      |          | 
|     |                | High            |   |      | Low      |  |   | High |  |  | Low |     
|     |                |                 |   |      |          |  |   |      |  |  |     |     
|2004 |                |                 |   |      |          |  |   |      |  |  |     |      |  |  |   |     
|     | First Quarter  |                 | $ | 3.82 |          |  | $ | 2.70 |  |  |     |     |  |  |   |     | 
|     | Second Quarter |                 |   | 3.60 |          |  |   | 2.00 |  |  |     |     |  |  |   |     | 
|     | Third Quarter  |                 |   | 3.31 |          |  |   | 1.82 |  |  |     |     |  |  |   |     | 
|     | Fourth Quarter |                 |   | 4.14 |          |  |   | 2.97 |  |  |     |     |  |  |   |     | 
|2003 |                |                 |   |      |          |  |   |      |  |  |     |      |  |  |   |     
|     | First Quarter  |                 | $ | 1.40 |          |  | $ | 0.70 |  |  | $   | 1.18 |  |  | $ | 0.69 | 
|     | Second Quarter |                 |   | 2.23 |          |  |   | 0.88 |  |  |     | 2.11 |  |  |   | 0.89 | 
|     | Third Quarter  |                 |   | 4.55 |          |  |   | 1.37 |  |  |     | 4.40 |  |  |   | 1.38 | 
|     | Fourth Quarter |                 |   | 5.34 |          |  |   | 2.28 |  |  |     | 5.10 |  |  |   | 2.54 | 

Holders




Dividends




Certain Aspects of British Virgin Islands Law




II-1



---



##### Table of Contents







Securities Authorized for Issuance Under Equity Compensation
Plans




Equity Compensation Plan Information


|                                                           |  |                      |           |     |                   |   |      |                         |  |  |           |    
|---------------------------------------------------------- |  | -------------------- | --------- | --- | ----------------- | - | ---- | ----------------------- |  |  | --------- | ---
|                                                           |  |                      |           | (b) |                   |   |     
|                                                           |  | (a)                  |           |     | Weighted-Average  |   |      | (c)                     | 
|                                                           |  | Number of Securities |           |     | Exercise Price of |   |      | Number of Securities    | 
|                                                           |  | to be Issued Upon    |           |     | Outstanding       |   |      | Remaining Available for | 
|                                                           |  | Exercise of          |           |     | Options,          |   |      | Future Issuance         | 
|                                                           |  | Outstanding Options, |           |     | Warrants and      |   |      | (excluding Securities   | 
|Plan Category                                              |  | Warrants and Rights  |           |     | Rights            |   |      | reflected in column(a)) | 
|                                                           |  |                      |           |     |                   |   |      |                         | 
|Equity compensation plans approved by security holders     |  |                      | 8,353,498 | (1) |                   | $ | 6.43 |                         |  |  | 4,719,953 | (2)
|Equity compensation plans not approved by security holders |  |                      | 817,317   | (3) |                   | $ | 4.81 | (4)                     |  |  | 438,111   | (5)
|                                                           |  |                      |           |     |                   |   |      |                         | 
|Total                                                      |  |                      | 9,170,815 |     |                   | $ | 6.40 | (4)                     |  |  | 5,158,064 |    
|                                                           |  |                      |           |     |                   |   |      |                         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents (i) 1,870,769 Class A ordinary shares
    issuable upon the exercise of options outstanding under our
    Amended and Restated 1999 Share Option/ Share Issuance
    Plan, or the 1999 Plan, (ii) 120,440 Class A ordinary
    shares issuable upon the exercise of outstanding options assumed
    in connection with our acquisition of Spyglass, Inc. in July
    2000, (iii) 4,113,450 Class A ordinary shares issuable
    upon the exercise of options outstanding under our 2003
    Incentive Plan, or the 2003 Plan, and (iv) 2,248,839
    Class A ordinary shares issuable upon the exercise of
    outstanding options, assumed in connection with our acquisition
    of ACTV, Inc. in July 2003.
|   
|(2) | Represents (i) 3,345,774 Class A ordinary shares
    available for future issuance under the 1999 Plan,
    (ii) 874,179 Class A ordinary shares available for
    future issuance under the 2003 Plan and (iii) 500,000
    Class A ordinary shares available for future issuance under
    our Amended and Restated 1999 Employee Stock Purchase Plan, or
    ESPP.                                                                                                                                                                                                                                                                                                                                                    



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our board of directors has suspended offering periods under our
    ESPP, and no options or purchase rights are currently
    outstanding under the ESPP. In the event our board elects to
    commence offering periods under our ESPP in the future, the
    number of Class A ordinary shares issuable under the ESPP
    will, pursuant to the terms of the ESPP, be reset at 500,000
    each successive December 31 through calendar year 2008, in
    each case for issuance during the following year.



|    |                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Represents (i) 61,889 Class A ordinary shares issuable
    upon exercise of outstanding stock options granted under our
    2001 Nonstatutory Stock Option Plan, or the 2001 Plan, and
    (ii) 755,428 Class A ordinary shares issuable upon the
    exercise of exchange rights granted under our 2000 Exchange
    Plan, or the Exchange Plan.

II-2



---



##### Table of Contents





|    |                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Does not include information regarding weighted-average exercise
    price of Class A ordinary shares issuable under the
    Exchange Plan because such issuances do not involve the payment
    of an exercise price or the provision of other monetary
    consideration.
|   
|(5) | Represents 438,111 Class A ordinary shares available for
    future issuance under the 2001 Plan.                                                                                                                                                                          

2000 Exchange Plan




2001 Nonstatutory Stock Option Plan




Share Reserve.


Administration.


Eligibility.




| |   |                                                                     
| | - | --------------------------------------------------------------------
| |  | employees (other than employees who are executive
    officers); and
|
| |  | consultants.                                                        

Structure of Plan.


Corporate Transaction.


Amendment and Termination.


II-3



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##### Table of Contents



Recent Sales of Unregistered Securities









|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                      |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |            |         |           |  |          |         |         | 
|----------------------------------------------------- | ---------------------------------- | -------------------------------------------------- | ------- | ------ | ------- |  | ------- | ------ | ------- |  | -------- | ------- | ------- | ---- | ---------- | ------- | --------- |  | -------- | ------- | ------- | 
|                                                      |                                    | Year Ended December 31,                            |        
|                                                      |                                    |                                                    |        
|                                                      |                                    | 2004                                               |         |        | 2003    |  |         | 2002   |         |  | 2001     |         |         | 2000 |           
|                                                      |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |           
|                                                      |                                    | (In thousands, except share and per share amounts) |        
|Consolidated Statement of Operations Data             |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |            |         |           |  |          |        
|Revenues:                                             |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |            |         |           |  |          |        
|                                                      | Royalties                          |                                                    | $       | 45,553 |         |  | $       | 25,192 |         |  | $        | 20,052  |         |      | $          | 33,800  |           |  | $        | 29,898  |        
|                                                      | Services, support and other        |                                                    |         | 14,861 |         |  |         | 22,588 |         |  |          | 23,812  |         |      |            | 36,486  |           |  |          | 19,805  |        
|                                                      | Fees and revenue shares            |                                                    |         | 13,450 |         |  |         | 12,961 |         |  |          | 11,278  |         |      |            | 3,346   |           |  |          |        |        
|                                                      | License fees                       |                                                    |         | 3,305  |         |  |         | 3,456  |         |  |          | 4,544   |         |      |            | 13,295  |           |  |          | 13,444  |        
|                                                      |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |           
|                                                      |                                    | Total revenues                                     |         |        | 77,169  |  |         |        | 64,197  |  |          |         | 59,686  |      |            |         | 86,927    |  |          |         | 63,147  | 
|Operating expenses:                                   |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |            |         |           |  |          |        
|                                                      | Cost of revenues(1)                |                                                    |         | 39,264 |         |  |         | 50,373 |         |  |          | 56,211  |         |      |            | 48,904  |           |  |          | 19,878  |        
|                                                      | NASCAR Amendment                   |                                                    |         | (4,600 | )       |  |         |       |         |  |          |        |         |      |            |        |           |  |          |        |        
|                                                      | Research and development (2 and 5) |                                                    |         | 29,753 |         |  |         | 23,082 |         |  |          | 35,200  |         |      |            | 43,542  |           |  |          | 60,508  |        
|                                                      | Sales and marketing(3)             |                                                    |         | 15,103 |         |  |         | 13,833 |         |  |          | 32,865  |         |      |            | 37,649  |           |  |          | 28,481  |        
|                                                      | General and administrative(4)      |                                                    |         | 17,876 |         |  |         | 17,407 |         |  |          | 21,141  |         |      |            | 19,870  |           |  |          | 22,345  |        
|                                                      | Restructuring costs                |                                                    |         | 893    |         |  |         | 6,587  |         |  |          | 29,414  |         |      |            |        |           |  |          |        |        
|                                                      | Amortization of intangible assets  |                                                    |         | 3,506  |         |  |         | 4,889  |         |  |          | 4,188   |         |      |            | 8,114   |           |  |          | 4,405   |        
|                                                      | Impairment of intangible assets    |                                                    |         |       |         |  |         | 1,497  |         |  |          | 24,796  |         |      |            |        |           |  |          |        |        
|                                                      | Amortization of goodwill           |                                                    |         |       |         |  |         |       |         |  |          |        |         |      |            | 394,495 |           |  |          | 170,706 |        
|                                                      | Impairment of goodwill             |                                                    |         |       |         |  |         |       |         |  |          | 514,501 |         |      |            | 816,247 |           |  |          |        |        
|                                                      |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |           
|                                                      |                                    | Total operating expenses                           |         |        | 101,795 |  |         |        | 117,668 |  |          |         | 718,316 |      |            |         | 1,368,821 |  |          |         | 306,323 | 
|                                                      |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |           
|Loss from operations                                  |                                    |                                                    | (24,626 | )      |         |  | (53,471 | )      |         |  | (658,630 | )       |         |      | (1,281,894 | )       |           |  | (243,176 | )      
|Interest income                                       |                                    |                                                    | 858     |        |         |  | 1,572   |        |         |  | 5,205    |         |         |      | 10,518     |         |           |  | 12,232   |        
|Other income (expense), net                           |                                    |                                                    | 499     |        |         |  | (1,103  | )      |         |  | (66      | )       |         |      | (33        | )       |           |  | (111     | )      
|Impairment of equity investments and notes receivable |                                    |                                                    |        |        |         |  |        |        |         |  | (10,923  | )       |         |      | (14,915    | )       |           |  | (10,000  | )      
|Share of losses of equity investee                    |                                    |                                                    |        |        |         |  |        |        |         |  | (7,275   | )       |         |      |           |         |           |  |         |        
|Realized loss on sale of marketable equity securities |                                    |                                                    |        |        |         |  |        |        |         |  |         |         |         |      | (24,014    | )       |           |  | (1,687   | )      
|Minority interest                                     |                                    |                                                    | 490     |        |         |  | 171     |        |         |  | 518      |         |         |      | 202        |         |           |  | 34       |        
|                                                      |                                    |                                                    |         |        |         |  |         |        |         |  |          |         |         |      |           

II-4



---



##### Table of Contents



|                                                        |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |            |            |   |   |            |          |  
|------------------------------------------------------- | ----------------------------------------------------------------------- | -------------------------------------------------- | ----------- | ------- | ---- | - | ---------- | ------- | - | - | ---------- | -------- | - | ---- | ---------- | ---------- | - | - | ---------- | -------- | -
|                                                        |                                                                         | Year Ended December 31,                            |            
|                                                        |                                                                         |                                                    |            
|                                                        |                                                                         | 2004                                               |             |         | 2003 |   |            | 2002    |   |   | 2001       |          |   | 2000 |           
|                                                        |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |           
|                                                        |                                                                         | (In thousands, except share and per share amounts) |            
|                                                        | Loss before income taxes and cumulative effect of accounting
    change |                                                    |             | (22,779 | )    |   |            | (52,831 | ) |   |            | (671,171 | ) |      |            | (1,310,136 | ) |   |            | (242,708 | )
|Income tax benefit (expense)                            |                                                                         |                                                    | 817         |         |      |   | (1,263     | )       |   |   | (1,541     | )        |   |      | 5,854      |            |   |   | 509        |         
|                                                        |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |           
|                                                        | Loss before cumulative effect of accounting change                      |                                                    |             | (21,962 | )    |   |            | (54,094 | ) |   |            | (672,712 | ) |      |            | (1,304,282 | ) |   |            | (242,199 | )
|Cumulative effect of accounting change, net of tax      |                                                                         |                                                    |            |         |      |   |           |         |   |   | (129,852   | )        |   |      |           |            |   |   |           |         
|                                                        |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |           
|                                                        | Net loss                                                                |                                                    | $           | (21,962 | )    |   | $          | (54,094 | ) |   | $          | (802,564 | ) |      | $          | (1,304,282 | ) |   | $          | (242,199 | )
|                                                        |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |           
|Net loss per share, basic and diluted:                  |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |            |            |   |   |            |         
|                                                        | Before cumulative effect of accounting change                           |                                                    | $           | (0.18   | )    |   | $          | (0.57   | ) |   | $          | (9.36    | ) |      | $          | (19.20     | ) |   | $          | (4.64    | )
|                                                        | Cumulative effect of accounting change, net of tax                      |                                                    |             |        |      |   |            |        |   |   |            | (1.81    | ) |      |            |           |   |   |            |         |  
|                                                        |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |           
|                                                        |                                                                         | $                                                  | (0.18       | )       |      | $ | (0.57      | )       |   | $ | (11.17     | )        |   | $    | (19.20     | )          |   | $ | (4.64      | )       
|                                                        |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |           
|Shares used in per share calculation, basic and diluted |                                                                         |                                                    | 121,308,965 |         |      |   | 98,818,278 |         |   |   | 71,839,101 |          |   |      | 67,937,686 |            |   |   | 52,190,338 |         
|                                                        |                                                                         |                                                    |             |         |      |   |            |         |   |   |            |          |   |      |           






|    |                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Inclusive of $25, $55, $1,277, $3,541 and $2,603 of share-based
    compensation for the years ended 2004, 2003, 2002, 2001 and
    2000, respectively.
|   
|(2) | Inclusive of $1, $59, $321, $1,171, and $1,538 of share-based
    compensation for the years ended 2004, 2003, 2002, 2001 and
    2000, respectively.  
|   
|(3) | Inclusive of $0, $24, $298, $1,644 and $2,100 of share-based
    compensation for the years ended 2004, 2003, 2002, 2001 and
    2000, respectively.   
|   
|(4) | Inclusive of $0, $33, $1,143, $3,233 and $8,185 of share-based
    compensation for the years ended 2004, 2003, 2002, 2001 and
    2000, respectively. 
|   
|(5) | Inclusive of $24,909 non-cash warrant expense for the year ended
    2000.                                                                             

|                                      |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |           | 
|------------------------------------- |  | ------------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | --------- | 
|                                      |  | As of December 31, |        
|                                      |  |                    |        
|                                      |  | 2004               |         |  | 2003 |   |         | 2002 |  |   | 2001    |  |  | 2000 |        
|                                      |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |        
|                                      |  | (In thousands)     |        
|Consolidated Balance Sheet Data       |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |           | 
|Cash and cash equivalents             |  | $                  | 35,660  |  |      | $ | 47,747  |      |  | $ | 38,568  |  |  | $    | 69,249  |  |  | $ | 94,003    | 
|Short-term marketable debt securities |  |                    | 1,986   |  |      |   | 10,577  |      |  |   | 26,940  |  |  |      | 28,454  |  |  |   | 115,367   | 
|Long-term marketable debt securities  |  |                    | 25,374  |  |      |   | 15,172  |      |  |   | 22,199  |  |  |      | 91,839  |  |  |   | 15,612    | 
|Working capital                       |  |                    | 18,428  |  |      |   | 19,395  |      |  |   | 30,276  |  |  |      | 100,083 |  |  |   | 219,966   | 
|Total assets                          |  |                    | 192,411 |  |      |   | 219,555 |      |  |   | 197,336 |  |  |      | 966,199 |  |  |   | 2,197,143 | 
|Total shareholders equity            |  |                    | 145,175 |  |      |   | 156,983 |      |  |   | 140,996 |  |  |      | 928,358 |  |  |   | 2,157,903 | 

II-5



---



##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Overview










Critical Accounting Policies and Estimates




II-6



---



##### Table of Contents







| |                    
| | -------------------
| | Revenue Recognition









| |                     
| | --------------------
| | Valuation Allowances







| |                                                         
| | --------------------------------------------------------
| | Valuation of Investments in Privately-Held
    Companies



II-7



---



##### Table of Contents







| |                                                   
| | --------------------------------------------------
| | Impairment of Goodwill and Other Intangible Assets





| |                    
| | -------------------
| | Restructuring Costs



Recent Accounting Pronouncements




Managements Assessment of Internal Control Over
Financial Reporting and Disclosure Controls






II-8



---



##### Table of Contents













Goodwill and Other Intangibles




II-9



---



##### Table of Contents







Years Ended December 31, 2004, 2003 and 2002




| |         
| | --------
| | Revenues



|                            |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |   |      |  |  |  |     |  
|--------------------------- |  | ----------------------- | ---- |  | - |  | --- | ---- |  | - | ---- |  |  | ---- | --- | - | - | - | ---- |  |  |  | --- | -
|                            |  | Year Ended December 31, |     
|                            |  |                         |     
|                            |  | 2004                    |      |  | % |  |     | 2003 |  |   | %    |  |  | 2002 |     |   | % |  
|                            |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |  
|Royalties                   |  | $                       | 45.6 |  |   |  | 59  | %    |  | $ | 25.2 |  |  |      | 39  | % |   | $ | 20.1 |  |  |  | 34  | %
|Services, support and other |  |                         | 14.9 |  |   |  | 19  | %    |  |   | 22.6 |  |  |      | 36  | % |   |   | 23.8 |  |  |  | 40  | %
|Fees and revenue shares     |  |                         | 13.4 |  |   |  | 18  | %    |  |   | 13.0 |  |  |      | 20  | % |   |   | 11.3 |  |  |  | 19  | %
|License fees                |  |                         | 3.3  |  |   |  | 4   | %    |  |   | 3.4  |  |  |      | 5   | % |   |   | 4.5  |  |  |  | 7   | %
|                            |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |  
|Total Revenues              |  | $                       | 77.2 |  |   |  | 100 | %    |  | $ | 64.2 |  |  |      | 100 | % |   | $ | 59.7 |  |  |  | 100 | %
|                            |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |  

Royalties.






II-10



---



##### Table of Contents







Services, Support and Other.


Fees and Revenue Shares.










License Fees.


II-11



---



##### Table of Contents





Other.


Operating Expenses




|                                        |  |                         |       |      |         |  |     |      |      |   |         |  |  |      |     |   |         |   |       |  |  |  |      |  
|--------------------------------------- |  | ----------------------- | ----- | ---- | ------- |  | --- | ---- | ---- | - | ------- |  |  | ---- | --- | - | ------- | - | ----- |  |  |  | ---- | -
|                                        |  | Year Ended December 31, |      
|                                        |  |                         |      
|                                        |  |                         |       | % of |         |  |     |      | % of |   |         |  |  | % of |    
|                                        |  | 2004                    |       |      | Revenue |  |     | 2003 |      |   | Revenue |  |  | 2002 |     |   | Revenue |  
|                                        |  |                         |       |      |         |  |     |      |      |   |         |  |  |      |     |   |         |  
|Cost of revenues                        |  | $                       | 39.2  |      |         |  | 51  | %    |      | $ | 50.4    |  |  |      | 79  | % |         | $ | 56.2  |  |  |  | 94   | %
|NASCAR Amendment                        |  |                         | (4.6  | )    |         |  | (6  | )%   |      |   |        |  |  |      |    |   |         |   |      |  |  |  |     |  
|Research and development                |  |                         | 29.8  |      |         |  | 39  | %    |      |   | 23.1    |  |  |      | 36  | % |         |   | 35.2  |  |  |  | 59   | %
|Sales and marketing                     |  |                         | 15.1  |      |         |  | 20  | %    |      |   | 13.8    |  |  |      | 21  | % |         |   | 32.9  |  |  |  | 55   | %
|General and administrative              |  |                         | 17.9  |      |         |  | 23  | %    |      |   | 17.4    |  |  |      | 27  | % |         |   | 21.1  |  |  |  | 35   | %
|Restructuring costs                     |  |                         | 0.9   |      |         |  | 1   | %    |      |   | 6.6     |  |  |      | 10  | % |         |   | 29.4  |  |  |  | 49   | %
|Amortization of other intangible assets |  |                         | 3.5   |      |         |  | 4   | %    |      |   | 4.9     |  |  |      | 8   | % |         |   | 4.2   |  |  |  | 7    | %
|Impairment of intangible assets         |  |                         |      |      |         |  |    |      |      |   | 1.5     |  |  |      | 2   | % |         |   | 24.8  |  |  |  | 42   | %
|Impairment of goodwill                  |  |                         |      |      |         |  |    |      |      |   |        |  |  |      |    |   |         |   | 514.5 |  |  |  | 862  | %
|                                        |  |                         |       |      |         |  |     |      |      |   |         |  |  |      |     |   |         |  
|Total Operating Expenses                |  | $                       | 101.8 |      |         |  | 132 | %    |      | $ | 117.7   |  |  |      | 183 | % |         | $ | 718.3 |  |  |  | 1203 | %
|                                        |  |                         |       |      |         |  |     |      |      |   |         |  |  |      |     |   |         |  

Cost of Revenues.






II-12



---



##### Table of Contents





NASCAR Amendment.


Research and Development.








Sales and Marketing.






General and Administrative.




II-13



---



##### Table of Contents







Restructuring Costs.




| |                                                                   
| | ------------------------------------------------------------------
| | Impairment and Amortization of Intangible Assets and
    Goodwill.







Interest Income




II-14



---



##### Table of Contents





Other Income and Expense Items






Minority Interest




Income Taxes




Business Segment Results








II-15



---



##### Table of Contents









|                                       |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |   |      |  |  |  |     |  
|-------------------------------------- |  | ----------------------- | ---- |  | - |  | --- | ---- |  | - | ---- |  |  | ---- | --- | - | - | - | ---- |  |  |  | --- | -
|                                       |  | Year Ended December 31, |     
|                                       |  |                         |     
|                                       |  | 2004                    |      |  | % |  |     | 2003 |  |   | %    |  |  | 2002 |     |   | % |  
|                                       |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |  
|Middleware and Integrated Technologies |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |   |      |  |  |  |     |  
|Royalties                              |  | $                       | 45.6 |  |   |  | 72  | %    |  | $ | 25.2 |  |  |      | 51  | % |   | $ | 20.1 |  |  |  | 42  | %
|Services, support and other            |  |                         | 14.4 |  |   |  | 23  | %    |  |   | 21.7 |  |  |      | 44  | % |   |   | 23.8 |  |  |  | 49  | %
|License fees                           |  |                         | 3.1  |  |   |  | 5   | %    |  |   | 2.7  |  |  |      | 5   | % |   |   | 4.4  |  |  |  | 9   | %
|                                       |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |  
|Subtotal                               |  |                         | 63.1 |  |   |  | 100 | %    |  |   | 49.6 |  |  |      | 100 | % |   |   | 48.3 |  |  |  | 100 | %
|Applications                           |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |   |      |  |  |  |     |  
|Fees and revenue shares                |  |                         | 11.4 |  |   |  | 94  | %    |  |   | 12.7 |  |  |      | 89  | % |   |   | 11.3 |  |  |  | 99  | %
|Services, support and other            |  |                         | 0.5  |  |   |  | 4   | %    |  |   | 0.9  |  |  |      | 6   | % |   |   |     |  |  |  |    |  
|License fees                           |  |                         | 0.2  |  |   |  | 2   | %    |  |   | 0.7  |  |  |      | 5   | % |   |   | 0.1  |  |  |  | 1   | %
|                                       |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |  
|Subtotal                               |  |                         | 12.1 |  |   |  | 100 | %    |  |   | 14.3 |  |  |      | 100 | % |   |   | 11.4 |  |  |  | 100 | %
|BettingCorp                            |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |   |      |  |  |  |     |  
|Fees and revenue shares                |  |                         | 2.0  |  |   |  |     |      |  |   | 0.3  |  |  |      |     |   |   |   |     |  |  |  |     |  
|                                       |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |  
|TOTAL                                  |  | $                       | 77.2 |  |   |  |     |      |  | $ | 64.2 |  |  |      |     |   |   | $ | 59.7 |  |  |  |     |  
|                                       |  |                         |      |  |   |  |     |      |  |   |      |  |  |      |     |   |   |  



II-16



---



##### Table of Contents









|                                                                                    |  |                         |       |   |      |   |       |      |  |   |        |  
|----------------------------------------------------------------------------------- |  | ----------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                                                                    |  | Year Ended December 31, |      
|                                                                                    |  |                         |      
|Contribution Margin:                                                                |  | 2004                    |       |   | 2003 |   |       | 2002 | 
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Middleware and Integrated Technologies                                              |  |                         | 26.3  |   |      |   | 17.7  |      |  |   | (6.0   | )
|Applications                                                                        |  |                         | (6.8  | ) |      |   | (17.9 | )    |  |   | (20.5  | )
|BettingCorp                                                                         |  |                         | (4.5  | ) |      |   | (1.5  | )    |  |   |       |  
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Total Contribution Margin                                                           |  |                         | 15.0  |   |      |   | (1.7  | )    |  |   | (26.5  | )
|Unallocated corporate overhead                                                      |  |                         | (29.1 | ) |      |   | (26.3 | )    |  |   | (31.8  | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Adjusted EBITDA before unusual items                                                |  |                         | (14.1 | ) |      |   | (28.0 | )    |  |   | (58.3  | )
|NASCAR amendment                                                                    |  |                         | 4.6   |   |      |   |      |      |  |   |       |  
|BSkyB contract amendment                                                            |  |                         |      |   |      |   | 1.2   |      |  |   |       |  
|DirecTV market development costs                                                    |  |                         |      |   |      |   | 3.8   |      |  |   |       |  
|Restructuring costs                                                                 |  |                         | (0.9  | ) |      |   | (6.6  | )    |  |   | (29.4  | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Adjusted EBITDA                                                                     |  |                         | (10.4 | ) |      |   | (29.6 | )    |  |   | (87.7  | )
|Depreciation and amortization                                                       |  |                         | (5.9  | ) |      |   | (7.5  | )    |  |   | (10.3  | )
|Amortization of intangible assets                                                   |  |                         | (8.2  | ) |      |   | (14.7 | )    |  |   | (18.3  | )
|Amortization of share-based compensation                                            |  |                         |      |   |      |   | (0.2  | )    |  |   | (3.0   | )
|Interest income                                                                     |  |                         | 0.8   |   |      |   | 1.6   |      |  |   | 5.2    |  
|Other income (expense)                                                              |  |                         | 0.5   |   |      |   | (1.1  | )    |  |   | (0.1   | )
|Impairment of equity investments                                                    |  |                         |      |   |      |   |      |      |  |   | (10.9  | )
|Share of losses of equity investee                                                  |  |                         |      |   |      |   |      |      |  |   | (7.3   | )
|Minority interest                                                                   |  |                         | 0.5   |   |      |   | 0.2   |      |  |   | 0.5    |  
|Impairment of intangible assets                                                     |  |                         |      |   |      |   | (1.5  | )    |  |   | (24.8  | )
|Impairment of goodwill                                                              |  |                         |      |   |      |   |      |      |  |   | (514.5 | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Loss before income taxes and cumulative effect of accounting
    change, net of tax |  |                         | (22.7 | ) |      |   | (52.8 | )    |  |   | (671.2 | )
|Income tax benefit (expense)                                                        |  |                         | 0.8   |   |      |   | (1.3  | )    |  |   | (1.5   | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Loss before cumulative effect of accounting change, net of tax                      |  |                         | (21.9 | ) |      |   | (54.1 | )    |  |   | (672.7 | )
|Cumulative effect of accounting change, net of tax                                  |  |                         |      |   |      |   |      |      |  |   | (129.9 | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Net loss                                                                            |  | $                       | (21.9 | ) |      | $ | (54.1 | )    |  | $ | (802.6 | )
|                                                                                    |  |                         |       |   |      |   |       |      | 



II-17



---



##### Table of Contents





Liquidity and Capital Resources














II-18



---



##### Table of Contents





| |                                        
| | ---------------------------------------
| | Commitments and Contractual Obligations



|                                   |  |                        |      |        |      |   |        |         |  |        |         |  |         |       |     |  |  |   |     | 
|---------------------------------- |  | ---------------------- | ---- | ------ | ---- | - | ------ | ------- |  | ------ | ------- |  | ------- | ----- | --- |  |  | - | --- | 
|                                   |  | Payments due by period |     
|                                   |  |                        |     
|                                   |  |                        |      | Due in |     
|                                   |  |                        |      | Due in |      |   | Due in |         |  | Due in |         |  | 2009 or |      
|                                   |  | Total                  |      |        | 2005 |   |        | 2006-07 |  |        | 2008-09 |  |         | after |    
|                                   |  |                        |      |        |      |   |        |         |  |        |         |  |         |       |    
|Operating leases obligations       |  | $                      | 22.1 |        |      | $ | 4.5    |         |  | $      | 7.6     |  |         | $     | 6.8 |  |  | $ | 3.2 | 
|Noncancelable purchase obligations |  |                        | 8.2  |        |      |   | 3.6    |         |  |        | 4.6     |  |         |       |    |  |  |   |    | 
|                                   |  |                        |      |        |      |   |        |         |  |        |         |  |         |       |    
|Total contractual obligations      |  | $                      | 30.3 |        |      | $ | 8.1    |         |  | $      | 12.2    |  |         | $     | 6.8 |  |  | $ | 3.2 | 
|                                   |  |                        |      |        |      |   |        |         |  |        |         |  |         |       |    









| |                
| | ---------------
| | Indemnification



Factors That May Affect Future Results






| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | We have a history of net losses, and we may continue to
    experience net losses in the future.



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| |                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have historically derived a significant percentage of
    our revenues from licensing our middleware to network operators.
    Our opportunities for future revenue growth with middleware are
    limited by the actual number of worldwide network operators and
    by technology decisions they make from time to time.







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | network operators that have selected our middleware may switch
    to another middleware platform for the provision of interactive
    services, reduce their pace of set-top box deployment or stop
    deploying set-top boxes enabled with our middleware, decrease or
    stop their use of our support services, or choose not to upgrade
    or add additional features to the version of our middleware
    running on their networks;
|
| |  | network operators that have not selected our middleware may
    choose another middleware platform for the provision of
    interactive services; or                                                                                                                                                                                                                                                                                         
|
| |  | a meaningful opportunity to deploy our middleware in the markets
    that have not yet adopted interactive television on a large
    scale may never develop or may develop at a very slow pace.                                                                                                                                                                                                                                             





| |                                                                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We offer volume discounts to certain customers, which may,
    over time, depress our average pricing. While deployments of our
    software may continue to grow, those discounts, as they are
    triggered, may limit the rate of our royalty growth in the
    future.





| |                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We expect a more significant portion of our revenue growth
    in the future to be derived from interactive applications that
    we develop and market. If we are not successful in developing
    and marketing interactive applications, our future revenue
    growth may be limited.



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Two of our potential North American cable customers, Cox
    Communications and Comcast Corporation, joined together in early
    2005 to acquire certain assets from Liberate Technologies, one
    of our direct competitors in the middleware business. That
    acquisition, if it closes, is likely to eliminate Cox and
    Comcast as potential customers for our middleware, which could
    adversely affect our ability to grow.





| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A significant percentage of our revenues are currently
    provided by entities affiliated with The News Corporation, which
    also controls companies that compete with us in certain market
    segments. Those circumstances may make it more difficult for us,
    over the long-term, to sell products, technologies or services
    to News Corporation affiliates in market segments in which other
    News Corporation affiliates offer competing products.





| |                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have concluded that our internal control over financial
    reporting and disclosure controls were not effective as of
    December 31, 2004. If we do not properly address identified
    weaknesses and implement additional controls to remedy those
    weaknesses, the reliability of our financial statements could be
    implicated and, ultimately, our financial results and our stock
    price could suffer.



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| |                                                                                                             
| | ------------------------------------------------------------------------------------------------------------
| | We may be unable in the future to raise additional capital
    required to support our operating activities.







| |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We realize a percentage of our revenue from revenue
    sharing and subscription-based arrangements, especially in our
    applications business. We are not certain that those revenue
    models will be generally acceptable to our customers over the
    long-term or that they will offer us significant opportunities
    for revenue growth, which could adversely affect the growth
    opportunities for our applications business.





| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | The market for our products and services is subject to
    significant competition, which could adversely affect our
    business.



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| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | The trend of consolidation among industry participants may
    adversely impact our business, results of operations and future
    prospects.







| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Unanticipated fluctuations in our quarterly operating
    results could affect our stock price.







| |   |                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Changes in the rate of capital spending and the rollout of
    interactive television-related products and services by network
    operators;             
|
| |  | The number, size and scope of network operators deploying
    OpenTV-enabled interactive services and the associated rollout
    to subscribers;          
|
| |  | Increased competition in general and any changes in our pricing
    policies that may result from increased competitive pressures;                        
|
| |  | Potential downturns in our customers businesses or in the
    domestic or international markets for our products and services;                           
|
| |  | The ability to generate applications-related revenue from
    existing and potential customers;                                                           
|
| |  | Changes in technology, whether or not developed by us;                                                                                                    
|
| |  | Our ability to develop and introduce on a timely basis new or
    enhanced versions of our products that can compete favorably in
    the marketplace; and
|
| |  | The timing of revenue recognition associated with major
    licensing and services agreements.                                                            



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| |                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend upon key personnel, including our senior
    executives and technical and engineering staff, to operate our
    business effectively, and we may be unable to attract or retain
    such personnel.





| |                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We continue to evaluate our business operations and may
    implement structural and other changes that affect the conduct
    of our worldwide business operations. As we continue to align
    our resources appropriately with our evolving business we may
    face unintended consequences or suffer adverse effects on our
    operations or personnel.





| |                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------
| | Interactive television remains an emerging business and it
    may not attract widespread market acceptance or demand.





| |                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because much of our success and value lie in our ownership
    and use of our intellectual property, our failure to protect our
    intellectual property and develop new proprietary technology may
    negatively affect us.





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| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | Intellectual property infringement claims may be asserted
    against us, which could have the effect of disrupting our
    business.





| |                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We grant certain indemnification rights to our customers
    when we license our software technologies. We may, therefore,
    become subject to third party infringement claims through those
    commercial arrangements. In addition, the damages to which we
    are subject may be increased by the use of our technologies in
    our customers products.







| |                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The adoption of industry-wide standards for interactive
    television, such as the OpenCable initiative in North America,
    could adversely affect our ability to sell our products and
    services or place downward pressure on our pricing.



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| |                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our failure to participate in certain industry standards
    setting organizations, including CableLabs, may adversely affect
    our ability to sell products or services to network operators or
    other potential customers that are members of those
    organizations.





| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The adoption of incompatible standards by our industry and
    rapid technological advances could render our products and
    services obsolete or non-competitive.









| |                                                              
| | -------------------------------------------------------------
| | Government regulations may adversely affect our
    business.





| |                                                                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Changes to current accounting policies or in how such
    policies are interpreted or applied to our business could have a
    significant effect on our reported financial results or the way
    in which we conduct our business and could make it difficult for
    investors to assess properly our financial condition or
    operating results.



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| |   |                                                     
| | - | ----------------------------------------------------
| |  | Software revenue recognition;                       
|
| |  | Accounting for stock-based compensation; and        
|
| |  | Accounting for goodwill and other intangible assets.







| |                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Through the use of our technology, we have the ability to
    collect personal and confidential information from set-top
    boxes. If we fail to protect this information from security
    breaches or misuse this information, then our operations could
    be disrupted and we could be subject to litigation and liability
    under privacy laws.



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we continue to develop and seek to market gaming and
    gambling applications, we must assess the legality of these
    types of activities in different jurisdictions. Our inability to
    launch these applications legally, the uncertain regulatory
    landscape for these applications and the significant costs
    associated with ongoing evaluations regarding the state of
    gaming and gambling laws around the world may adversely affect
    our business.





| |                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our multinational operations expose us to special risks
    that could increase our expenses, adversely affect our operating
    results and require increased time and attention of
    management.





| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | differing legal and regulatory requirements and changes in those
    requirements;                                                          
|
| |  | potential loss of proprietary information due to piracy,
    misappropriation or weaker laws regarding intellectual property
    protection;
|
| |  | export and import restrictions, tariffs and other trade barriers;                                                                           
|
| |  | currency fluctuations and devaluations;                                                                                                     
|
| |  | difficulties in staffing and managing offices as a result of,
    among other things, distance, language and cultural differences;          
|
| |  | longer payment cycles and problems in collecting accounts
    receivable;                                                                   
|
| |  | political and economic instability; and                                                                                                     
|
| |  | potentially adverse tax consequences.                                                                                                       





| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | Our software products may contain errors, which could
    cause us to lose revenue and incur unexpected expenses.



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| |                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | The interests of our majority owner may differ from yours
    and may result in OpenTV acting in a manner inconsistent with
    your general interests.





| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because we are controlled by Liberty Media, we are exempt
    from certain listing requirements of the Nasdaq National Market
    relating to corporate governance matters.





| |                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because we are a British Virgin Islands company, you may
    not be able to enforce judgments against us that are obtained in
    United States courts.







| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because we are a British Virgin Islands company, your
    rights as a stockholder may be less clearly established as
    compared to the rights of stockholders of companies incorporated
    in other jurisdictions.



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| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Certain provisions contained in our charter documents
    could deter a change of control of us.








|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk



Fixed Income Investment Risk










|                             |  |                |        |  |                   |   |               |                |  |               |                |  |  |   |        | 
|---------------------------- |  | -------------- | ------ |  | ----------------- | - | ------------- | -------------- |  | ------------- | -------------- |  |  | - | ------ | 
|                             |  | Valuation of   |        |  |                   |   | Valuation of  |                |  | Valuation of  |               
|                             |  | Securities if  |        |  |                   |   | Securities if |                |  | Securities if |               
|                             |  | Interest Rates |        |  | Fair Value as of  |   |               | Interest Rates |  |               | Interest Rates | 
|Issuer                       |  | Decrease 1%    |        |  | December 31, 2004 |   |               | Increase 1%    |  |               | Increase 2%    | 
|                             |  |                |        |  |                   |   |               |                |  |               |                | 
|U.S. government and agencies |  | $              | 6,073  |  |                   | $ | 5,938         |                |  | $             | 5,849          |  |  | $ | 5,741  | 
|Corporate notes and bonds    |  |                | 2,657  |  |                   |   | 2,522         |                |  |               | 2,548          |  |  |   | 2,496  | 
|Auction rate securities      |  |                | 17,373 |  |                   |   | 16,900        |                |  |               | 16,710         |  |  |   | 16,390 | 
|Certificate of deposit       |  |                | 2,029  |  |                   |   | 2,000         |                |  |               | 1,931          |  |  |   | 1,911  | 
|                             |  |                |        |  |                   |   |               |                |  |               |                | 
|                             |  | $              | 28,132 |  |                   | $ | 27,360        |                |  | $             | 27,038         |  |  | $ | 26,538 | 
|                             |  |                |        |  |                   |   |               |                |  |               |                | 

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Foreign Currency Exchange Rate Risk











|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures



|   |                                                                                             
|-- | --------------------------------------------------------------------------------------------
|a. | Managements Report on Internal Control over
    Financial Reporting as of December 31, 2004





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| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Certain Duties within the Companys Financial Group
    were not Properly Segregated





| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | Certain Controls Associated with the Financial Reporting
    and Close Process were not Effective



|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements review of certain year-end accruals was not
    effective. Specifically, this review did not identify that an
    accrual was not adequately supported by reasonable assumptions
    and sufficient documentation. As a result, an error in the
    accounting for accrued liabilities and cost of revenue was
    identified and subsequently corrected.                                                                                                                                                     
| 
| | Managements ineffective review of certain detailed
    schedules prepared in connection with the companys
    financial reporting process to support the companys
    financial statements and related note disclosures led to errors
    in the statement of cash flows, lease commitments and tax notes
    and required modification of those notes as included in the
    Companys 2004 audited financial statements.                                                                                              
| 
| | The company does not have sufficient internal personnel and
    technical expertise to properly apply accounting principles to
    certain non-routine matters. As a result, the company
    inappropriately applied the provisions of Statement of Financial
    Accounting Standards No. 142, Goodwill and Other
    Intangibles(SFAS No. 142) in conducting its annual
    analysis for potential impairment that led to an error in the
    accounting for goodwill that was identified and subsequently
    corrected.







|   |                                                                                
|-- | -------------------------------------------------------------------------------
|b. | Remediation Efforts related to Managements
    Assessment on Internal Controls

Remediation
of Material Weakness Related to Improper Segregation of Certain
Duties within the Financial Group








|   |                                                                                              
|-- | ---------------------------------------------------------------------------------------------
|2) | Remediation of Certain Controls Associated with the Financial
    Reporting and Close Process



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|   |                                                                     
|-- | --------------------------------------------------------------------
|c. | Effect of Pre-closing Audit Adjustments on Financial
    Statements.





|   |                                                  
|-- | -------------------------------------------------
|d. | Evaluation of disclosure controls and procedures.







Changes in Internal Control
Over Financial Reporting




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Companys controller had the ability to direct other
    personnel within the finance group to initiate and enter manual
    journal entries in the Companys books and records without
    authorization or review by other members of the financial
    organization. This lack of segregation of duties resulted in a
    more than remote likelihood that material misstatements of the
    annual or interim financial statements would not be prevented or
    detected.
| 
| | Managements review of certain year-end accruals was not
    effective. Specifically, this review did not identify that an
    accrual was not adequately supported by reasonable assumptions
    and sufficient documentation. As a result, an error in the
    accounting for accrued liabilities and cost of revenue was
    identified and subsequently corrected.                                                                                                            

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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Managements ineffective review of certain detailed
    schedules prepared in connection with the companys
    financial reporting process to support the companys
    financial statements and related note disclosures led to errors
    in the statement of cash flows, lease commitments and tax notes
    and required modification of those notes as included within the
    companys 2004 audited financial statements.                                                                                            
| 
| | The company does not have sufficient internal personnel and
    technical expertise to properly apply accounting principles to
    certain non-routine matters. As a result, the Company
    inappropriately applied the provisions of Statement of Financial
    Accounting Standards No. 142, Goodwill and Other
    Intangibles (SFAS No. 142), in conducting its
    annual analysis for potential impairment that led to an error in
    the accounting for goodwill that was identified and subsequently
    corrected.







/s/







|         |                  
|-------- | -----------------
|Item 9B. | Other Information



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PART III







|         |                                           
|-------- | ------------------------------------------
|Item 10. | Directors and Executive Officers of OpenTV



|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Age                    |  | Position                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Mark H. Allen
    Age 48        |  | Our Executive Vice President and Managing Director of Technology
    Licensing and Commercial Affairs since September 2004;
    Mr. Allen also served in other executive capacities for us
    from November 2002 to September 2004; Executive Vice President
    of Corporate Development and Deputy General Counsel of Liberty
    Broadband Interactive Television from May 2002 to March 2003;
    Executive Vice President of Corporate Development and Technology
    Licensing of Gemstar-TV Guide International, Inc. from February
    2002 to May 2002, and President of TV Guide Affiliate Sales for
    TV Guide, Inc. from September 1999 to May 2002.
|Nigel B. Bennett
    Age 42     |  | Our Senior Vice President and General Manager of Europe, Middle
    East and Africa since October 2004; our Senior Vice President
    and General Manager of Worldwide Professional Services and
    Support from June 1999 to September 2004.                                                                                                                                                                                                                                                                                                                                                                                                                     
|Robert R. Bennett(1)
    Age 46 |  | Our director since August 2002; President and Chief Executive
    Officer of Liberty Media Corporation since April 1997; Executive
    Vice President of Tele-Communications, Inc. from April 1997 to
    March 1999; currently a director of Liberty Media Corporation,
    Liberty Media International, Inc, and UnitedGlobalCom, Inc.                                                                                                                                                                                                                                                                                                                           
|J. Timothy Bryan(2)
    Age 43  |  | Our director since June 2003; currently a director and Chairman
    of the Audit Committee for Clearwire Corporation and a director
    of ICO Global Communications; formerly a director of Nextel
    Communications, Inc.; currently an advisor to Nextel
    Communications, Inc.; Chief Financial Officer of Eagle River,
    Inc. from 2001 to 2003; an advisor for domestic and
    international telecommunications companies from 1999 to 2001;
    Chief Financial Officer of United GlobalCom and then President
    of United Pan Europe Communications from 1996 to 1999.                                                                             
|James A. Chiddix
    Age 59     |  | Our director and Executive Chairman since March 2004; our Chief
    Executive Officer since May 2004; President of MystroTV, a
    business unit of Time Warner Cable formed to provide digital
    customers with the ability to pause, rewind and restart live
    television and to recapture missed programming, from July 2001
    to January 2004; Chief Technical Officer of Time Warner Cable
    from June 1998 to July 2001.                                                                                                                                                                                                                             
|Vincent Dureau
    Age 44       |  | Our Chief Technology Officer since May 1998; our Senior Vice
    President of Engineering since 1994; prior to joining us,
    Mr. Dureau held a variety of positions in the research
    department of Thomson Multimedia in Paris and Los Angeles.                                                                                                                                                                                                                                                                                                                                                                                                               

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|                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Age                 |  | Position                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Tim Evard
    Age 58         |  | Our Senior Vice President and General Manager of Marketing and
    Applications Products since November 2004; President and Chief
    Executive Officer of Broadband iTV from January 2004 to November
    2004, a company that uses interactive technology to deliver
    community based content; Senior Vice President of WSNET from
    2002 to 2003, a company that provides digital video distribution
    to the cable television industry; Founder and Executive Vice
    President of Broadband Residential from 2000 to 2002, a company
    that provides telecommunications services to the multi-family
    housing market; Senior Vice President of Marketing of Time
    Warner from 1998 to 2002; President and co-Founder of the Time
    Warner Road Runner high-speed cable data business from April
    1994 to April 2000.
|Joel Hassell
    Age 44      |  | Our Senior Vice President and General Manager of North American
    Satellite since September 2004; our Vice President of
    Engineering from July 2003 to September 2004; Chief Operating
    Officer of ACTV, Inc. from July 2001 to July 2003; Chairman of
    the Board, Chief Executive Officer and President of Intellocity
    USA, Inc. from January 2000 to March 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Wesley O. Hoffman
    Age 51 |  | Our Executive Vice President and General Manager of North
    American Cable (and previously Chief Operating Officer) since
    August 2003; Chief Executive Officer of ICTV, Inc. from August
    2001 to August 2003; President of ICTV, Inc. from 1996 to August
    2003; ICTV is a privately-held company that develops
    infrastructure for cable operators to deliver content and
    television services to digital cable subscribers; President and
    Chief Executive Officer of High Speed Surfing, a private company
    that designed and distributed modular DOCSIS cable modems for
    the North American market, from August 2000 to August 2001.                                                                                                                                                                         
|Richard Hornstein
    Age 42 |  | Our Senior Vice President and Chief Financial Officer since
    October 2003; Consultant to Golden Gate Capital, a private
    equity fund, from April 2003 to September 2003; Chief Financial
    Officer and General Counsel of Resonate, Inc., a software
    company, from August 2002 to March 2003; Chief Financial Officer
    and General Counsel of Believe, Inc., a software company, from
    July 2000 to April 2002; General Counsel and Senior Vice
    President of Corporate Development and Taxation of Network
    Associates, Inc., a software company, from January 1999 to June
    2000; previously, Mr. Hornstein served as Manager with
    Coopers & Lybrand and KPMG.                                                                                                                                               
|Mazin S. Jadallah
    Age 35 |  | Our Senior Vice President of Strategic Development since July
    2004; Vice President of Corporate Development at the Time Warner
    Interactive Video Group from 2001 to 2004; Executive Director at
    Time Warner from 1998 to 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Alec Livingstone
    Age 57  |  | Our Senior Vice President and General Manager 
    Platform Development (previously served in other managerial
    capacities) since October 2000; Group Technical Director for
    British Interactive Broadcasting from 1997 to 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Age                    |  | Position                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|Jerry Machovina
    Age 57      |  | Our director since October 2003; currently Private Investor;
    Executive Vice President of Yankees Entertainment and Sports
    Network (YES) from September 2001 to October of 2002; Co-Chief
    Executive Officer of Mediapassage, which merged with Adauction
    (doing business as OneMediaPlace), from April 2001 to September
    2001; President and Chief Executive Officer of Adauction from
    January 2000 to April 2001; Executive Vice President of
    TCI/AT&T Broadband from January 1995 to April 2000;
    currently a director and Senior Consultant for Vehix.com.                                                                                                                                          
|J. David Wargo(3)
    Age 51    |  | Our director since August 2002; President of Wargo &
    Company, Inc., a private investment company specializing in the
    communications industry, since January 1993; currently a
    director of Strayer Education, Inc. and Liberty Media
    International, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Anthony G. Werner(1)
    Age 48 |  | Our director since August 2002; Senior Vice President and Chief
    Technology Officer of Liberty Media Corporation since August
    2001; Senior Vice President of Strategic Technologies at Qwest
    Communications from May 2001 to August 2001; President and Chief
    Executive Officer of Aurora Networks, a manufacturer of
    advanced, next-generation optical transport systems for
    broadband networks that support the convergence of digital
    broadband, voice, video and data applications, from October 2000
    to May 2001; Executive Vice President and Chief Technology
    Officer of AT&T Broadband, previously TCI, from July 1994 to
    October 2000; currently a director of Dycom Industries, Inc.
|Scott Wornow
    Age 42         |  | Our Senior Vice President, General Counsel and Corporate
    Secretary since October 2003; Vice President, General Counsel,
    Corporate Secretary and Chief Restructuring Officer of OmniSky
    Corporation, a wireless data provider, from May 2000 to December
    2002 (which filed for bankruptcy protection under the federal
    bankruptcy laws in December 2001); Partner in the New York
    office of the international law firm of Paul, Hastings,
    Janofsky & Walker LLP, from February 1998 to May 2000.                                                                                                                                                                                                          
|Michael Zeisser(1)
    Age 39   |  | Our director since October 2003; our Interim Chairman from
    December 2003 through March 2004; Senior Vice President of
    Liberty Media Corporation since September 2003; Partner at
    McKinsey & Company from December 1996 through September
    2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       






|    |                                                                                       
|--- | --------------------------------------------------------------------------------------
|(1) | c/o Liberty Media Corporation, 12300 Liberty Boulevard,
    Englewood, Colorado 80112.
|   
|(2) | c/o Eagle River, Inc., 3003 East Third Avenue, Suite 205,
    Denver, Colorado 80206. 
|   
|(3) | c/o Wargo & Company, Inc., 712 Fifth Avenue,
    41st Floor, New York, New York 10019.

Audit Committee




III-3



---



##### Table of Contents





Section 16(a) Beneficial Ownership Reporting
Compliance






Code of Ethics


www.opentv.com







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



III-4



---



##### Table of Contents





Summary Compensation Table


|                            |                                             |      |      |                     |     |              |          |         |            |              |         |           |            |         |         |              |      |  |           |         |      |  |         |         |    
|--------------------------- | ------------------------------------------- | ---- | ---- | ------------------- | --- | ------------ | -------- | ------- | ---------- | ------------ | ------- | --------- | ---------- | ------- | ------- | ------------ | ---- |  | --------- | ------- | ---- |  | ------- | ------- | ---
|                            |                                             |      |      |                     |     |              |          |         |            | Long-Term    |         |           |           
|                            |                                             |      |      |                     |     | Compensation |          |         |           
|                            |                                             |      |      | Annual Compensation |     |              | Awards   |         |            |             
|                            |                                             |      |      |                     |     |              |          |         |            |             
|                            |                                             |      |      |                     |     | Other Annual |          |         | Securities |              |         | All Other |           
|                            |                                             |      |      | Salary              |     |              | Bonus(*) |         |            | Compensation |         |           | Underlying |         |         | Compensation |     
|Name and Principal Position |                                             | Year |      |                     | ($) |              |          | ($)     |            |              | ($)     |           |            | Options |         |              | ($)  | 
|                            |                                             |      |      |                     |     |              |          |         |            |              |         |           |            |         |         |              |      | 
|James A. Chiddix(1)         |                                             |      | 2004 |                     |     |              | 337,500  |         |            |              | 112,500 |           |            |         |        |              |      |  | 1,000,000 |         |      |  | 3,000   | (2)    
|                            | Chief Executive Officer                     |      |      | 2003                |     |              |          |        |            |              |         |          |            |         |         |             |      |  |           |        |      |  |         |        |    
|                            |                                             |      | 2002 |                     |     |              |         |         |            |              |        |           |            |         |        |              |      |  |          |         |      |  |        |        
|                           
|James A. Ackerman(3)        |                                             |      | 2004 |                     |     |              | 420,733  |         |            |              |        |           |            |         | 750,000 | (4)          |      |  |          |         |      |  | 453,820 | (5)    
|                            | Former Chief Executive                      |      |      | 2003                |     |              |          | 420,733 |            |              |         | 93,910    |            |         |         | 790,856      | (6)  |  |           | 200,000 |      |  |         | 359,400 | (7)
|                            | Officer                                     |      |      | 2002                |     |              |          | 420,733 |            |              |         |          |            |         |         | 767,765      | (8)  |  |           |        |      |  |         | 597,000 | (9)
|                           
|Mark H. Allen (10)          |                                             |      | 2004 |                     |     |              | 339,863  |         |            |              |        |           |            |         |        |              |      |  | 40,000    |         |      |  |        |        
|                            | Executive Vice President                    |      |      | 2003                |     |              |          |        |            |              |         | 91,105    | (11)       |         |         |             |      |  |           | 150,000 | (12) |  |         |        |    
|                            | and Managing Director                       |      |      | 2002                |     |              |          |        |            |              |         |          |            |         |         |             |      |  |           |        |      |  |         |        |    
|                            | Technology Licensing and Commercial Affairs |      |      |                     |     |              |          |         |            |              |         |           |            |         |         |              |      |  |           |         |      |  |         |         |    
|                           
|Nigel B. Bennett            |                                             |      | 2004 |                     |     |              | 225,500  |         |            |              |        |           |            |         |        |              |      |  | 20,000    |         |      |  | 3,000   | (2)    
|                            | Senior Vice President and                   |      |      | 2003                |     |              |          | 220,000 |            |              |         | 49,105    |            |         |         | 50,511       | (13) |  |           | 20,000  |      |  |         | 3,000   | (2)
|                            | General Manager EMEA                        |      |      | 2002                |     |              |          | 220,000 |            |              |         |          |            |         |         |             |      |  |           |        |      |  |         |        |    
|                           
|Wesley O. Hoffman (14)      |                                             |      | 2004 |                     |     |              | 275,000  |         |            |              |        |           |            |         |        |              |      |  | 50,000    |         |      |  | 3,000   | (2)    
|                            | Executive Vice President                    |      |      | 2003                |     |              |          | 96,955  |            |              |         | 21,526    |            |         |         |             |      |  |           | 100,000 |      |  |         | 2,000   | (2)
|                            | and General Manager of                      |      |      | 2002                |     |              |          |        |            |              |         |          |            |         |         |             |      |  |           |        |      |  |         |        |    
|                            | North American Cable                        |      |      |                     |     |              |          |         |            |              |         |           |            |         |         |              |      |  |           |         |      |  |         |         |    
|                           
|Alec Livingstone (15)       |                                             |      | 2004 |                     |     |              | 315,100  |         |            |              |        |           |            |         |        |              |      |  | 40,000    |         |      |  |        |        
|                            | Senior Vice President and                   |      |      | 2003                |     |              |          | 281,100 |            |              |         | 70,885    |            |         |         | 49,000       | (16) |  |           | 50,000  |      |  |         |        |    
|                            | General Manager                            |      |      | 2002                |     |              |          | 259,100 |            |              |         |          |            |         |         |             |      |  |           |        |      |  |         |        |    
|                            | Platform Development                        |      |      |                     |     |              |          |         |            |              |         |           |            |         |         |              |      |  |           |         |      |  |         |         |    






| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (*) | Bonus compensation is displayed for the year such bonus was
    earned, except for the bonus Mr. Chiddix received pursuant to
    his employment agreement which was both earned and paid in 2004.
    Bonus awards for our senior executives in respect of 2004 have
    not been determined as of the date of this Annual Report. Upon
    any such determination, we would, to the extent required, file
    information with respect to such awards with the Securities and
    Exchange Commission. Bonus awards for the year ended
    December 31, 2003 were paid in the form of OpenTV
    Class A ordinary shares.
|
| | (1) | Mr. Chiddixs employment as our Chief Executive
    Officer commenced in May 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| | (2) | Represents matching contributions made to the individuals
    401(k) plan account in the fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (3) | Mr. Ackerman resigned as Chief Executive Officer in May
    2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | (4) | Represents (i) loan forgiveness ($602,011) and
    (ii) the fair market value of 43,662 shares granted to Mr.
    Ackerman on January 2, 2004 ($147,989). For a more detailed
    description of the loan forgiveness, see Item 13.
    Certain Relationships and Related Transactions 
    Forgiveness of Executive Officer Loan.                                                                                                                                                                                                                                                                                      
|
| | (5) | Represents (i) a severance payment ($410,367), of which
    $210,367 was paid in 2004 and $200,000 was paid in 2005,
    (ii) vacation payment ($40,454), and (iii) a $3,000
    matching contribution made to Mr. Ackermans 401(k)
    plan account.                                                                                                                                                                                                                                                                                                                                                                     
|
| | (6) | Represents (i) loan forgiveness ($602,011), (ii) the
    fair market value of 121,402 of our Class A ordinary shares
    granted to Mr. Ackerman in October 2003 ($147,989) and
    (iii) reimbursement of part of Mr. Ackermans
    automobile and other expenses ($40,856).                                                                                                                                                                                                                                                                                                                                             

III-5



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##### Table of Contents





| |     |                                                                                                                                                                                                                                                                                 
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (7) | Represents a payment of $356,400 made pursuant to a management
    retention agreement with Mr. Ackerman and a $3,000 matching
    contribution made to Mr. Ackermans 401(k) plan
    account.                                                                                 
|
| | (8) | Represents (i) loan forgiveness ($602,011), (ii) the
    fair market value of 17,830 of our Class A ordinary shares
    granted to Mr. Ackerman on January 2, 2002 ($147,989)
    and (iii) reimbursement of part of Mr. Ackermans
    automobile and other expenses ($17,765).
|
| | (9) | Represents a payment of $594,000 made pursuant to a management
    retention agreement with Mr. Ackerman and a $3,000 matching
    contribution made to Mr. Ackermans 401(k) plan
    account.                                                                                 



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Mr. Allens employment with us commenced in March
    2004. Prior to that time, Mr. Allen provided services to us
    through Liberty Broadband Interactive Television, a company that
    formerly provided management services to us.                                                                                                                                                                                                                                                                         
|    
|(11) | Represents payments made in connection with services provided to
    us through Liberty Broadband Interactive Television.                                                                                                                                                                                                                                                                                                                                                                                       
|    
|(12) | Represents an option to purchase (i) 50,000 shares
    granted on June 12, 2003 and (ii) 100,000 shares
    granted on September 1, 2003, in each case, in connection
    with services provided to us through Liberty Broadband
    Interactive Television.                                                                                                                                                                                                                                                    
|    
|(13) | Represents a payment of $50,511 made as a pay-out of the balance
    of a deferred compensation plan.                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|(14) | Mr. Hoffmans employment with us commenced in August
    2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    
|(15) | Dr. Livingstones salary and bonus are paid in Pound
    Sterling and the amounts have been translated into United States
    dollars. Dr. Livingstones salary was converted to
    U.S. dollars by applying the Interbank annual average pound
    sterling/ U.S. dollar exchange rate for the applicable
    fiscal year. Dr. Livingstones 2003 bonus award
    was converted to U.S. dollars by applying the Interbank
    pound sterling/ U.S. dollar exchange rate applicable as of
    January 14, 2004.
|    
|(16) | Represents a tax equalization payment ($49,000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                



Option Grants in 2004






III-6



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##### Table of Contents



|                  |  |            |           |            |              |  |    |          |  |   |                            |                              |  |    |           |  |     |   |           |  |  |   |           | 
|----------------- |  | ---------- | --------- | ---------- | ------------ |  | -- | -------- |  | - | -------------------------- | ---------------------------- |  | -- | --------- |  | --- | - | --------- |  |  | - | --------- | 
|                  |  |            |           | Percent of |              |  |    |          |  |   | Potential Realizable Value |                             
|                  |  | Number of  |           |            | Total        |  |    |          |  |   |                            | at Assumed Rates of          | 
|                  |  | Securities |           |            | Options      |  |    |          |  |   |                            | Stock Price Appreciation for | 
|                  |  | Underlying |           |            | Granted to   |  |    |          |  |   |                            | Option Term                  | 
|                  |  | Options    |           |            | Employees in |  |    | Exercise |  |   | Expiration                 |                              |  |    |          
|Name              |  | Granted    |           |            | Fiscal Year  |  |    | Price    |  |   | Date                       |                              |  | 5% |           |  | 10% |  
|                  |  |            |           |            |              |  |    |          |  |   |                            |                              |  |    |           |  |     |  
|James A. Chiddix  |  |            | 1,000,000 |            |              |  | 36 | %        |  | $ | 2.99                       |                              |  |    | 3/23/2014 |  |     | $ | 1,880,395 |  |  | $ | 4,765,290 | 
|James J. Ackerman |  |            |          |            |              |  |   |          |  |   |                           |                              |  |    |          |  |     |   |          |  |  |   |          | 
|Mark H. Allen     |  |            | 40,000    |            |              |  | 1  | %        |  | $ | 2.99                       |                              |  |    | 3/23/2014 |  |     | $ | 75,216    |  |  | $ | 190,612   | 
|Nigel B. Bennett  |  |            | 20,000    |            |              |  | 1  | %        |  | $ | 2.99                       |                              |  |    | 3/23/2014 |  |     | $ | 36,608    |  |  | $ | 95,306    | 
|Wesley O. Hoffman |  |            | 50,000    |            |              |  | 2  | %        |  | $ | 2.99                       |                              |  |    | 3/23/2014 |  |     | $ | 94,020    |  |  | $ | 238,265   | 
|Alec Livingstone  |  |            | 40,000    |            |              |  | 1  | %        |  | $ | 2.99                       |                              |  |    | 3/23/2014 |  |     | $ | 75,216    |  |  | $ | 190,612   | 

Option Exercises in 2004 and Year-End Option Values




|                  |  |                 |   |  |          |                            |   |             |                             |  |               |  |  |             |           |  |               |  |   |  |  |   |         | 
|----------------- |  | --------------- | - |  | -------- | -------------------------- | - | ----------- | --------------------------- |  | ------------- |  |  | ----------- | --------- |  | ------------- |  | - |  |  | - | ------- | 
|                  |  |                 |   |  |          | Number of Securities       |   |             | Value of Unexercised In-The | 
|                  |  |                 |   |  |          | Underlying Unexercised     |   |             | Money Options at Fiscal     | 
|                  |  |                 |   |  |          | Options at Fiscal Year-End |   |             | Year-End                    | 
|                  |  | Shares Acquired |   |  | Value    |                            |   |             |                             |  |               | 
|Name              |  | Upon Exercise   |   |  | Realized |                            |   | Exercisable |                             |  | Unexercisable |  |  | Exercisable |           |  | Unexercisable | 
|                  |  |                 |   |  |          |                            |   |             |                             |  |               |  |  |             |           |  |               | 
|James A. Chiddix  |  |                 |  |  |          |                            |  |             |                             |  |              |  |  |             | 1,000,000 |  |               |  |  |  |  | $ | 850,000 | 
|James J. Ackerman |  |                 |  |  |          |                            |  |             |                             |  | 395,833       |  |  |             | 204,167   |  |               |  |  |  |  |   | 412,000 | 
|Mark H. Allen     |  |                 |  |  |          |                            |  |             |                             |  | 25,000        |  |  |             | 165,000   |  |               |  |  |  |  |   | 137,000 | 
|Nigel B. Bennett  |  |                 |  |  |          |                            |  |             |                             |  | 122,136       |  |  |             | 40,416    |  |               |  |  |  |  |   | 61,200  | 
|Wesley O. Hoffman |  |                 |  |  |          |                            |  |             |                             |  |              |  |  |             | 150,000   |  |               |  |  |  |  |   | 112,500 | 
|Alec Livingstone  |  |                 |  |  |          |                            |  |             |                             |  | 43,583        |  |  |             | 90,417    |  |               |  |  |  |  |   | 144,500 | 

Compensation of Directors


Base Compensation and Expense Reimbursement.


Options.




III-7



---



##### Table of Contents





Employment Agreements




| |                                                  
| | -------------------------------------------------
| | Employment agreement with Chief Executive Officer













III-8



---



##### Table of Contents







| |                                                   
| | --------------------------------------------------
| | Employment Letters With Certain Executive Officers







Compensation Committee Interlocks and Insider
Participation




III-9



---



##### Table of Contents



The following pages contain a report issued by our
compensation committee relating to executive compensation for
2004. Stockholders should be aware that under Securities and
Exchange Commission rules, the report on executive compensation
by the compensation committee is not deemed to be
filed or incorporated by reference in any past or
future filing by us under the Securities Exchange Act of 1934 or
the Securities Act of 1933, except to the extent that we
specifically incorporate this information by reference.


REPORT ON EXECUTIVE COMPENSATION


Board Compensation Committee Report on Executive
Compensation




General Compensation Policy.


Base Salary.


Annual Bonus Opportunity.


Incentive Compensation.


III-10



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##### Table of Contents



CEO Compensation.


Limitations on Deductibility of Compensation.




Robert R. Bennett


J. Timothy Bryan


J. David Wargo


Michael Zeisser


James A. Chiddix (other than in respect of compensation of
the Chief Executive Officer)


III-11



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##### Table of Contents



Stock Price Performance






COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN


AMONG OPENTV CORP., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND


THE NASDAQ COMPUTER & DATA PROCESSING INDEX





|                                  |  |                         |        |  |       |  |       |       |  |  |       |  |  |       |       |  |       |  |       |  |  |  |       | 
|--------------------------------- |  | ----------------------- | ------ |  | ----- |  | ----- | ----- |  |  | ----- |  |  | ----- | ----- |  | ----- |  | ----- |  |  |  | ----- | 
|                                  |  | Cumulative Total Return |       
|                                  |  |                         |       
|                                  |  | 12/99                   |        |  | 12/00 |  |       | 12/01 |  |  | 12/02 |  |  | 12/03 |       |  | 12/04 | 
|                                  |  |                         |        |  |       |  |       |       |  |  |       |  |  |       |       |  |       | 
|OPENTV CORP.                      |  |                         | 100.00 |  |       |  | 12.85 |       |  |  | 10.31 |  |  |       | 1.48  |  |       |  | 4.16  |  |  |  | 4.79  | 
|NASDAQ STOCK MARKET (U.S.)        |  |                         | 100.00 |  |       |  | 72.62 |       |  |  | 50.23 |  |  |       | 29.12 |  |       |  | 44.24 |  |  |  | 47.16 | 
|NASDAQ COMPUTER & DATA PROCESSING |  |                         | 100.00 |  |       |  | 51.77 |       |  |  | 37.44 |  |  |       | 26.67 |  |       |  | 37.90 |  |  |  | 42.79 | 






|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management

Securities Authorized for Issuance Under Equity Compensation
Plans.




Five Percent Beneficial Holders






III-12



---



##### Table of Contents





|                                     |                                              |           |         |         |           |  |           |            |  |  |        |      |   |  |      |     | 
|------------------------------------ | -------------------------------------------- | --------- | ------- | ------- | --------- |  | --------- | ---------- |  |  | ------ | ---- | - |  | ---- | --- | 
|                                     |                                              | Series of |         |         | Number of |  |           | Percent of |  |  | Voting |     
|Name and Address of Beneficial Owner |                                              | Stock     |         |         | Shares    |  |           | Class      |  |  | Power  |     
|                                     |                                              |           |         |         |           |  |           |            |  |  |        |     
|Liberty Media Corporation(1)         |                                              |           | Class A |         |           |  | 8,847,667 |            |  |  | 9.7    | %    |   |  | 79.0 |    
|                                     | 12300 Liberty Boulevard                      |           |         | Class B |           |  |           | 30,510,150 |  |  |        | 99.6 | % |  |      |    | 
|                                     | Englewood, CO 80112                          |           |         |         |           |  |           |            |  |  |        |      |   |  |      |     | 
|Sun Microsystems, Inc.(2)            |                                              |           | Class A |         |           |  |          |            |  |  |       |      |   |  | 16.0 | (3)
|                                     | 901 San Antonio Road                         |           |         | Class B |           |  |           | 7,594,796  |  |  |        | 19.9 | % |  |      |    | 
|                                     | Mail Stop PAL 1-S-21
    Palo Alto, CA 94304 |           |         |         |           |  |           |            |  |  |        |      |   |  |      |     | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Liberty Media Corporation holds 2,313,716 of our Class A
    ordinary shares and 303,966 of our Class B ordinary shares
    through its subsidiary LDIG OTV, Inc.; 5,866,640 of our
    Class A ordinary shares through its subsidiary Liberty
    IATV, Inc.; and 667,311 of our Class A ordinary shares and
    30,206,154 of our Class B ordinary shares through its
    subsidiary Liberty IATV Holdings, Inc.                                                                                                                   
|   
|(2) | Sun Microsystems, Inc., through its subsidiary Sun TSI
    Subsidiary, Inc., owns 7,594,796 shares of Class B
    common stock of our subsidiary OpenTV, Inc., which may be
    exchanged at any time into an equal number of our Class B
    ordinary shares. The shares, which do not confer voting rights
    on matters presented for a vote of our stockholders unless
    converted into our Class B ordinary shares, have been held
    by Sun Microsystems, Inc. since August 1999, prior to our
    initial public offering.
|   
|(3) | Assumes conversion into our Class B ordinary shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

Security Ownership of Management








III-13



---



##### Table of Contents





|                         |  |                |                         |                   |           |  |            |             |  |        |       |   |  |  |      | 
|------------------------ |  | -------------- | ----------------------- | ----------------- | --------- |  | ---------- | ----------- |  | ------ | ----- | - |  |  | ---- | 
|                         |  |                |                         | Amount and Nature |           |  |            |             | 
|                         |  |                |                         | of Beneficial     |           |  | Percent    |             |  | Voting |      
|Name of Beneficial Owner |  | Title of Class |                         |                   | Ownership |  |            | of Class    |  |        | Power |  
|                         |  |                |                         |                   |           |  |            |             |  |        |       |  
|James J. Ackerman        |  |                | OpenTV Class A          |                   |           |  | 601,419    | (1)         |  |        | *     |   |  |  | *    | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | Liberty Media Series  B |                   |           |  |           |             |  |        |      |   |  |  |      | 
|Mark H. Allen            |  |                | OpenTV Class A          |                   |           |  | 45,277     | (2)         |  |        | *     |   |  |  | *    | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | Liberty Media Series  B |                   |           |  |           |             |  |        |      |   |  |  |      | 
|Nigel B. Bennett         |  |                | OpenTV Class A          |                   |           |  | 129,103    | (3)         |  |        | *     |   |  |  | *    | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | Liberty Media Series  B |                   |           |  |           |             |  |        |      |   |  |  |      | 
|Robert R. Bennett        |  |                | OpenTV Class A          |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  | 4,004,826  | (4),(5),(6) |  |        | *     |   |  |  | 3.6% | 
|                         |  |                | Liberty Media Series  B |                   |           |  | 13,761,279 | (5),(6)     |  |        | 11.4  | % |  |  |      | 
|J. Timothy Bryan         |  |                | OpenTV Class A          |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | Liberty Media Series  B |                   |           |  |           |             |  |        |      |   |  |  |      | 
|James A. Chiddix         |  |                | OpenTV Class A          |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | Liberty Media Series  B |                   |           |  |           |             |  |        |      |   |  |  |      | 
|Wesley O. Hoffman        |  |                | OpenTV Class A          |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | Liberty Media Series  B |                   |           |  |           |             |  |        |      |   |  |  |      | 
|Alec Livingstone         |  |                | OpenTV Class A          |                   |           |  | 61,319     | (7)         |  |        | *     |   |  |  | *    | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | Liberty Media Series  B |                   |           |  |           |             |  |        |      |   |  |  |      | 
|Jerry Machovina          |  |                | OpenTV Class A          |                   |           |  |           |             |  |        |      |   |  |  |     | 
|                         |  |                | OpenTV Class B          |                   |           |  |           |             |  |        |      |   |  |  |      | 
|                         |  |                | Liberty Media Series  A |                   |           |  | 59,410     |             |  |        | *     |   |  |  | *    | 
|                         |  |                | Liberty Media Series  B |                   |           |  |           |             |  |        |      |   |  |  |      | 

III-14



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##### Table of Contents



|                                                                         |  |                |                         |                   |           |  |            |          |  |        |       |   |  |  |      | 
|------------------------------------------------------------------------ |  | -------------- | ----------------------- | ----------------- | --------- |  | ---------- | -------- |  | ------ | ----- | - |  |  | ---- | 
|                                                                         |  |                |                         | Amount and Nature |           |  |            |          | 
|                                                                         |  |                |                         | of Beneficial     |           |  | Percent    |          |  | Voting |      
|Name of Beneficial Owner                                                 |  | Title of Class |                         |                   | Ownership |  |            | of Class |  |        | Power |  
|                                                                         |  |                |                         |                   |           |  |            |          |  |        |       |  
|J. David Wargo                                                           |  |                | OpenTV Class A          |                   |           |  | 12,371     |          |  |        | *     |   |  |  | *    | 
|                                                                         |  |                | OpenTV Class B          |                   |           |  |           |          |  |        |      |   |  |  |      | 
|                                                                         |  |                | Liberty Media Series  A |                   |           |  | 152,272    | (8)      |  |        | *     |   |  |  | *    | 
|                                                                         |  |                | Liberty Media Series  B |                   |           |  |           |          |  |        |      |   |  |  |      | 
|Anthony G. Werner                                                        |  |                | OpenTV Class A          |                   |           |  |           |          |  |        |      |   |  |  |     | 
|                                                                         |  |                | OpenTV Class B          |                   |           |  |           |          |  |        |      |   |  |  |      | 
|                                                                         |  |                | Liberty Media Series  A |                   |           |  | 227,300    | (9)      |  |        | *     |   |  |  | *    | 
|                                                                         |  |                | Liberty Media Series  B |                   |           |  |           |          |  |        |      |   |  |  |      | 
|Michael Zeisser                                                          |  |                | OpenTV Class A          |                   |           |  |           |          |  |        |      |   |  |  |     | 
|                                                                         |  |                | OpenTV Class B          |                   |           |  |           |          |  |        |      |   |  |  |      | 
|                                                                         |  |                | Liberty Media Series  A |                   |           |  | 204,500    |          |  |        | *     |   |  |  | *    | 
|                                                                         |  |                | Liberty Media Series  B |                   |           |  |           |          |  |        |      |   |  |  |      | 
|All current directors and executive officers as a group
    (17 persons) |  |                | OpenTV Class A          |                   |           |  | 591,409    |          |  |        | *     |   |  |  | *    | 
|                                                                         |  |                | OpenTV Class B          |                   |           |  |           |          |  |        |      |   |  |  |      | 
|                                                                         |  |                | Liberty Media Series  A |                   |           |  | 4,648,308  |          |  |        | *     |   |  |  | 3.6% | 
|                                                                         |  |                | Liberty Media Series  B |                   |           |  | 13,761,279 |          |  |        | 11.4  | % |  |  |      | 






| |   |                                                       
| | - | ------------------------------------------------------
| | * | Indicates less than 1 percent of class of voting power



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes beneficial ownership of 400,000 of our Class A
    ordinary shares that may be acquired within 60 days after
    December 31, 2004, pursuant to stock options.                                                                                                                                                                                                                                                                                    
|   
|(2) | Includes beneficial ownership of 25,000 of our Class A
    ordinary shares that may be acquired within 60 days after
    December 31, 2004, pursuant to stock options.                                                                                                                                                                                                                                                                                     
|   
|(3) | Includes beneficial ownership of 122,552 of our Class A
    ordinary shares that may be acquired within 60 days after
    December 31, 2004, pursuant to stock options.                                                                                                                                                                                                                                                                                    
|   
|(4) | Includes 27,271 shares of Liberty Media Series A
    common stock held by the Liberty Media 401(k) Savings Plan.                                                                                                                                                                                                                                                                                                                                           
|   
|(5) | Includes beneficial ownership of 225,640 shares of Liberty
    Media Series A common stock and 13,760,879 shares of
    Liberty Media Series B common stock which may be acquired
    within 60 days after December 31, 2004, pursuant to
    stock options. Mr. Bennett has the right to convert the
    options to purchase shares of Liberty Media Series B common
    stock into options to purchase shares of Liberty Media
    Series A common stock.
|   
|(6) | Includes 1,246,596 shares of Liberty Media Series A
    common stock and 400 shares of Liberty Media B common stock
    owned by Hilltop Investments, Inc., which is jointly owned by
    Mr. Bennett and his wife.                                                                                                                                                                                                                                        
|   
|(7) | Includes beneficial ownership of 44,000 of our Class A
    ordinary shares that may be acquired within 60 days after
    December 31, 2004, pursuant to stock options.                                                                                                                                                                                                                                                                                     
|   
|(8) | Includes (i) 8,750 shares of Liberty Media
    Series A common stock, which may be acquired within
    60 days after December 31, 2004, pursuant to stock
    options and (ii) 142,873 shares of Liberty Media
    Series A common stock held by accounts managed by
    Mr. Wargo, as to which shares Mr. Wargo has disclaimed
    beneficial ownership.                                                                                                  
|   
|(9) | Includes beneficial ownership of 227,300 shares of Liberty
    Media Series A common stock, which may be acquired within
    60 days after December 31, 2004, pursuant to stock
    options.                                                                                                                                                                                                                                                               



|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions



III-15



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##### Table of Contents





| |                            
| | ---------------------------
| | Investors Rights Agreement









Board of Directors.




| |   |                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | so long as the investors in our October 1999 private placement
    own a number of our ordinary shares equal to at least 60% of the
    number of shares issued to such investors in that private
    placement (which amount is referred to as the issued
    amount), two directors designated by the new investors;
|
| |  | so long as the investors in our October 1999 private placement
    own a number of our ordinary shares equal to at least 30% of the
    issued amount, one director designated by the new
    investors; and                                                                                                            
|
| |  | so long as the existing investor owns shares equal to at least
    30% of the aggregate amount of our Class B ordinary shares
    issuable in respect of its shares of Class B common stock
    of OpenTV, Inc., one director designated by the existing
    investor.                                                  



Approval Rights.


Transfers and Exchanges.




III-16



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##### Table of Contents



Registration Rights.


Nonsolicitation.




| |                                             
| | --------------------------------------------
| | Amended and Restated Stockholders Agreement



Fundamental Business Decisions.




| |   |                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | any business combination involving a change of control of us;                                                                                                                                                                                                                                                                                                                   
|
| |  | any change to our memorandum of association or articles of
    association that (a) materially adversely affects Sun TSI
    Subsidiarys rights under the Exchange Agreement described
    below, (b) affects Sun TSI Subsidiary more adversely than
    OTV Holdings or (c) would impact the intellectual property
    rights licensed by Sun Microsystems to OpenTV, Inc.; or
|
| |  | any assignment or sublicensing of licensed Sun Microsystems
    intellectual property made outside of the ordinary course of
    business or in connection with our liquidation.                                                                                                                                                                                                





| |   |                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | any business combination involving a change of control of
    OpenTV, Inc.;                                                                                                                                                                                                                                                                        
|
| |  | any change to the charter of OpenTV, Inc. that
    (a) materially adversely affects Sun TSI Subsidiarys
    rights under the Exchange Agreement described below,
    (b) affects Sun TSI Subsidiary more adversely than OpenTV,
    Inc. or (c) would impact the intellectual property rights
    licensed by Sun Microsystems to OpenTV, Inc.; or
|
| |  | any assignment or sublicensing of licensed Sun Microsystems
    intellectual property made outside of the ordinary course of
    business or in connection with the liquidation of OpenTV, Inc.                                                                                                                                                    



Restrictions on Transfer of Shares by Sun TSI Subsidiary.




| |   |                                                                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | in exchange for our ordinary shares pursuant to the terms of the
    Exchange Agreement described below; or                                                                                            
|
| |  | to an affiliate of Sun TSI Subsidiary so long as Sun TSI
    Subsidiary remains bound, and the transferee agrees to be bound,
    by the terms of the Amended and Restated Stockholders
    Agreement.

Term.


III-17



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##### Table of Contents





| |                   
| | ------------------
| | Exchange Agreement







| |                                                                                 
| | --------------------------------------------------------------------------------
| | Management Fee and Expense Reimbursement Arrangements with
    Liberty Broadband





| |                                        
| | ---------------------------------------
| | Liberty Media Medical Insurance Program





| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Arrangements with Liberty Media regarding the Chairman of
    our Board of Directors





| |                                      
| | -------------------------------------
| | Forgiveness of Executive Officer Loan







| |                                                                     
| | --------------------------------------------------------------------
| | Indemnification Agreements with Directors and Executive
    Officers



III-18



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##### Table of Contents





|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services



|                                            |  |      |       |  |      |   |     | 
|------------------------------------------- |  | ---- | ----- |  | ---- | - | --- | 
|                                            |  | 2004 |       |  | 2003 |  
|                                            |  |      |       |  |      |  
|Audit fees, excluding audit-related fees(1) |  | $    | 1,036 |  |      | $ | 371 | 
|Audit-related fees(2)                       |  | $    | 47    |  |      | $ | 696 | 
|Tax fees(3)                                 |  | $    | 156   |  |      | $ | 277 | 
|All other fees(4)                           |  | $    | 8     |  |      | $ | 0   | 






|    |                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Represents fees for professional services provided in connection
    with the audit of our financial statements and review of our
    quarterly financial statements. 2004 fees include work required
    under Section 404 of the Sarbanes-Oxley Act of 2002.
|   
|(2) | Represents professional consultations with respect to accounting
    issues affecting our financial statements, new accounting
    pronouncements, issuance of consents for regulatory filings and
    acquisition related services.                          
|   
|(3) | Represents tax compliance and consultations regarding the tax
    implications of certain transactions and application of foreign
    tax laws.                                                                                                               
|   
|(4) | Represents the cost of training classes attended by staff.                                                                                                                                                                                                    



III-19



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##### Table of Contents



PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

(1) Financial Statements Included in Part II of
this Report:


|                                                                                                                                                               |  |      |     | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                                                                               |  | Page |    
|                                                                                                                                                               |  |      |    
|Index
    to Consolidated Financial Statements                                                                                                                 |  |      | F-1 | 
|Report
    of Independent Registered Public Accounting Firm                                                                                                    |  |      | F-2 | 
|Consolidated
    Balance Sheets as of December 31, 2004 and 2003                                                                                               |  |      | F-3 | 
|Consolidated
    Statements of Operations for the years ended December 31,
    2004, 2003 and 2002                                                             |  |      | F-4 | 
|Consolidated
    Statements of Shareholders Equity and Comprehensive Loss
    for the years ended December 31,
    2004,                    2003
    and 2002 |  |      | F-5 | 
|Consolidated
    Statements of Cash Flows for the years ended December 31,
    2004, 2003 and 2002                                                             |  |      | F-6 | 
|Notes
    to the Consolidated Financial Statements                                                                                                             |  |      | F-7 | 

(2) Financial Statement Schedule


|                                                    |  |  |      | 
|--------------------------------------------------- |  |  | ---- | 
|Schedule II 
    Valuation and Qualifying Accounts |  |  | F-39 | 

(3) Exhibits


|         |    |    |  |                                                                                                                                                                                                                                                                                                                                                           
|-------- | -- | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |    |   
|         |    |   
|         | 3  | .1 |  | Memorandum of Association of OpenTV Corp. (incorporated by
    reference to Exhibit 3.1 of Amendment No. 2 (the
    Second F-1 Amendment) to the Registration
    Statement on Form F-1 (the F-1 Registration
    Statement) of OpenTV Corp. (File No. 333-89609), as
    filed with the Securities and Exchange Commission on
    November 18, 1999).
|         | 3  | .2 |  | Articles of Association of OpenTV Corp. (incorporated by
    reference to Exhibit 3(ii) to the Quarterly Report on Form
    10-Q of OpenTV Corp. for the quarterly period ended
    September 30, 2002, as filed with the Securities and
    Exchange Commission on November 14, 2002).                                                                   
|         | 4  | .1 |  | Specimen Certificate for Class A ordinary shares of OpenTV
    Corp. (incorporated by reference to Exhibit 4.1 of
    Amendment No. 1 (the First F-1 Amendment)
    to the F-1 Registration Statement, as filed with the
    Securities and Exchange Commission on November 10, 1999).                                                                  
|         | 10 | .1 |  | Form of Indemnification Agreement for directors and officers of
    OpenTV Corp.                                                                                                                                                                                                                                                                          
|         | 10 | .2 |  | OpenTV Corp.s Amended and Restated 1999 Employee Stock
    Purchase Plan (incorporated by reference to Exhibit 4.2 to
    the Annual Report on Form 20-F of OpenTV Corp. for the year
    ended December 31, 2000 (the 2000 20-F).                                                                                                                     
|         | 10 | .3 |  | OpenTV Corp.s Amended and Restated 1999 Share Option/
    Share Issuance Plan (incorporated by reference to
    Exhibit 10.3 of Amendment No. 3 (the Third
    F-1 Amendment) to the F-1 Registration
    Statement, as filed with the Securities and Exchange Commission
    on November 19, 1999).                                                   
|         | 10 | .4 |  | Shareholders Agreement among OTV Holdings Limited, OpenTV
    Corp. and Sun TSI Subsidiary, Inc. dated October 23, 1999
    (incorporated by reference to Exhibit 10.4 to the
    Third F-1 Amendment).                                                                                                                                                  
|         | 10 | .5 |  | Trademark License Agreement between Sun Microsystems, Inc. and
    OpenTV, Inc. dated March 20, 1998 (incorporated by
    reference to Exhibit 10.5 to the Third F-1 Amendment).                                                                                                                                                                          
|         | 10 | .6 |  | Technology License and Distribution Agreement between Sun
    Microsystems, Inc. and OpenTV, Inc. dated March 20, 1998
    (incorporated by reference to Exhibit 10.6 to the Third
    F-1 Amendment).                                                                                                                                                    
|         | 10 | .7 |  | First Amendment to Technology License and Distribution Agreement
    between Sun Microsystems, Inc. and OpenTV, Inc. dated
    June 30, 1999 (incorporated by reference to
    Exhibit 10.7 to the Third F-1 Amendment).                                                                                                                                  
|         | 10 | .8 |  | Source Code License and Binary Distribution Agreement between
    Sun Microsystems, Inc. and OpenTV, Inc. effective July 1,
    1996 (incorporated by reference to Exhibit 10.10 to the
    Third F-1 Amendment).                                                                                                                                         

IV-1



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##### Table of Contents



|         |    |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                               
|-------- | -- | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |    |     | 
|         |    |     | 
|         | 10 | .9  |  | Source Code License and Binary Distribution Agreement between
    Sun Microsystems, Inc. and OpenTV, Inc. effective April 1,
    1998 (incorporated by reference to Exhibit 10.9 to the
    Third F-1 Amendment).                                                                                                                                                                                                             
|         | 10 | .10 |  | Convertible Preferred Stock Purchase Agreement between OpenTV
    Corp. and Sun TSI Subsidiary, Inc. dated October 23, 1999
    (incorporated by reference to Exhibit 10.11 to the Second
    F-1 Amendment).                                                                                                                                                                                                                 
|         | 10 | .11 |  | Convertible Preferred Stock and Warrant Purchase Agreement among
    OpenTV Corp., America Online, Inc., General Instrument
    Corporation, LDIG OTV, Inc., News America Incorporated and
    TWI-OTV Holdings, Inc., dated October 23, 1999
    (incorporated by reference to Exhibit 10.11 to the First
    F-1 Amendment).                                                                                                
|         | 10 | .12 |  | Exchange Agreement between OpenTV Corp., OpenTV, Inc. and Sun
    TSI Subsidiary, Inc., dated October 23, 1999 (incorporated
    by reference to Exhibit 10.12 to the First
    F-1 Amendment).                                                                                                                                                                                                                               
|         | 10 | .13 |  | Investors Rights Agreement among OpenTV Corp., America
    Online, Inc., General Instrument Corporation, LDIG OTV, Inc.,
    News America Incorporated, TWI-OTV Holdings, Inc., OTV Holdings
    Limited, Sun TSI Subsidiary, Inc. and MIH (BVI) Ltd., dated
    October 23, 1999 (incorporated by reference to
    Exhibit 10.14 to the Second F-1 Amendment).                                                              
|         | 10 | .14 |  | Amended and Restated Stockholders Agreement among OpenTV
    Corp., OpenTV, Inc., OTV Holdings Limited, Sun Microsystems,
    Inc. and Sun TSI Subsidiary, Inc., dated October 23, 1999
    (incorporated by reference to Exhibit 10.15 to the Second
    F-1 Amendment).                                                                                                                                                    
|         | 10 | .15 |  | OpenTVs Amended and Restated 2000 Exchange Plan
    (incorporated by reference to Exhibit 10.1 to the
    Form 6-K of OpenTV Corp., as filed with the Securities and
    Exchange Commission on August 30, 2000).                                                                                                                                                                                                            
|         | 10 | .16 |  | Registration Rights Agreement by and among OpenTV Corp., General
    Instrument Corporation and Cable Soft Communications, Inc. dated
    November 13, 2000 (incorporated by reference to
    Exhibit 4.1 to the Form 6-K of OpenTV Corp., as filed
    with the Securities and Exchange Commission on December 1,
    2000).                                                                                                 
|         | 10 | .17 |  | Marketing Agreement dated as of January 22, 2001 by and
    between British Sky Broadcasting Limited and OpenTV, Inc.
    (incorporated by reference to Exhibit 4.22 to the 2000
    20-F).                                                                                                                                                                                                                                   
|         | 10 | .18 |  | Second Amendment to Technology License and Distribution
    Agreement between Sun Microsystems, Inc. and OpenTV, Inc., dated
    December 20, 2000 (incorporated by reference to
    Exhibit 4.23 to the 2000 20-F).                                                                                                                                                                                                          
|         | 10 | .19 |  | OpenTVs 2001 Nonstatutory Stock Option Plan (incorporated
    by reference to Exhibit 4.1 to the Registration Statement
    on Form S-8 of OpenTV Corp. (File No. 333-74026), as
    filed with the Securities and Exchange Commission on
    November 27, 2001).                                                                                                                                                            
|         | 10 | .20 |  | Letter Agreement between MIH Limited and OpenTV Corp. dated
    May 8, 2002 (incorporated by reference to Exhibit 4.34
    to the 2001 20-F).                                                                                                                                                                                                                                                                                 
|         | 10 | .21 |  | License Agreement for OpenTV Interactive Applications and
    Enterprise and Network Solutions, dated as of August 16,
    2002, by and among OpenTV, Inc., MultiChoice Africa Limited and
    MIH Limited (incorporated by reference to Exhibit 10.31 to
    the Registration Statement on Form S-4 of OpenTV Corp.
    (File No. 333-102944), as filed with the Securities and
    Exchange Commission on February 4, 2003).
|         | 10 | .22 |  | OpenTV Corp. 2003 Incentive Plan (incorporated by reference to
    Exhibit 10.32 to Amendment No. 1 to the Registration
    Statement on Form S-4 of OpenTV Corp.(File
    No. 333-102944), as filed with the Securities and Exchange
    Commission on April 25, 2003).                                                                                                                                                      
|         | 10 | .23 |  | Letter Agreement between OpenTV, Inc. and Mark Allen dated
    July 9, 2004.                                                                                                                                                                                                                                                                                                                                                  
|         | 10 | .24 |  | Letter Agreement between OpenTV, Inc. and Mazin Jadallah dated
    July 26, 2004.                                                                                                                                                                                                                                                                                                                                             
|         | 10 | .25 |  | Form of Incentive Stock Option Agreement for OpenTV Corp.
    Amended and Restated 1999 Share Option/Share Issuance Plan.                                                                                                                                                                                                                                                                                                     
|         | 10 | .26 |  | Form of Nonstatutory Stock Option Agreement for OpenTV Corp.
    2001 Nonstatutory Stock Option Plan.                                                                                                                                                                                                                                                                                                                         
|         | 10 | .27 |  | Form of Incentive Stock Option Agreement for OpenTV Corp. 2003
    Incentive Plan.                                                                                                                                                                                                                                                                                                                                            

IV-2



---



##### Table of Contents



|         |    |    |  |                                                                                                                                                                                                                                                                                                               
|-------- | -- | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibits |    |    | 
|         |    |    | 
|         | 18 | .1 |  | Letter from KPMG LLP dated March 12, 2004 regarding change
    in accounting principle (incorporated by reference to
    Exhibit 18.1 to the Annual Report on Form 10-K of OpenTV
    Corp. for the year ended December 31, 2003, as filed with
    the Securities and Exchange Commission on March 15, 2004).
|         | 21 | .1 |  | List of Subsidiaries.                                                                                                                                                                                                                                                                                         
|         | 23 | .1 |  | Consent of Independent Registered Accounting Firm (KPMG LLP).                                                                                                                                                                                                                                                 
|         | 31 | .1 |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                       
|         | 31 | .2 |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                       
|         | 32 | .1 |  | Certifications of Chief Executive Officer and Chief Financial
    Officer pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                                                                                                                                                                      

IV-3



---



##### Table of Contents



SIGNATURES






| |                                     
| | ------------------------------------
| | OPENTV CORP.                        
|
| | /s/ James A. Chiddix                
| |                                     
| | James A. Chiddix                    
| | Chairman and Chief Executive Officer





|                                           |  |                                                                                            |  |                |  | 
|------------------------------------------ |  | ------------------------------------------------------------------------------------------ |  | -------------- |  | 
|Name                                       |  | Title                                                                                      |  | Date          
|                                           |  |                                                                                            |  |               
|                                          
|/s/ James A. ChiddixJames
    A. Chiddix   |  | Chairman and Chief Executive Officer
    (Principal Executive Officer)                     |  | March 15, 2005
|                                          
|/s/ Richard HornsteinRichard
    Hornstein |  | Chief Financial Officer
    (Principal Financial Officer and Principal Accounting Officer) |  | March 15, 2005
|                                          
|/s/ Robert R. BennettRobert
    R. Bennett |  | Director                                                                                   |  | March 15, 2005
|                                          
|/s/ J. Timothy BryanJ.
    Timothy Bryan   |  | Director                                                                                   |  | March 15, 2005
|                                          
|/s/ Jerry MachovinaJerry
    Machovina     |  | Director                                                                                   |  | March 15, 2005
|                                          
|/s/ J. David WargoJ.
    David Wargo       |  | Director                                                                                   |  | March 15, 2005
|                                          
|/s/ Anthony G. WernerAnthony
    G. Werner |  | Director                                                                                   |  | March 15, 2005
|                                          
|/s/ Michael ZeisserMichael
    Zeisser     |  | Director                                                                                   |  | March 15, 2005

IV-4



---










OPENTV CORP.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                   |                                  |          |      |     | 
|-------------------------------------------------------------------------------------------------- | -------------------------------- | -------- | ---- | --- | 
|                                                                                                   |                                  | Page No. |     
|                                                                                                   |                                  |          |     
|Report of Independent Registered Public
    Accounting Firm                                        |                                  |          | F-2  |    
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                   |                                  |          | F-3  |    
|Consolidated Statements of Operations for
    the years ended December 31, 2004, 2003, and         |                                  |          |      |    
|                                                                                                   | 2002                             |          |      | F-4 | 
|Consolidated Statements of
    Shareholders Equity and Comprehensive Loss for the years
    ended |                                  |          |      |    
|                                                                                                   | December 31, 2004, 2003 and 2002 |          |      | F-5 | 
|Consolidated Statements of Cash Flows for
    the years ended December 31, 2004, 2003 and 2002     |                                  |          | F-6  |    
|Notes to the Consolidated Financial
    Statements                                                 |                                  |          | F-7  |    
|Schedule II  Valuation and
    Qualifying Accounts                                                |                                  |          | F-39 |    



F-1



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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM















/s/





F-2



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##### Table of Contents






OPENTV CORP.


CONSOLIDATED BALANCE SHEETS


|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |   |         |            |         | 
|----------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------- | ---------- | ------------ | - | ------- | ---------- | ------- | 
|                                                                  |                                                                                                                                                                                                                   | December 31,                |         |            | December 31, |  
|                                                                  |                                                                                                                                                                                                                   | 2004                        |         |            | 2003         |  
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | (In thousands, except share |        
|                                                                  |                                                                                                                                                                                                                   | amounts)                    |        
|ASSETS                                                           
|Current assets:                                                   |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|                                                                  | Cash and cash equivalents                                                                                                                                                                                         |                             | $       | 35,660     |              |   | $       | 47,747     |        
|                                                                  | Short-term marketable debt securities                                                                                                                                                                             |                             |         | 1,986      |              |   |         | 10,577     |        
|                                                                  | Accounts receivable, net of allowance for doubtful accounts of
    $559 and $789 at December 31, 2004 and 2003, respectively                                                                                      |                             |         | 17,797     |              |   |         | 12,536     |        
|                                                                  | Prepaid expenses and other current assets                                                                                                                                                                         |                             |         | 3,073      |              |   |         | 4,722      |        
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total current assets        |         |            | 58,516       |   |         |            | 75,582  | 
|Long-term marketable debt securities                              |                                                                                                                                                                                                                   |                             | 25,374  |            |              |   | 15,172  |           
|Property and equipment, net                                       |                                                                                                                                                                                                                   |                             | 6,858   |            |              |   | 11,689  |           
|Goodwill                                                          |                                                                                                                                                                                                                   |                             | 70,466  |            |              |   | 70,398  |           
|Intangible assets, net                                            |                                                                                                                                                                                                                   |                             | 25,108  |            |              |   | 33,336  |           
|Other assets                                                      |                                                                                                                                                                                                                   |                             | 6,089   |            |              |   | 13,378  |           
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total assets                |         | $          | 192,411      |   |         | $          | 219,555 | 
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                 
|LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS
    EQUITY      
|Current liabilities:                                              |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|                                                                  | Accounts payable                                                                                                                                                                                                  |                             | $       | 3,870      |              |   | $       | 5,854      |        
|                                                                  | Accrued liabilities                                                                                                                                                                                               |                             |         | 23,916     |              |   |         | 32,174     |        
|                                                                  | Accrued restructuring                                                                                                                                                                                             |                             |         | 1,394      |              |   |         | 7,789      |        
|                                                                  | Due to Liberty Media                                                                                                                                                                                              |                             |         | 388        |              |   |         | 630        |        
|                                                                  | Current portion of deferred revenue                                                                                                                                                                               |                             |         | 10,520     |              |   |         | 9,740      |        
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total current liabilities   |         |            | 40,088       |   |         |            | 56,187  | 
|Deferred revenue, less current portion                            |                                                                                                                                                                                                                   |                             | 6,563   |            |              |   | 5,310   |           
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total liabilities           |         |            | 46,651       |   |         |            | 61,497  | 
|Commitments and contingencies (Note 13)                           |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|Minority interest                                                 |                                                                                                                                                                                                                   |                             | 585     |            |              |   | 1,075   |           
|Shareholders equity:                                             |                                                                                                                                                                                                                   |                             |         |            |              |   |         |           
|                                                                  | Class A ordinary shares, no par value,
    500,000,000 shares authorized; 91,552,293 and
    88,969,550 shares issued and outstanding, including
    treasury shares, at December 31, 2004 and 2003, respectively |                             |         | 2,213,951  |              |   |         | 2,208,370  |        
|                                                                  | Class B ordinary shares, no par value,
    200,000,000 shares authorized; 30,631,746 shares
    issued and outstanding                                                                                            |                             |         | 35,953     |              |   |         | 35,953     |        
|                                                                  | Additional paid-in capital                                                                                                                                                                                        |                             |         | 470,453    |              |   |         | 466,228    |        
|                                                                  | Treasury shares at cost, 76,327 shares at December 31,
    2004 and 2003, respectively                                                                                                                            |                             |         | (38        | )            |   |         | (38        | )      
|                                                                  | Deferred share-based compensation                                                                                                                                                                                 |                             |         | (10        | )            |   |         | (36        | )      
|                                                                  | Accumulated other comprehensive income                                                                                                                                                                            |                             |         | 523        |              |   |         | 201        |        
|                                                                  | Accumulated deficit                                                                                                                                                                                               |                             |         | (2,575,657 | )            |   |         | (2,553,695 | )      
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|                                                                  |                                                                                                                                                                                                                   | Total shareholders equity  |         |            | 145,175      |   |         |            | 156,983 | 
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  
|Total liabilities, minority interest and shareholders
    equity |                                                                                                                                                                                                                   | $                           | 192,411 |            |              | $ | 219,555 |           
|                                                                  |                                                                                                                                                                                                                   |                             |         |            |              |  



F-3



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##### Table of Contents






OPENTV CORP.


CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |         |   |            |         |         |  
|----------------------------------------------------------------------- | ------------------------------------------ | -------------------------------------------------------------------------------------------------- | ----------- | ------ | ------- | - | ---------- | ------ | ------- | - | ---------- | ------- | ------- | -
|                                                                        |                                            | Year Ended December 31,                                                                            |            
|                                                                        |                                            |                                                                                                    |            
|                                                                        |                                            | 2004                                                                                               |             |        | 2003    |   |            | 2002   |        
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|                                                                        |                                            | (In thousands, except share and per share                                                          |            
|                                                                        |                                            | amounts)?                                                                                          |            
|Revenues:                                                               |                                            |                                                                                                    |             |        |         |   |            |        |         |   |            |        
|                                                                        | Royalties                                  |                                                                                                    | $           | 45,553 |         |   | $          | 25,192 |         |   | $          | 20,052  |        
|                                                                        | Services, support and other                |                                                                                                    |             | 14,861 |         |   |            | 22,588 |         |   |            | 23,812  |        
|                                                                        | Fees and revenue shares                    |                                                                                                    |             | 13,450 |         |   |            | 12,961 |         |   |            | 11,278  |        
|                                                                        | License fees                               |                                                                                                    |             | 3,305  |         |   |            | 3,456  |         |   |            | 4,544   |        
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|                                                                        |                                            | Total revenues (inclusive of $3,618, $8,581 and $9,160 of
    related party revenue, respectively) |             |        | 77,169  |   |            |        | 64,197  |   |            |         | 59,686  |  
|Operating expenses:                                                     |                                            |                                                                                                    |             |        |         |   |            |        |         |   |            |        
|                                                                        | Cost of revenues(1)                        |                                                                                                    |             | 39,264 |         |   |            | 50,373 |         |   |            | 56,211  |        
|                                                                        | NASCAR Amendment (Note 8)                  |                                                                                                    |             | (4,600 | )       |   |            |       |         |   |            |        |        
|                                                                        | Research and development(2)                |                                                                                                    |             | 29,753 |         |   |            | 23,082 |         |   |            | 35,200  |        
|                                                                        | Sales and marketing(3)                     |                                                                                                    |             | 15,103 |         |   |            | 13,833 |         |   |            | 32,865  |        
|                                                                        | General and administrative(4)              |                                                                                                    |             | 17,876 |         |   |            | 17,407 |         |   |            | 21,141  |        
|                                                                        | Restructuring costs                        |                                                                                                    |             | 893    |         |   |            | 6,587  |         |   |            | 29,414  |        
|                                                                        | Amortization of intangible assets (Note 7) |                                                                                                    |             | 3,506  |         |   |            | 4,889  |         |   |            | 4,188   |        
|                                                                        | Impairment of intangible assets            |                                                                                                    |             |       |         |   |            | 1,497  |         |   |            | 24,796  |        
|                                                                        | Impairment of goodwill                     |                                                                                                    |             |       |         |   |            |       |         |   |            | 514,501 |        
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|                                                                        |                                            | Total operating expenses                                                                           |             |        | 101,795 |   |            |        | 117,668 |   |            |         | 718,316 |  
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|Loss from operations                                                    |                                            |                                                                                                    | (24,626     | )      |         |   | (53,471    | )      |         |   | (658,630   | )      
|Interest income                                                         |                                            |                                                                                                    | 858         |        |         |   | 1,572      |        |         |   | 5,205      |        
|Other income (expense), net                                             |                                            |                                                                                                    | 499         |        |         |   | (1,103     | )      |         |   | (66        | )      
|Impairment of equity investments                                        |                                            |                                                                                                    |            |        |         |   |           |        |         |   | (10,923    | )      
|Share of losses of equity investee                                      |                                            |                                                                                                    |            |        |         |   |           |        |         |   | (7,275     | )      
|Minority interest                                                       |                                            |                                                                                                    | 490         |        |         |   | 171        |        |         |   | 518        |        
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|Loss before income taxes and cumulative effect of accounting
    change |                                            |                                                                                                    | (22,779     | )      |         |   | (52,831    | )      |         |   | (671,171   | )      
|Income tax benefit (expense)                                            |                                            |                                                                                                    | 817         |        |         |   | (1,263     | )      |         |   | (1,541     | )      
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|Loss before cumulative effect of accounting change                      |                                            |                                                                                                    | (21,962     | )      |         |   | (54,094    | )      |         |   | (672,712   | )      
|Cumulative effect of accounting change, net of tax                      |                                            |                                                                                                    |            |        |         |   |           |        |         |   | (129,852   | )      
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|Net Loss                                                                |                                            | $                                                                                                  | (21,962     | )      |         | $ | (54,094    | )      |         | $ | (802,564   | )      
|Net loss per share, basic and diluted:                                  |                                            |                                                                                                    |             |        |         |   |            |        |         |   |            |        
|                                                                        |                                            | Before cumulative effect of accounting change                                                      |             | $      | (0.18   | ) |            | $      | (0.57   | ) |            | $       | (9.36   | )
|                                                                        |                                            | Cumulative effect of accounting change, net of tax                                                 |             |        |        |   |            |        |        |   |            |         | (1.81   | )
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|                                                                        |                                            | $                                                                                                  | (0.18       | )      |         | $ | (0.57      | )      |         | $ | (11.17     | )      
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        
|Shares used in per share calculation, basic and diluted                 |                                            |                                                                                                    | 121,308,965 |        |         |   | 94,818,278 |        |         |   | 71,839,101 |        
|                                                                        |                                            |                                                                                                    |             |        |         |   |            |        |        






|    |                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------
|(1) | Inclusive of $25, $55 and $1,277 of share-based compensation for
    the years ended December 31, 2004, 2003 and 2002,
    respectively.
|   
|(2) | Inclusive of $1, $59 and $321 of share-based compensation for
    the years ended December 31, 2004, 2003 and 2002,
    respectively.   
|   
|(3) | Inclusive of $0, $24 and $298 of share-based compensation for
    the years ended December 31, 2004, 2003 and 2002,
    respectively.   
|   
|(4) | Inclusive of $0, $33 and $1,143 of share-based compensation for
    the years ended December 31, 2004, 2003 and 2002,
    respectively. 



F-4



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##### Table of Contents






OPENTV CORP.


CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
COMPREHENSIVE LOSS


|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |         |   |         |         |        |   |       |   |      |      |  |   |            |   |  |   |          |   |  |   |          |  
|---------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ---------- | - | ------- | - | --------- | ---------- |  |  | ---------- | ----- | -------- | ----------- | ------ | ------------- | ------ | - | ------- | ------------ |  | - | ------- | - | ------- | ------- | ------ | - | ----- | - | ---- | ---- |  | - | ---------- | - |  | - | -------- | - |  | - | -------- | -
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        | Accumulated   |        |   |         |              |  |   |        
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            | Other |          |             |        |               |        |   |        
|                                                                                                     |  | Class A                              |            |   | Class B |   |           | Additional |  |  |            |       | Deferred |             |        | Comprehensive |        |   |         |              |  |   | Compre- |  
|                                                                                                     |  |                                      |            |   |         |   |           | Paid-In    |  |  | Treasury   |       |          | Share-Based |        |               | Income |   |         | Accumulated  |  |   |         |   | hensive |        
|                                                                                                     |  | Shares                               |            |   | Amount  |   |           | Shares     |  |  | Amount     |       |          | Capital     |        |               | Shares |   |         | Compensation |  |   | (Loss)  |   |         | Deficit |        |   | Total |   |      | Loss | 
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |         |   |         |         |        |   |       |   |      |      | 
|                                                                                                     |  | (In thousands, except share amounts) |           
|Balances, December 31, 2001                                                                          |  |                                      | 40,525,732 |   |         | $ | 2,138,383 |            |  |  | 30,631,746 |       |          | $           | 35,953 |               |        | $ | 455,308 |              |  | $ | (16     | ) |         | $       | (4,144 | ) |       | $ | (89  | )    |  | $ | (1,697,037 | ) |  | $ | 928,358  |   |  |   |          |  
|Share options exercised                                                                              |  |                                      | 150,703    |   |         |   | 345       |            |  |  |           |       |          |             |       |               |        |   | 13      |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 358      |   |  |   |          |  
|Share issued per Static earn-out agreement                                                           |  |                                      | 626,872    |   |         |   | 3,749     |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 3,749    |   |  |   |          |  
|Share issued through employee share purchase plan                                                    |  |                                      | 205,427    |   |         |   | 457       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 457      |   |  |   |          |  
|Share issued for employee compensation                                                               |  |                                      | 22,830     |   |         |   | 190       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 190      |   |  |   |          |  
|Share issued in exchange for OpenTV, Inc. shares                                                     |  |                                      | 55,469     |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 295     |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 295      |   |  |   |          |  
|Amortization of deferred share-based compensation                                                    |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         | 3,039  |   |       |   |     |      |  |   |           |   |  |   | 3,039    |   |  |   |          |  
|Reversal of deferred share-based compensation due to employee
    terminations                       |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | (884    | )            |  |   |        |   |         |         | 884    |   |       |   |     |      |  |   |           |   |  |   |         |   |  |   |          |  
|Capital contribution from MIH Limited                                                                |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 6,531   |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 6,531    |   |  |   |          |  
|Reclassification for realized gains from sale of marketable debt
    securities, net of income taxes |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   | (880 | )    |  |   |           |   |  |   | (880     | ) |  | $ | (880     | )
|Unrealized gains on investments, net of income taxes                                                 |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   | 790  |      |  |   |           |   |  |   | 790      |   |  |   | 790      |  
|Foreign currency translation gains                                                                   |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   | 673  |      |  |   |           |   |  |   | 673      |   |  |   | 673      |  
|Net loss                                                                                             |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   | (802,564   | ) |  |   | (802,564 | ) |  |   | (802,564 | )
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |         |   |         |         |        |   |       |   |      |      | 
|Balances, December 31, 2002                                                                          |  |                                      | 41,587,033 |   |         |   | 2,143,124 |            |  |  | 30,631,746 |       |          |             | 35,953 |               |        |   | 461,263 |              |  |   | (16     | ) |         |         | (221   | ) |       |   | 494  |      |  |   | (2,499,601 | ) |  |   | 140,996  |   |  | $ | (801,981 | )
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |         |   |         |         |        |   |       |   |      |      | 
|Share options exercised                                                                              |  |                                      | 1,526,637  |   |         |   | 2,453     |            |  |  |           |       |          |             |       |               |        |   | (13     | )            |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 2,440    |   |  |   |          |  
|Shares issued for employee and director compensation                                                 |  |                                      | 125,155    |   |         |   | 160       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 160      |   |  |   |          |  
|Cashless exercise of stock options                                                                   |  |                                      | 73,332     |   |         |   | 140       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 140      |   |  |   |          |  
|Shares issued for ACTV acquisition                                                                   |  |                                      | 41,648,399 |   |         |   | 54,559    |            |  |  |           |       |          |             |       |               |        |   | 3,948   |              |  |   |        |   |         |         | (36    | ) |       |   |     |      |  |   |           |   |  |   | 58,471   |   |  |   |          |  
|Shares issued for BettingCorp acquisition                                                            |  |                                      | 3,225,063  |   |         |   | 6,934     |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 6,934    |   |  |   |          |  
|Shares issued for purchase of minority interest                                                      |  |                                      | 675,676    |   |         |   | 1,000     |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 1,000    |   |  |   |          |  
|Shares issued in exchange for OpenTV, Inc. shares                                                    |  |                                      | 115,417    |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 277     |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 277      |   |  |   |          |  
|Shares retired                                                                                       |  |                                      | (7,162     | ) |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   |         |   |  |   |          |  
|Amortization of deferred share-based compensation                                                    |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         | 171    |   |       |   |     |      |  |   |           |   |  |   | 171      |   |  |   |          |  
|Reversal of deferred share-based compensation due to employee
    terminations                       |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | (50     | )            |  |   |        |   |         |         | 50     |   |       |   |     |      |  |   |           |   |  |   |         |   |  |   |          |  
|Capital contribution from MIH Limited                                                                |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 793     |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 793      |   |  |   |          |  
|Purchase of treasury shares                                                                          |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 10      |              |  |   | (22     | ) |         |         |       |   |       |   |     |      |  |   |           |   |  |   | (12      | ) |  |   |          |  
|Reclassification for realized gains from sale of marketable debt
    securities, net of income taxes |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   | (246 | )    |  |   |           |   |  |   | (246     | ) |  | $ | (246     | )
|Unrealized losses on investments, net of income taxes                                                |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   | (264 | )    |  |   |           |   |  |   | (264     | ) |  |   | (264     | )
|Foreign currency translation gains                                                                   |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   | 217  |      |  |   |           |   |  |   | 217      |   |  |   | 217      |  
|Net loss                                                                                             |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   | (54,094    | ) |  |   | (54,094  | ) |  |   | (54,094  | )
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |         |   |         |         |        |   |       |   |      |      | 
|Balances, December 31, 2003                                                                          |  |                                      | 88,969,550 |   |         |   | 2,208,370 |            |  |  | 30,631,746 |       |          |             | 35,953 |               |        |   | 466,228 |              |  |   | (38     | ) |         |         | (36    | ) |       |   | 201  |      |  |   | (2,553,695 | ) |  |   | 156,983  |   |  | $ | (54,387  | )
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |         |   |         |         |        |   |       |   |      |      | 
|Share options exercised                                                                              |  |                                      | 1,852,898  |   |         |   | 3,448     |            |  |  |           |       |          |             |       |               |        |   | 16      |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 3,464    |   |  |   |          |  
|Shares issued for employee bonus                                                                     |  |                                      | 578,917    |   |         |   | 1,731     |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 1,731    |   |  |   |          |  
|Shares issued for employee and director compensation                                                 |  |                                      | 52,280     |   |         |   | 172       |            |  |  |           |       |          |             |       |               |        |   | 63      |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 235      |   |  |   |          |  
|Shares issued to Liberty Media as dividend (Note 14)                                                 |  |                                      | 76,982     |   |         |   | 230       |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 230      |   |  |   |          |  
|Shares issued in exchange for OpenTV, Inc. shares                                                    |  |                                      | 21,666     |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 68      |              |  |   |        |   |         |         |        |   |       |   |     |      |  |   |           |   |  |   | 68       |   |  |   |          |  
|Amortization of deferred share-based compensation                                                    |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         | 26     |   |       |   |     |      |  |   |           |   |  |   | 26       |   |  |   |          |  
|Proceeds from BettingCorp liquidity guarantee                                                        |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   | 4,078   |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   |           |   |  |   | 4,078    |   |  |   |          |  
|Unrealized losses on investments, net of income taxes                                                |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   | (115 | )    |  |   |           |   |  |   | (115     | ) |  | $ | (115     | )
|Foreign currency translation gains                                                                   |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   | 437  |      |  |   |           |   |  |   | 437      |   |  |   | 437      |  
|Net loss                                                                                             |  |                                      |           |   |         |   |          |            |  |  |           |       |          |             |       |               |        |   |        |              |  |   |        |   |         |         |       |   |       |   |     |      |  |   | (21,962    | ) |  |   | (21,962  | ) |  |   | (21,962  | )
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |         |   |         |         |        |   |       |   |      |      | 
|Balances, December 31, 2004                                                                          |  |                                      | 91,552,293 |   |         | $ | 2,213,951 |            |  |  | 30,631,746 |       |          | $           | 35,953 |               |        | $ | 470,453 |              |  | $ | (38     | ) |         | $       | (10    | ) |       | $ | 523  |      |  | $ | (2,575,657 | ) |  | $ | 145,175  |   |  | $ | (21,640  | )
|                                                                                                     |  |                                      |            |   |         |   |           |            |  |  |            |       |          |             |        |               |        |   |         |              |  |   |         |   |         |         |        |   |       |   |      |      | 



F-5



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##### Table of Contents



OPENTV CORP.


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |         |   |          |         |         |  
|-------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ------------------------------------------- | ------- | ----- | ------- | - | ------- | ------ | ------- | - | -------- | ------- | ------- | -
|                                                                                                               |                                                         | Year Ended December 31,                     |        
|                                                                                                               |                                                         |                                             |        
|                                                                                                               |                                                         | 2004                                        |         |       | 2003    |   |         | 2002   |        
|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |        
|                                                                                                               |                                                         | (In thousands)                              |        
|Cash flows used in operating activities:                                                                       |                                                         |                                             |         |       |         |   |         |        |         |   |          |        
|Net loss                                                                                                       |                                                         | $                                           | (21,962 | )     |         | $ | (54,094 | )      |         | $ | (802,564 | )      
|Adjustments to reconcile net loss to net cash used in operating
    activities:                                |                                                         |                                             |         |       |         |   |         |        |         |   |          |        
|                                                                                                               | Cumulative effect of accounting change, net of tax      |                                             |         |      |         |   |         |       |         |   |          | 129,852 |        
|                                                                                                               | Impairment of goodwill                                  |                                             |         |      |         |   |         |       |         |   |          | 514,501 |        
|                                                                                                               | Impairment of intangible assets                         |                                             |         |      |         |   |         | 1,497  |         |   |          | 24,796  |        
|                                                                                                               | Depreciation and amortization of property and equipment |                                             |         | 5,941 |         |   |         | 7,490  |         |   |          | 10,276  |        
|                                                                                                               | Amortization of intangible assets                       |                                             |         | 8,228 |         |   |         | 14,679 |         |   |          | 18,326  |        
|                                                                                                               | Amortization of share-based compensation                |                                             |         | 26    |         |   |         | 171    |         |   |          | 3,039   |        
|                                                                                                               | Non-cash employee compensation                          |                                             |         | 1,089 |         |   |         | 889    |         |   |          | 752     |        
|                                                                                                               | Provision for (reduction of) doubtful accounts          |                                             |         | (187  | )       |   |         | 168    |         |   |          | 1,758   |        
|                                                                                                               | Non-cash restructuring costs                            |                                             |         | 1,020 |         |   |         | 532    |         |   |          | 8,145   |        
|                                                                                                               | Impairment of equity investments                        |                                             |         |      |         |   |         |       |         |   |          | 10,923  |        
|                                                                                                               | Share of losses of equity investee                      |                                             |         |      |         |   |         |       |         |   |          | 7,275   |        
|                                                                                                               | In-process research and development                     |                                             |         |      |         |   |         |       |         |   |          | 1,000   |        
|                                                                                                               | Minority interest                                       |                                             |         | (490  | )       |   |         | (171   | )       |   |          | (518    | )      
|                                                                                                               | Changes in operating assets and liabilities:            |                                             |         |       |         |   |         |        |         |   |          |         |        
|                                                                                                               |                                                         | Accounts receivable                         |         |       | (5,327  | ) |         |        | (1,454  | ) |          |         | 11,700  |  
|                                                                                                               |                                                         | Due from MIH Limited entities               |         |       |        |   |         |        |        |   |          |         | 4,290   |  
|                                                                                                               |                                                         | Prepaid expenses and other current assets   |         |       | 1,024   |   |         |        | 602     |   |          |         | 5,030   |  
|                                                                                                               |                                                         | Other assets                                |         |       | 7,289   |   |         |        | 2,308   |   |          |         | 1,728   |  
|                                                                                                               |                                                         | Accounts payable                            |         |       | (1,948  | ) |         |        | (923    | ) |          |         | (1,155  | )
|                                                                                                               |                                                         | Accrued liabilities                         |         |       | (6,273  | ) |         |        | (5,558  | ) |          |         | (4,293  | )
|                                                                                                               |                                                         | Accrued restructuring                       |         |       | (6,395  | ) |         |        | (11,873 | ) |          |         | 10,865  |  
|                                                                                                               |                                                         | Due to Liberty Media                        |         |       | (242    | ) |         |        | (526    | ) |          |         | 527     |  
|                                                                                                               |                                                         | Deferred revenue                            |         |       | 2,033   |   |         |        | 3,777   |   |          |         | (138    | )
|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |        
|                                                                                                               |                                                         | Net cash used in operating activities       |         |       | (16,174 | ) |         |        | (42,486 | ) |          |         | (43,885 | )
|Cash flows provided from investing activities:                                                                 |                                                         |                                             |         |       |         |   |         |        |         |   |          |        
|Purchase of property and equipment                                                                             |                                                         |                                             | (2,070  | )     |         |   | (2,944  | )      |         |   | (7,693   | )      
|Sale of assets                                                                                                 |                                                         |                                             |        |       |         |   | 1,000   |        |         |   |         |        
|Cash used for acquisitions, net of cash acquired                                                               |                                                         |                                             | 4,078   |       |         |   | (10,130 | )      |         |   | (81,451  | )      
|Proceeds from sale of marketable debt securities                                                               |                                                         |                                             | 22,541  |       |         |   | 111,697 |        |         |   | 208,149  |        
|Purchase of marketable debt securities                                                                         |                                                         |                                             | (24,267 | )     |         |   | (51,384 | )      |         |   | (110,671 | )      
|Private equity investments                                                                                     |                                                         |                                             |        |       |         |   |        |        |         |   | (3,000   | )      
|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |        
|                                                                                                               |                                                         | Net cash provided from investing activities |         |       | 282     |   |         |        | 48,239  |   |          |         | 5,334   |  
|Cash flows provided from financing activities:                                                                 |                                                         |                                             |         |       |         |   |         |        |         |   |          |        
|Proceeds from issuance of ordinary shares                                                                      |                                                         |                                             | 3,464   |       |         |   | 2,466   |        |         |   | 856      |        
|Capital contribution from MIH Limited                                                                          |                                                         |                                             |        |       |         |   | 793     |        |         |   | 6,531    |        
|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |        
|                                                                                                               |                                                         | Net cash provided from financing activities |         |       | 3,464   |   |         |        | 3,259   |   |          |         | 7,387   |  
|Effect of exchange rate changes on cash and cash equivalents                                                   |                                                         |                                             | 341     |       |         |   | 167     |        |         |   | 483      |        
|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |        
|Net increase (decrease) in cash and cash equivalents                                                           |                                                         |                                             | (12,087 | )     |         |   | 9,179   |        |         |   | (30,681  | )      
|Cash and cash equivalents, beginning of year                                                                   |                                                         |                                             | 47,747  |       |         |   | 38,568  |        |         |   | 69,249   |        
|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |        
|Cash and cash equivalents, end of year                                                                         |                                                         | $                                           | 35,660  |       |         | $ | 47,747  |        |         | $ | 38,568   |        
|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |        
|Supplemental disclosure of cash flow information:                                                              |                                                         |                                             |         |       |         |   |         |        |         |   |          |        
|Cash received (paid) for income taxes                                                                          |                                                         | $                                           | (451    | )     |         | $ | 150     |        |         | $ | (195     | )      
|                                                                                                               |                                                         |                                             |         |       |         |   |         |        |        
|Non-cash investing and financing activities:                                                                   |                                                         |                                             |         |       |         |   |         |        |         |   |          |        
|Value of shares issued in connection with acquisition and
    establishment of companies and intangible assets |                                                         | $                                           |        |       |         | $ | 61,493  |        |         | $ | 3,749    |        
|Value of shares issued for purchase of minority interest                                                       |                                                         |                                             |        |       |         |   | 1,000   |        |         |   |         |        
|Deferred compensation arising from issuance of options                                                         |                                                         |                                             |        |       |         |   | 36      |        |         |   |         |        



F-6



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##### Table of Contents



OPENTV CORP.





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2004




|        |                                 
|------- | --------------------------------
|Note 1. | Ownership and Business of OpenTV









|        |                                           
|------- | ------------------------------------------
|Note 2. | Summary of Significant Accounting Policies



| |                                                          
| | ---------------------------------------------------------
| | Principles of Consolidation and Basis of
    Presentation







| |                     
| | --------------------
| | Management Estimates





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                           
| | --------------------------
| | Marketable Debt Securities







F-7



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





| |                             
| | ----------------------------
| | Concentration of Credit Risk





| |                       
| | ----------------------
| | Property and Equipment







| |                                     
| | ------------------------------------
| | Long-Term Private Equity Investments





| |                               
| | ------------------------------
| | Goodwill and Intangible Assets



F-8



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                  
| | -----------------
| | Long-Lived Assets





| |                    
| | -------------------
| | Revenue Recognition



Royalties.


Professional Services, Support and Other.




F-9



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Fees and Revenue Shares.












License Fees.




| |                                  
| | ---------------------------------
| | Other Revenue Accounting Policies







F-10



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                 
| | ----------------
| | Deferred Revenue





| |                         
| | ------------------------
| | Research and Development





| |            
| | -----------
| | Advertising





| |            
| | -----------
| | 401(k) Plan





| |               
| | --------------
| | Employee Bonus





| |             
| | ------------
| | Income Taxes



F-11



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Share-Based Compensation



|                                       |                                                                                                                                                     |                         |       |      |       |   |       |      |       |   |        |       |        |  
|-------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------- | ----- | ---- | ----- | - | ----- | ---- | ----- | - | ------ | ----- | ------ | -
|                                       |                                                                                                                                                     | Year Ended December 31, |      
|                                       |                                                                                                                                                     |                         |      
|                                       |                                                                                                                                                     | 2004                    |       |      | 2003  |   |       | 2002 |      
|                                       |                                                                                                                                                     |                         |       |      |       |   |       |      |      
|Net loss, as reported                  |                                                                                                                                                     | $                       | (21.9 | )    |       | $ | (54.1 | )    |       | $ | (802.6 | )    
|                                       | Add: Share-based employee compensation expense included in
    reported net loss, net of related tax effects                                        |                         |       |     |       |   |       | 0.2  |       |   |        | 3.0   |       
|                                       | Add (deduct): Share-based employee compensation expense
    determined under fair value-based method for all awards, net of
    related tax effects |                         |       | (2.9 | )     |   |       | 1.1  |       |   |        | (13.1 | )     
|                                       |                                                                                                                                                     |                         |       |      |       |   |       |      |      
|Pro-forma net loss                     |                                                                                                                                                     | $                       | (24.8 | )    |       | $ | (52.8 | )    |       | $ | (812.7 | )    
|                                       |                                                                                                                                                     |                         |       |      |       |   |       |      |      
|Net loss per share, basic and diluted: |                                                                                                                                                     |                         |       |      |       |   |       |      |       |   |        |      
|                                       |                                                                                                                                                     | As reported             |       | $    | (0.18 | ) |       | $    | (0.57 | ) |        | $     | (11.17 | )
|                                       |                                                                                                                                                     |                         |       |      |       |   |       |      |      
|                                       |                                                                                                                                                     | Pro-forma               |       | $    | (0.21 | ) |       | $    | (0.56 | ) |        | $     | (11.31 | )
|                                       |                                                                                                                                                     |                         |       |      |       |   |       |      |      







|                               |  |      |             |  |      |  |             |      |  |  |             | 
|------------------------------ |  | ---- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- | 
|                               |  | 2004 |             |  | 2003 |  |             | 2002 | 
|                               |  |      |             |  |      |  |             |      | 
|Risk-free interest rate        |  |      | 2.65%-3.85% |  |      |  | 2.40%-3.63% |      |  |  | 2.23%-2.75% | 
|Average expected life (months) |  |      | 60          |  |      |  | 60          |      |  |  | 60          | 
|Volatility                     |  |      | 106%        |  |      |  | 131%        |      |  |  | 101%        | 
|Dividend yield                 |  |      |            |  |      |  |            |      |  |  |            | 



F-12



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |  |      |             | 
|------------------------------ |  | ---- | ----------- | 
|                               |  | 2002 |            
|                               |  |      |            
|Risk-free interest rate        |  |      | 1.97%-2.21% | 
|Average expected life (months) |  |      | 6           | 
|Volatility                     |  |      | 78%-121%    | 
|Dividend yield                 |  |      |            | 





| |                            
| | ---------------------------
| | Comprehensive income (loss)





| |                             
| | ----------------------------
| | Foreign currency translation





| |                   
| | ------------------
| | Net loss per share



|                                                                    |                                                                   |      |           |           |      |  |           |           |  |  |           |           | 
|------------------------------------------------------------------- | ----------------------------------------------------------------- | ---- | --------- | --------- | ---- |  | --------- | --------- |  |  | --------- | --------- | 
|                                                                    |                                                                   | 2004 |           |           | 2003 |  |           | 2002      | 
|                                                                    |                                                                   |      |           |           |      |  |           |           | 
|Class A ordinary shares issuable upon exercise of stock
    options |                                                                   |      | 8,415,387 |           |      |  | 9,011,456 |           |  |  | 5,599,994 |          
|Class A ordinary shares issuable upon exercise of warrants          |                                                                   |      |          |           |      |  |          |           |  |  | 506,520   |          
|Class A ordinary shares issuable for shares of OpenTV, Inc.         |                                                                   |      |           |           |      |  |           |           |  |  |           |          
|                                                                    | Class A common stock (including shares of OpenTV, Inc.            |      |           |           |      |  |           |           |  |  |           |           | 
|                                                                    | Class A common stock issuable upon exercise of stock
    options) |      |           | 755,428   |      |  |           | 777,094   |  |  |           | 979,511   | 
|Class B ordinary shares issuable for shares of OpenTV, Inc.         |                                                                   |      |           |           |      |  |           |           |  |  |           |          
|                                                                    | Class B common stock                                              |      |           | 7,594,796 |      |  |           | 7,594,796 |  |  |           | 7,594,796 | 



F-13



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                 
| | --------------------------------
| | Recent accounting pronouncements





Note 3.     Acquisitions




| |                   
| | ------------------
| | Static Acquisition





| |                 
| | ----------------
| | Wink Acquisition



F-14



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                 |                                     |          |       |      | 
|-------------------------------- | ----------------------------------- | -------- | ----- | ---- | 
|                                 |                                     | Purchase |      
|                                 |                                     | Price    |      
|                                 |                                     |          |      
|Tangible net liabilities assumed |                                     | $        | 41.0  |     
|Intangible assets acquired:      |                                     |          |       |     
|                                 | Patents                             |          |       | 4.3  | 
|                                 | Developed technology                |          |       | 2.7  | 
|                                 | In-process research and development |          |       | 1.0  | 
|                                 | Existing relationships              |          |       | 6.5  | 
|                                 | Trademarks                          |          |       | 0.5  | 
|                                 | Goodwill                            |          |       | 45.0 | 
|                                 |                                     |          |      
|                                 |                                     | $        | 101.0 |     
|                                 |                                     |          |      





|                                                        |  |      |            |  
|------------------------------------------------------- |  | ---- | ---------- | -
|                                                        |  | 2002 |           
|                                                        |  |      |           
|Revenues                                                |  | $    | 62.0       |  
|Net loss before cumulative effect of accounting change  |  | $    | (696.4     | )
|Net loss                                                |  | $    | (826.3     | )
|Net loss per share, basic and diluted                   |  | $    | (11.50     | )
|Shares used in per share calculation, basic and diluted |  |      | 71,839,101 |  



| |                 
| | ----------------
| | ACTV Acquisition



F-15



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |          |          |      |      | 
|---------------------------- | -------- | -------- | ---- | ---- | 
|                             |          | Purchase |     
|                             |          | Price    |     
|                             |          |          |     
|Tangible net assets acquired |          | $        | 26.7 |     
|Intangible assets acquired:  |          |          |      |     
|                             | Patents  |          |      | 16.3 | 
|                             | Goodwill |          |      | 18.7 | 
|                             |          |          |     
|                             |          | $        | 61.7 |     
|                             |          |          |     





|                                                        |  |      |             |   |      |   |             |  
|------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                        |  | 2003 |             |   | 2002 |  
|                                                        |  |      |             |   |      |  
|Revenues                                                |  | $    | 68.4        |   |      | $ | 71.0        |  
|Net loss before cumulative effect of accounting change  |  | $    | (79.6       | ) |      | $ | (717.5      | )
|Net loss                                                |  | $    | (79.6       | ) |      | $ | 847.4       | )
|Net loss per share, basic and diluted                   |  | $    | (0.69       | ) |      | $ | (7.47       | )
|Shares used in per share calculation, basic and diluted |  |      | 115,642,478 |   |      |   | 113,487,500 |  





| |                        
| | -----------------------
| | BettingCorp Acquisition



F-16



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                             |                      |          |      |     | 
|---------------------------- | -------------------- | -------- | ---- | --- | 
|                             |                      | Purchase |     
|                             |                      | Price    |     
|                             |                      |          |     
|Tangible net assets acquired |                      | $        | 0.1  |    
|Intangible assets acquired:  |                      |          |      |    
|                             | Developed technology |          |      | 4.4 | 
|                             | Customer base        |          |      | 0.4 | 
|                             | Goodwill             |          |      | 6.5 | 
|                             |                      |          |     
|                             |                      | $        | 11.4 |    
|                             |                      |          |     







|        |                                        
|------- | ---------------------------------------
|Note 4. | Balance Sheet Components (in thousands)

|                                           |                                                |              |        |         |      |   |        |         |  
|------------------------------------------ | ---------------------------------------------- | ------------ | ------ | ------- | ---- | - | ------ | ------- | -
|                                           |                                                | December 31, |       
|                                           |                                                |              |       
|                                           |                                                | 2004         |        |         | 2003 |  
|                                           |                                                |              |        |         |      |  
|Prepaid expenses and other current assets: |                                                |              |        |         |      |   |        |        
|                                           | Due from officer                               |              | $      |        |      |   | $      | 602     |  
|                                           | Deferred launch fees                           |              |        |        |      |   |        | 579     |  
|                                           | Federal income tax refund                      |              |        | 440     |      |   |        | 440     |  
|                                           | Value Added Tax                                |              |        | 296     |      |   |        | 299     |  
|                                           | Interest receivable                            |              |        | 68      |      |   |        | 245     |  
|                                           | Other                                          |              |        | 2,269   |      |   |        | 2,557   |  
|                                           |                                                |              |        |         |      |  
|                                           |                                                | $            | 3,073  |         |      | $ | 4,722  |        
|                                           |                                                |              |        |         |      |  
|Property and equipment:                    |                                                |              |        |         |      |   |        |        
|                                           | Computers and equipment                        |              | $      | 15,078  |      |   | $      | 15,835  |  
|                                           | Software                                       |              |        | 5,500   |      |   |        | 5,206   |  
|                                           | Furniture and fixtures                         |              |        | 2,483   |      |   |        | 2,576   |  
|                                           | Leasehold improvements                         |              |        | 2,403   |      |   |        | 3,789   |  
|                                           |                                                |              |        |         |      |  
|                                           |                                                |              | 25,464 |         |      |   | 27,406 |        
|                                           | Less accumulated depreciation and amortization |              |        | (18,606 | )    |   |        | (15,717 | )
|                                           |                                                |              |        |         |      |  
|                                           |                                                | $            | 6,858  |         |      | $ | 11,689 |        
|                                           |                                                |              |        |         |      |  

F-17



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                     |                                            |              |        |       |      |   |        |       | 
|-------------------- | ------------------------------------------ | ------------ | ------ | ----- | ---- | - | ------ | ----- | 
|                     |                                            | December 31, |       
|                     |                                            |              |       
|                     |                                            | 2004         |        |       | 2003 |  
|                     |                                            |              |        |       |      |  
|Other assets:        |                                            |              |        |       |      |   |        |      
|                     | Cash held in escrow                        |              | $      |      |      |   | $      | 6,940 | 
|                     | Private equity investment                  |              |        | 4,000 |      |   |        | 4,000 | 
|                     | Deposits                                   |              |        | 671   |      |   |        | 930   | 
|                     | Notes receivable                           |              |        | 743   |      |   |        | 743   | 
|                     | Other                                      |              |        | 675   |      |   |        | 765   | 
|                     |                                            |              |        |       |      |  
|                     |                                            | $            | 6,089  |       |      | $ | 13,378 |      
|                     |                                            |              |        |       |      |  
|Accrued liabilities: |                                            |              |        |       |      |   |        |      
|                     | Accrued payroll and related liabilities    |              | $      | 8,081 |      |   | $      | 8,082 | 
|                     | Accrued professional fees                  |              |        | 2,947 |      |   |        | 1,929 | 
|                     | Accrued marketing                          |              |        | 1,840 |      |   |        | 3,488 | 
|                     | Accrued income taxes                       |              |        | 1,879 |      |   |        | 3,148 | 
|                     | Accrued launch fees and revenue guarantees |              |        | 245   |      |   |        | 2,450 | 
|                     | Deferred rent                              |              |        | 2,147 |      |   |        | 1,550 | 
|                     | Accrual for loss contract                  |              |        |      |      |   |        | 6,416 | 
|                     | Other                                      |              |        | 6,777 |      |   |        | 5,111 | 
|                     |                                            |              |        |       |      |  
|                     |                                            | $            | 23,916 |       |      | $ | 32,174 |      
|                     |                                            |              |        |       |      |  





|        |                           
|------- | --------------------------
|Note 5. | Marketable Debt Securities



|                                |                                             |           |        |        |            |   |            |   |  |            |     |      |   |   |        |        | 
|------------------------------- | ------------------------------------------- | --------- | ------ | ------ | ---------- | - | ---------- | - |  | ---------- | --- | ---- | - | - | ------ | ------ | 
|                                |                                             | 2004      |       
|                                |                                             |           |       
|                                |                                             | Purchase/ |        |        | Gross      |   | Gross      |   |  |           
|                                |                                             | Amortized |        |        | Unrealized |   | Unrealized |   |  | Estimated  |    
|                                |                                             | Cost      |        |        | Gains      |   | Losses     |   |  | Fair Value |    
|                                |                                             |           |        |        |            |   |            |   |  |            |    
|U.S. government debt securities |                                             | $         | 2,000  |        |            | $ |           |   |  | $          | (14 | )    |   | $ | 1,986  |       
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     
|                                | Total short-term marketable debt securities |           |        | 2,000  |            |   |            |  |  |            |     | (14  | ) |   |        | 1,986  | 
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     
|Auction rate securities         |                                             |           | 16,900 |        |            |   |           |   |  |            |    |      |   |   | 16,900 |       
|Corporate debt securities       |                                             |           | 2,567  |        |            |   |           |   |  |            | (45 | )    |   |   | 2,522  |       
|U.S. government debt securities |                                             |           | 4,000  |        |            |   |           |   |  |            | (48 | )    |   |   | 3,952  |       
|Certificates of deposit         |                                             |           | 2,000  |        |            |   |           |   |  |            |    |      |   |   | 2,000  |       
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     
|                                | Total long-term marketable debt securities  |           |        | 25,467 |            |   |            |  |  |            |     | (93  | ) |   |        | 25,374 | 
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     
|                                | Total marketable debt securities            |           | $      | 27,467 |            |   | $          |  |  |            | $   | (107 | ) |   | $      | 27,360 | 
|                                |                                             |           |        |        |            |   |            |   |  |            |     |     

F-18



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                |                                             |           |        |        |            |   |   |            |  |            |   |   |  |   |        |        | 
|------------------------------- | ------------------------------------------- | --------- | ------ | ------ | ---------- | - | - | ---------- |  | ---------- | - | - |  | - | ------ | ------ | 
|                                |                                             | 2003      |       
|                                |                                             |           |       
|                                |                                             | Purchase/ |        |        | Gross      |   |   | Gross      |  |           
|                                |                                             | Amortized |        |        | Unrealized |   |   | Unrealized |  | Estimated  |  
|                                |                                             | Cost      |        |        | Gains      |   |   | Losses     |  | Fair Value |  
|                                |                                             |           |        |        |            |   |   |            |  |            |  
|Corporate debt securities       |                                             | $         | 2,535  |        |            | $ | 3 |            |  | $          |  |   |  | $ | 2,538  |       
|U.S. government debt securities |                                             |           | 8,039  |        |            |   |  |            |  |            |  |   |  |   | 8,039  |       
|                                |                                             |           |        |        |            |   |   |            |  |            |   |  
|                                | Total short-term marketable debt securities |           |        | 10,574 |            |   |   | 3          |  |            |   |  |  |   |        | 10,577 | 
|                                |                                             |           |        |        |            |   |   |            |  |            |   |  
|Corporate debt securities       |                                             |           | 1,076  |        |            |   | 5 |            |  |            |  |   |  |   | 1,081  |       
|U.S. government debt securities |                                             |           | 12,089 |        |            |   | 2 |            |  |            |  |   |  |   | 12,091 |       
|Certificates of deposit         |                                             |           | 2,000  |        |            |   |  |            |  |            |  |   |  |   | 2,000  |       
|                                |                                             |           |        |        |            |   |   |            |  |            |   |  
|                                | Total long-term marketable debt securities  |           |        | 15,165 |            |   |   | 7          |  |            |   |  |  |   |        | 15,172 | 
|                                |                                             |           |        |        |            |   |   |            |  |            |   |  
|                                | Total marketable debt securities            |           | $      | 25,739 |            |   | $ | 10         |  |            | $ |  |  |   | $      | 25,749 | 
|                                |                                             |           |        |        |            |   |   |            |  |            |   |  



|        |         
|------- | --------
|Note 6. | Goodwill



|                                                                                              |  |      |      |  |      |   |      |      |  |   |        |  
|--------------------------------------------------------------------------------------------- |  | ---- | ---- |  | ---- | - | ---- | ---- |  | - | ------ | -
|                                                                                              |  | 2004 |      |  | 2003 |   |      | 2002 | 
|                                                                                              |  |      |      |  |      |   |      |      | 
|Beginning balance                                                                             |  | $    | 70.4 |  |      | $ | 45.4 |      |  | $ | 634.3  |  
|Cumulative effect of accounting change                                                        |  |      |     |  |      |   |     |      |  |   | (129.9 | )
|Reclassification of certain intangible assets in connection with
    the adoption of SFAS 142 |  |      |     |  |      |   |     |      |  |   | 6.0    |  
|Acquisition of Static                                                                         |  |      |     |  |      |   |     |      |  |   | 3.8    |  
|Acquisition of Wink                                                                           |  |      |     |  |      |   | (0.4 | )    |  |   | 45.4   |  
|Acquisition of ACTV                                                                           |  |      |     |  |      |   | 18.7 |      |  |   |       |  
|Acquisition of BettingCorp. assets                                                            |  |      |     |  |      |   | 6.5  |      |  |   |       |  
|Goodwill related to exchangeable shares                                                       |  |      | 0.1  |  |      |   | 0.2  |      |  |   | 0.3    |  
|Impairment                                                                                    |  |      |     |  |      |   |     |      |  |   | (514.5 | )
|                                                                                              |  |      |      |  |      |   |      |      | 
|Ending Balance                                                                                |  | $    | 70.5 |  |      | $ | 70.4 |      |  | $ | 45.4   |  
|                                                                                              |  |      |      |  |      |   |      |      | 







F-19



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Note 7.     Intangible Assets,
Net




|                   |                             |             |  |                   |          |              |      |              |     |   |          |      |   |          |      |      |  |   |      |      | 
|------------------ | --------------------------- | ----------- |  | ----------------- | -------- | ------------ | ---- | ------------ | --- | - | -------- | ---- | - | -------- | ---- | ---- |  | - | ---- | ---- | 
|                   |                             |             |  |                   |          | December 31, |     
|                   |                             |             |  | December 31, 2004 |          |              | 2003 |             
|                   |                             |             |  |                   |          |              |      |             
|                   |                             |             |  | Gross             |          |              |      |              | Net |   |          | Net  |  
|                   |                             | Useful Life |  |                   | Carrying |              |      | Accumulated  |     |   | Carrying |      |   | Carrying |     
|                   |                             | in Years    |  |                   | Amount   |              |      | Amortization |     |   | Amount   |      |   | Amount   |     
|                   |                             |             |  |                   |          |              |      |              |     |   |          |      |   |          |     
|Intangible assets: |                             |             |  |                   |          |              |      |              |     |   |          |      |   |          |      |      |  |   |      |     
|                   | Patents                     |             |  | 5-13              |          |              | $    | 20.7         |     |   | $        | (3.9 | ) |          | $    | 16.8 |  |   | $    | 18.9 | 
|                   | Developed technologies      |             |  | 5                 |          |              |      | 7.1          |     |   |          | (2.5 | ) |          |      | 4.6  |  |   |      | 7.1  | 
|                   | Contracts and relationships |             |  | 2-5               |          |              |      | 6.9          |     |   |          | (3.3 | ) |          |      | 3.6  |  |   |      | 6.6  | 
|                   | Purchased Technologies      |             |  | 5                 |          |              |      | 0.4          |     |   |          | (0.3 | ) |          |      | 0.1  |  |   |      | 0.2  | 
|                   | Trademarks                  |             |  |                   |          |              |      |             |     |   |          |     |   |          |      |     |  |   |      | 0.5  | 
|                   |                             |             |  |                   |          |              |      |              |     |   |          |      |   |          |     
|                   |                             |             |  |                   |          | $            | 35.1 |              |     | $ | (10.0    | )    |   | $        | 25.1 |      |  | $ | 33.3 |     
|                   |                             |             |  |                   |          |              |      |              |     |   |          |      |   |          |     





F-20



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                         |  |              |      | 
|------------------------ |  | ------------ | ---- | 
|                         |  | Amortization |     
|Year Ending December 31, |  | Expense      |     
|                         |  |              |     
|2005                     |  | $            | 5.0  | 
|2006                     |  |              | 4.9  | 
|2007                     |  |              | 3.9  | 
|2008                     |  |              | 1.8  | 
|2009                     |  |              | 1.3  | 
|Thereafter               |  |              | 8.2  | 
|                         |  |              |     
|                         |  | $            | 25.1 | 
|                         |  |              |     



|        |                 
|------- | ----------------
|Note 8. | NASCAR Amendment





|        |                    
|------- | -------------------
|Note 9. | Restructuring Costs





F-21



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                 |  |              |       |   |            |   |      |            |  |   |       |   |  |       |      |   |  |   |       |  
|-------------------------------- |  | ------------ | ----- | - | ---------- | - | ---- | ---------- |  | - | ----- | - |  | ----- | ---- | - |  | - | ----- | -
|                                 |  | Employee     |       |   |            |   |      |            |  |   |      
|                                 |  | Severance    |       |   | Excess     |   |      | Asset      |  |   | Legal |   |  |      
|                                 |  | and Benefits |       |   | Facilities |   |      | Write-Offs |  |   | Fees  |   |  | Total |     
|                                 |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     
|2002 provision                   |  | $            | 8.0   |   |            | $ | 12.7 |            |  | $ | 8.2   |   |  | $     | 0.5  |   |  | $ | 29.4  |  
|Wink restructuring reserve       |  |              | 1.2   |   |            |   | 2.1  |            |  |   |      |   |  |       |     |   |  |   | 3.3   |  
|Cash payments                    |  |              | (6.9  | ) |            |   | (3.1 | )          |  |   |      |   |  |       | (0.3 | ) |  |   | (10.3 | )
|Non-cash charges                 |  |              |      |   |            |   |     |            |  |   | (8.2  | ) |  |       |     |   |  |   | (8.2  | )
|Currency effect                  |  |              |      |   |            |   | 0.4  |            |  |   |      |   |  |       |     |   |  |   | 0.4   |  
|                                 |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     
|Balance, December 31, 2002       |  |              | 2.3   |   |            |   | 12.1 |            |  |   |      |   |  |       | 0.2  |   |  |   | 14.6  |  
|2003 provision, net of reversals |  |              | 4.8   |   |            |   | 1.3  |            |  |   | 0.5   |   |  |       |     |   |  |   | 6.6   |  
|ACTV restructuring reserve       |  |              | 4.5   |   |            |   | 0.2  |            |  |   |      |   |  |       |     |   |  |   | 4.7   |  
|Cash payments                    |  |              | (10.3 | ) |            |   | (7.3 | )          |  |   |      |   |  |       | (0.2 | ) |  |   | (17.8 | )
|Non-cash charges                 |  |              |      |   |            |   |     |            |  |   | (0.5  | ) |  |       |     |   |  |   | (0.5  | )
|Currency effect                  |  |              | 0.2   |   |            |   |     |            |  |   |      |   |  |       |     |   |  |   | 0.2   |  
|                                 |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     
|Balance, December 31, 2003       |  |              | 1.5   |   |            |   | 6.3  |            |  |   |      |   |  |       |     |   |  |   | 7.8   |  
|2004 provision, net of reversals |  |              | (0.2  | ) |            |   | 0.1  |            |  |   | 1.0   |   |  |       |     |   |  |   | 0.9   |  
|Cash payments                    |  |              | (1.3  | ) |            |   | (5.0 | )          |  |   |      |   |  |       |     |   |  |   | (6.3  | )
|Non-cash charges                 |  |              |      |   |            |   |     |            |  |   | (1.0  | ) |  |       |     |   |  |   | (1.0  | )
|                                 |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     
|Balance. December 31, 2004       |  | $            |      |   |            | $ | 1.4  |            |  | $ |      |   |  | $     |     |   |  | $ | 1.4   |  
|                                 |  |              |       |   |            |   |      |            |  |   |       |   |  |       |     



F-22



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                     
|-------- | --------------------
|Note 10. | Shareholders Equity



| |                         
| | ------------------------
| | Authorized share capital



| |   |                                                 
| | - | ------------------------------------------------
| |  | 500,000,000 Class A ordinary shares             
|
| |  | 200,000,000 Class B ordinary shares             
|
| |  | 500,000,000 preference shares  none outstanding



| |       
| | ------
| | Voting





| |                                  
| | ---------------------------------
| | Dividends and Other Distributions





| |       
| | ------
| | Merger





| |                                      
| | -------------------------------------
| | Conversion of Class B Ordinary Shares





| |   |                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | upon transfer of Class B ordinary shares to a person or
    entity which is not one of the original beneficial owners of
    Class B ordinary shares or Class A ordinary shares who
    used to be the holder of Convertible Preference Shares or an
    affiliate;
|
| |  | on the date on which the number of Class B ordinary shares
    then outstanding is less than 10% of our then outstanding
    ordinary shares (without regard to voting rights);                                                                                    

F-23



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | at any time when the board of directors and the holders of a
    majority of our outstanding Class B ordinary shares approve
    the conversion of all of the Class B ordinary shares into
    Class A ordinary shares; or                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | if the board of directors, in its sole discretion, elects to
    effect a conversion after a determination that there has been a
    material adverse change in the liquidity, marketability or
    market value of our Class A ordinary shares, considered in
    the aggregate, due to (i) the exclusion of Class A
    ordinary shares from trading on a national securities exchange
    or the exclusion of Class A ordinary shares from quotation
    on the Nasdaq or any other similar market quotation system then
    in use; or (ii) requirements under any applicable law, in
    each of cases (i) and (ii), as a result of the existence of
    our Class B ordinary shares.





| |                                
| | -------------------------------
| | Exchangeable Share Arrangements







| |                
| | ---------------
| | Shares Reserved



|                                                                                                                                                                |       |  |            |            | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----- |  | ---------- | ---------- | 
|Issuable upon conversion of Class B Ordinary shares                                                                                                             |       |  | 30,631,746 |           
|Issuable upon exchange of shares (including shares issuable upon
    exercise of outstanding options) of OpenTV, Inc. common stock
    under 2000 Exchange Plan |       |  | 755,428    |           
|Stock options outstanding                                                                                                                                       |       |  | 8,415,387  |           
|Stock options reserved for future grant under 1999 Option Plan                                                                                                  |       |  | 3,345,774  |           
|Stock options reserved for future grant under 2001 Option Plan                                                                                                  |       |  | 438,111    |           
|Stock options reserved for future grant under 2003 Option Plan                                                                                                  |       |  | 874,179    |           
|Employee stock purchase plan                                                                                                                                    |       |  | 500,000    |           
|                                                                                                                                                                |       |  |           
|                                                                                                                                                                | Total |  |            | 44,960,625 | 
|                                                                                                                                                                |       |  |           



F-24



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |         
| | --------
| | Warrants





| |                                                
| | -----------------------------------------------
| | Agreements with General Instrument and Motorola





| |                         
| | ------------------------
| | Share-based Compensation





|         |             
|-------- | ------------
|Note 11. | Option Plans







F-25



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














F-26



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                           |  |               |            |   |           |  |            |                |  |                  |                |  |  |   |       | 
|------------------------------------------ |  | ------------- | ---------- | - | --------- |  | ---------- | -------------- |  | ---------------- | -------------- |  |  | - | ----- | 
|                                           |  | Shares        |            |   |           |  |            |                | 
|                                           |  | Available for |            |   | Number of |  |            |                |  | Weighted Average |               
|                                           |  | Grant         |            |   | Shares    |  |            | Exercise Price |  |                  | Exercise Price | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 
|Balance, December 31, 2001                 |  |               | 601,221    |   |           |  | 7,896,329  |                |  |                  |                |  |  | $ | 15.64 | 
|Options granted                            |  |               | (179,480   | ) |           |  | 179,480    |                |  | $                | 5.55  $ 8.30  |  |  | $ | 5.90  | 
|Options exercised                          |  |               |           |   |           |  | (153,703   | )              |  | $                | 1.05  $ 6.00  |  |  | $ | 2.31  | 
|Options cancelled                          |  |               | 2,002,277  |   |           |  | (2,173,112 | )              |  | $                | 1.05  $81.54  |  |  | $ | 14.41 | 
|Shares issued as compensation              |  |               | (22,830    | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 
|Balance, December 31, 2002                 |  |               | 2,401,188  |   |           |  | 5,748,994  |                |  |                  |                |  |  | $ | 16.35 | 
|Options reserved at inception of 2003 Plan |  |               | 5,000,000  |   |           |  |            |                |  |                  |                |  |  |   |       | 
|Options related to ACTV acquisition        |  |               |            |   |           |  | 6,750,103  |                |  | $                | 0.33  $73.83  |  |  | $ | 3.63  | 
|Options granted                            |  |               | (1,607,850 | ) |           |  | 1,607,850  |                |  | $                | 1.51  $ 5.04  |  |  | $ | 2.52  | 
|Options exercised                          |  |               |           |   |           |  | (1,599,969 | )              |  | $                | 0.33  $ 2.73  |  |  | $ | 1.62  | 
|Options cancelled                          |  |               | 1,958,045  |   |           |  | (3,433,522 | )              |  | $                | 0.33  $94.56  |  |  | $ | 14.89 | 
|Shares issued as compensation              |  |               | (125,155   | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 
|Balance, December 31, 2003                 |  |               | 7,626,228  |   |           |  | 9,073,456  |                |  |                  |                |  |  | $ | 6.81  | 
|Options granted                            |  |               | (2,813,050 | ) |           |  | 2,813,050  |                |  | $                | 2.16  $ 4.00  |  |  | $ | 3.06  | 
|Options exercised                          |  |               |           |   |           |  | (1,852,898 | )              |  | $                | 0.33  $ 2.73  |  |  | $ | 1.86  | 
|Options cancelled                          |  |               | 476,083    |   |           |  | (1,556,221 | )              |  | $                | 0.33  $54.25  |  |  | $ | 8.09  | 
|Shares issued to employees as bonus        |  |               | (578,917   | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|Shares issued as compensation              |  |               | (52,280    | ) |           |  |           |                |  |                  |                |  |  |   |       | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 
|Balance, December 31, 2004                 |  |               | 4,658,064  |   |           |  | 8,477,387  |                |  |                  |                |  |  | $ | 6.41  | 
|                                           |  |               |            |   |           |  |            |                |  |                  |                | 





|                |  |                     |           |                  |                               |  |      |                  |  |   |             |  |  |                  |           |  |  |   |       | 
|--------------- |  | ------------------- | --------- | ---------------- | ----------------------------- |  | ---- | ---------------- |  | - | ----------- |  |  | ---------------- | --------- |  |  | - | ----- | 
|                |  | Options Outstanding |           |                  | Options Currently Exercisable | 
|                |  |                     |           |                  |                               | 
|                |  |                     |           | Weighted Average |                               |  |      |                  | 
|                |  | Number              |           |                  | Remaining                     |  |      | Weighted Average |  |   | Number      |  |  | Weighted Average |          
|Exercise Price  |  | Outstanding         |           |                  | Contractual Life              |  |      | Exercise Price   |  |   | Exercisable |  |  | Exercise Price   |          
|                |  |                     |           |                  |                               |  |      |                  |  |   |             |  |  |                  |          
|$ 0.33  $ 1.78 |  |                     | 1,209,805 |                  |                               |  | 6.26 |                  |  | $ | 1.20        |  |  |                  | 630,716   |  |  | $ | 0.73  | 
|$ 2.02  $ 2.18 |  |                     | 1,141,566 |                  |                               |  | 2.62 |                  |  | $ | 2.17        |  |  |                  | 1,050,066 |  |  | $ | 2.18  | 
|$ 2.21  $ 2.73 |  |                     | 529,196   |                  |                               |  | 6.52 |                  |  | $ | 2.39        |  |  |                  | 157,930   |  |  | $ | 2.73  | 
|$ 2.85  $ 2.99 |  |                     | 2,447,000 |                  |                               |  | 9.19 |                  |  | $ | 2.99        |  |  |                  | 13,800    |  |  | $ | 2.90  | 
|$ 3.12  $ 5.00 |  |                     | 1,067,524 |                  |                               |  | 6.41 |                  |  | $ | 3.84        |  |  |                  | 441,602   |  |  | $ | 3.58  | 
|$ 5.04  $ 9.72 |  |                     | 1,256,224 |                  |                               |  | 4.31 |                  |  | $ | 8.87        |  |  |                  | 1,209,732 |  |  | $ | 8.93  | 
|$ 9.90  $82.06 |  |                     | 810,072   |                  |                               |  | 5.62 |                  |  | $ | 30.99       |  |  |                  | 796,341   |  |  | $ | 31.32 | 
|$86.31  $86.31 |  |                     | 9,000     |                  |                               |  | 5.33 |                  |  | $ | 86.31       |  |  |                  | 9,000     |  |  | $ | 86.31 | 
|$88.00  $88.00 |  |                     | 1,000     |                  |                               |  | 4.92 |                  |  | $ | 88.00       |  |  |                  | 1,000     |  |  | $ | 88.00 | 
|$94.56  $94.56 |  |                     | 6,000     |                  |                               |  | 5.09 |                  |  | $ | 94.56       |  |  |                  | 6,000     |  |  | $ | 94.56 | 
|                |  |                     |           |                  |                               |  |      |                  |  |   |             |  |  |                  |          
|                |  |                     | 8,477,387 |                  |                               |  | 6.30 |                  |  | $ | 6.41        |  |  |                  | 4,316,187 |  |  | $ | 9.73  | 
|                |  |                     |           |                  |                               |  |      |                  |  |   |             |  |  |                  |          

F-27



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|         |             
|-------- | ------------
|Note 12. | Income Taxes



|              |  |                         |         |   |      |   |         |      |  |   |          |  
|------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|              |  | Year Ended December 31, |        
|              |  |                         |        
|              |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|              |  |                         |         |   |      |   |         |      | 
|United States |  | $                       | (20,644 | ) |      | $ | (49,477 | )    |  | $ | (587,674 | )
|International |  |                         | (2,135  | ) |      |   | (3,354  | )    |  |   | (83,497  | )
|              |  |                         |         |   |      |   |         |      | 
|              |  | $                       | (22,779 | ) |      | $ | (52,831 | )    |  | $ | (671,171 | )
|              |  |                         |         |   |      |   |         |      | 



|         |                     |                         |      |      |      |   |       |       |  |   |       |       | 
|-------- | ------------------- | ----------------------- | ---- | ---- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|         |                     | Year Ended December 31, |     
|         |                     |                         |     
|         |                     | 2004                    |      |      | 2003 |   |       | 2002  | 
|         |                     |                         |      |      |      |   |       |       | 
|Current  |                     |                         |      |      |      |   |       |       |  |   |       |      
|         | United States       |                         | $    | (611 | )    |   | $     |      |  |   | $     |      | 
|         | International       |                         |      | 66   |      |   |       | 1,163 |  |   |       | 1,341 | 
|         | State               |                         |      | (272 | )    |   |       | 100   |  |   |       | 200   | 
|         |                     |                         |      |      |      |   |       |       | 
|         |                     | $                       | (817 | )    |      | $ | 1,263 |       |  | $ | 1,541 |      
|         |                     |                         |      |      |      |   |       |       | 
|Deferred |                     |                         |      |      |      |   |       |       |  |   |       |      
|         | United States       |                         | $    |     |      |   | $     |      |  |   | $     |      | 
|         |                     |                         |      |      |      |   |       |       | 
|         | Provision (benefit) |                         | $    | (817 | )    |   | $     | 1,263 |  |   | $     | 1,541 | 
|         |                     |                         |      |      |      |   |       |       | 





|                                                          |  |                         |        |   |      |   |         |      |  |   |          |  
|--------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                          |  | Year Ended December 31, |       
|                                                          |  |                         |       
|                                                          |  | 2004                    |        |   | 2003 |   |         | 2002 | 
|                                                          |  |                         |        |   |      |   |         |      | 
|Income tax (benefit) at the federal statutory rate of 35% |  | $                       | (7,972 | ) |      | $ | (18,491 | )    |  | $ | (234,910 | )
|Impairment of goodwill                                    |  |                         |       |   |      |   |        |      |  |   | 180,075  |  
|Amortization of share-based compensation                  |  |                         | 103    |   |      |   | 73      |      |  |   | 816      |  
|International losses                                      |  |                         | 747    |   |      |   | 1,043   |      |  |   | 23,519   |  
|Change in valuation allowance                             |  |                         | 6,905  |   |      |   | 15,523  |      |  |   | 29,132   |  
|Other                                                     |  |                         | (600   | ) |      |   | 3,115   |      |  |   | 2,909    |  
|                                                          |  |                         |        |   |      |   |         |      | 
|                                                          |  | $                       | (817   | ) |      | $ | 1,263   |      |  | $ | 1,541    |  
|                                                          |  |                         |        |   |      |   |         |      | 

F-28



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                            |                                  |                         |   |        |      |   |   |         |   |   |   |         |  
|------------------------------------------- | -------------------------------- | ----------------------- | - | ------ | ---- | - | - | ------- | - | - | - | ------- | -
|                                            |                                  | Year Ended December 31, |  
|                                            |                                  |                         |  
|                                            |                                  | 2004                    |   |        | 2003 |   |   | 2002    |  
|                                            |                                  |                         |   |        |      |   |   |         |  
|Current deferred tax asset (liability), net |                                  |                         |   |        |      |   |   |         |   |   |   |        
|                                            | Deferred revenue                 |                         | $ | 4,986  |      |   | $ | 4,860   |   |   | $ | 4,912   |  
|                                            | Accrued liabilities and reserves |                         |   | 3,144  |      |   |   | 7,268   |   |   |   | 7,278   |  
|                                            | Valuation allowance              |                         |   | (8,130 | )    |   |   | (12,128 | ) |   |   | (12,190 | )
|                                            |                                  |                         |   |        |      |   |   |         |  
|                                            |                                  | $                       |  |        |      | $ |  |         |   | $ |  |        
|                                            |                                  |                         |   |        |      |   |   |         |  

|                                              |                                             |      |   |          |      |   |   |          |   |   |   |         |  
|--------------------------------------------- | ------------------------------------------- | ---- | - | -------- | ---- | - | - | -------- | - | - | - | ------- | -
|                                              |                                             | 2004 |   |          | 2003 |   |   | 2002     |  
|                                              |                                             |      |   |          |      |   |   |          |  
|Long-term deferred tax asset (liability), net |                                             |      |   |          |      |   |   |          |   |   |   |        
|                                              | Share-based compensation                    |      | $ |         |      |   | $ |         |   |   | $ | 174     |  
|                                              | Asset basis differences                     |      |   | 17,332   |      |   |   | 20,543   |   |   |   | 5,276   |  
|                                              | Acquired intangibles                        |      |   | (1,154   | )    |   |   | (2,817   | ) |   |   | (6,472  | )
|                                              | Net operating loss and credit carryforwards |      |   | 134,045  |      |   |   | 107,826  |   |   |   | 85,704  |  
|                                              | Valuation allowance                         |      |   | (150,223 | )    |   |   | (125,552 | ) |   |   | (84,682 | )
|                                              |                                             |      |   |          |      |   |   |          |  
|                                              |                                             | $    |  |          |      | $ |  |          |   | $ |  |        
|                                              |                                             |      |   |          |      |   |   |          |  







|         |                              
|-------- | -----------------------------
|Note 13. | Commitments and Contingencies



| |                 
| | ----------------
| | Operating Leases



F-29



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                         |  |             |      | 
|------------------------ |  | ----------- | ---- | 
|                         |  | Minimum     |     
|Year Ending December 31, |  | Commitments |     
|                         |  |             |     
|2005                     |  | $           | 4.5  | 
|2006                     |  |             | 4.1  | 
|2007                     |  |             | 3.5  | 
|2008                     |  |             | 3.5  | 
|2009                     |  |             | 3.3  | 
|Thereafter               |  |             | 3.2  | 
|                         |  |             |     
|                         |  | $           | 22.1 | 
|                         |  |             |     



| |                  
| | -----------------
| | Other Commitments









| |              
| | -------------
| | Contingencies

OpenTV, Inc. v. Liberate Technologies, Inc.




F-30



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Initial Public Offering Securities Litigation. In re OpenTV Corp. Initial Public Offering
Securities Litigation. In re Initial Public
Offering Securities Litigation.


In re Wink Communications, Inc.
Initial Public Offering Securities Litigation.


F-31



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


In re Initial
Public Offering Securities Litigation.


Litigation Relating to the Acquisition of ACTV, Inc.


Broadcast Innovation Matter.


F-32



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Personalized Media Communications, LLC.


Other Matters.




F-33



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                           
|-------- | --------------------------
|Note 14. | Related Party Transactions



|                             |  |                       |                                  |                         |      |   |        |      |  |   |        |   |  |   |        |  
|---------------------------- |  | --------------------- | -------------------------------- | ----------------------- | ---- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                             |  |                       |                                  | Year Ended December 31, |     
|                             |  |                       |                                  |                         |     
|Related Party                |  | Nature of Transaction |                                  |                         | 2004 |   |        | 2003 |  |   | 2002   |  
|                             |  |                       |                                  |                         |      |   |        |      |  |   |        |  
|Shareholders:                |  |                       |                                  |                         |      |   |        |      |  |   |        |   |  |   |        |  
|Liberty Media and affiliates |  |                       | Management fee and other costs   |                         |      | $ | (558   | )    |  | $ | (2,382 | ) |  | $ | (527   | )
|Liberty Media                |  |                       | Medical insurance                |                         |      |   | (1,807 | )    |  |   |       |   |  |   |       |  
|Liberty Media affiliates     |  |                       | Services and support revenue     |                         |      |   | 52     |      |  |   | 1,107  |   |  |   | 560    |  
|                             |  |                       | and license fees                 |                         |      |   |        |      |  |   |        |   |  |   |        |  
|Motorola                     |  |                       | Services and support revenue     |                         |      |   | 1,735  |      |  |   | 6,406  |   |  |   | 6,772  |  
|                             |  |                       | and license fees                 |                         |      |   |        |      |  |   |        |   |  |   |        |  
|                             |  |                       | Equipment purchases and          |                         |      |   | (147   | )    |  |   | (138   | ) |  |   | (1,892 | )
|                             |  |                       | support                          |                         |      |   |        |      |  |   |        |   |  |   |        |  
|MIH Limited and affiliates   |  |                       | Royalties, services and          |                         |      |   | 1,831  |      |  |   | 1,068  |   |  |   | 1,429  |  
|                             |  |                       | support revenue and license fees |                         |      |   |        |      |  |   |        |   |  |   |        |  
|Sun Microsystems             |  |                       | Software technology license      |                         |      |   | (3,540 | )    |  |   |       |   |  |   | (141   | )
|                             |  |                       | and equipment                    |                         |      |   |        |      |  |   |        |   |  |   |        |  
|Equity Investments:          |  |                       |                                  |                         |      |   |        |      |  |   |        |   |  |   |        |  
|WOW TV                       |  |                       | Services revenue                 |                         |      |   |       |      |  |   |       |   |  |   | 399    |  









F-34



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|         |                    
|-------- | -------------------
|Note 15. | Segment Information







F-35



---



##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                                                    |  |                         |       |   |      |   |       |      |  |   |        |  
|----------------------------------------------------------------------------------- |  | ----------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ------ | -
|                                                                                    |  | Year Ended December 31, |      
|                                                                                    |  |                         |      
|                                                                                    |  | 2004                    |       |   | 2003 |   |       | 2002 | 
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Revenues:                                                                           |  |                         |       |   |      |   |       |      |  |   |        |  
|Middleware and Integrated Technologies                                              |  | $                       | 63.1  |   |      | $ | 49.6  |      |  | $ | 48.3   |  
|Applications                                                                        |  |                         | 12.1  |   |      |   | 14.3  |      |  |   | 11.4   |  
|BettingCorp                                                                         |  |                         | 2.0   |   |      |   | 0.3   |      |  |   |       |  
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Total Revenue                                                                       |  |                         | 77.2  |   |      |   | 64.2  |      |  |   | 59.7   |  
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Contribution Margin:                                                                |  |                         |       |   |      |   |       |      |  |   |        |  
|Middleware and Integrated Technologies                                              |  |                         | 26.3  |   |      |   | 17.7  |      |  |   | (6.0   | )
|Applications                                                                        |  |                         | (6.8  | ) |      |   | (17.9 | )    |  |   | (20.5  | )
|BettingCorp                                                                         |  |                         | (4.5  | ) |      |   | (1.5  | )    |  |   |       |  
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Total Contribution Margin                                                           |  |                         | 15.0  |   |      |   | (1.7  | )    |  |   | (26.5  | )
|Unallocated corporate overhead                                                      |  |                         | (29.1 | ) |      |   | (26.3 | )    |  |   | (31.8  | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Adjusted EBITDA before unusual items                                                |  |                         | (14.1 | ) |      |   | (28.0 | )    |  |   | (58.3  | )
|NASCAR amendment                                                                    |  |                         | 4.6   |   |      |   |      |      |  |   |       |  
|BSkyB contract amendment                                                            |  |                         |      |   |      |   | 1.2   |      |  |   |       |  
|DirecTV market development costs                                                    |  |                         |      |   |      |   | 3.8   |      |  |   |       |  
|Restructuring costs                                                                 |  |                         | (0.9  | ) |      |   | (6.6  | )    |  |   | (29.4  | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Adjusted EBITDA                                                                     |  |                         | (10.4 | ) |      |   | (29.6 | )    |  |   | (87.7  | )
|Depreciation and amortization                                                       |  |                         | (5.9  | ) |      |   | (7.5  | )    |  |   | (10.3  | )
|Amortization of intangible assets                                                   |  |                         | (8.2  | ) |      |   | (14.7 | )    |  |   | (18.3  | )
|Amortization of share-based compensation                                            |  |                         |      |   |      |   | (0.2  | )    |  |   | (3.0   | )
|Interest income                                                                     |  |                         | 0.8   |   |      |   | 1.6   |      |  |   | 5.2    |  
|Other income (expense)                                                              |  |                         | 0.5   |   |      |   | (1.1  | )    |  |   | (0.1   | )
|Impairment of equity investments                                                    |  |                         |      |   |      |   |      |      |  |   | (10.9  | )
|Share of losses of equity investee                                                  |  |                         |      |   |      |   |      |      |  |   | (7.3   | )
|Minority interest                                                                   |  |                         | 0.5   |   |      |   | 0.2   |      |  |   | 0.5    |  
|Impairment of intangible assets                                                     |  |                         |      |   |      |   | (1.5  | )    |  |   | (24.8  | )
|Impairment of goodwill                                                              |  |                         |      |   |      |   |      |      |  |   | (514.5 | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Loss before income taxes and cumulative effect of accounting
    change, net of tax |  |                         | (22.7 | ) |      |   | (52.8 | )    |  |   | (671.2 | )
|Income tax benefit (expense)                                                        |  |                         | 0.8   |   |      |   | (1.3  | )    |  |   | (1.5   | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Loss before cumulative effect of accounting change, net of tax                      |  |                         | (21.9 | ) |      |   | (54.1 | )    |  |   | (672.7 | )
|Cumulative effect of accounting change, net of tax                                  |  |                         |      |   |      |   |      |      |  |   | (129.9 | )
|                                                                                    |  |                         |       |   |      |   |       |      | 
|Net loss                                                                            |  | $                       | (21.9 | ) |      | $ | (54.1 | )    |  | $ | (802.6 | )
|                                                                                    |  |                         |       |   |      |   |       |      | 

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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |   |      |      |      |  |      |     |     | 
|------------------------------ | --------------- | ----------------------- | ---- | ---- | ---- |  | ---- | ---- | --- | - | ---- | ---- | ---- | ---- | ---- | --- | --- | - | ---- | ---- | ---- |  | ---- | --- | --- | 
|                               |                 | Year Ended December 31, |     
|                               |                 |                         |     
|                               |                 | 2004                    |      |      | %    |  |      | 2003 |     |   | %    |      |      | 2002 |      |     | %   |  
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  
|Europe, Middle East and Africa |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |   |      |      |      |  |      |    
|                               | United Kingdom  |                         | $    | 20.5 |      |  |      | 26%  |     |   | $    | 17.2 |      |      |      | 27% |     |   | $    | 15.4 |      |  |      | 26% |    
|                               | Italy           |                         |      | 13.8 |      |  |      | 18%  |     |   |      | 1.8  |      |      |      | 3%  |     |   |      | 1.1  |      |  |      | 2%  |    
|                               | Other Countries |                         |      | 10.9 |      |  |      | 14%  |     |   |      | 11.9 |      |      |      | 18% |     |   |      | 14.5 |      |  |      | 24% |    
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  
|                               |                 | Subtotal                |      |      | 45.2 |  |      |      | 58% |   |      |      | 30.9 |      |      |     | 48% |   |      |      | 31.0 |  |      |     | 52% | 
|Americas                       |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |   |      |      |      |  |      |    
|                               | United States   |                         |      | 18.4 |      |  |      | 24%  |     |   |      | 20.2 |      |      |      | 32% |     |   |      | 14.6 |      |  |      | 25% |    
|                               | Other Countries |                         |      | 2.9  |      |  |      | 4%   |     |   |      | 4.0  |      |      |      | 6%  |     |   |      | 6.7  |      |  |      | 11% |    
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  
|                               |                 | Subtotal                |      |      | 21.3 |  |      |      | 28% |   |      |      | 24.2 |      |      |     | 38% |   |      |      | 21.3 |  |      |     | 36% | 
|Asia Pacific                   |                 |                         | 10.7 |      |      |  | 14%  |      |     |   | 9.1  |      |      |      | 14%  |     |     |   | 7.4  |      |      |  | 12%  |    
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  
|                               |                 | $                       | 77.2 |      |      |  | 100% |      |     | $ | 64.2 |      |      |      | 100% |     |     | $ | 59.7 |      |      |  | 100% |    
|                               |                 |                         |      |      |      |  |      |      |     |   |      |      |      |      |      |     |     |  



|         |  |              |     |  |      |  |     |      |  |  |     | 
|-------- |  | ------------ | --- |  | ---- |  | --- | ---- |  |  | --- | 
|         |  | Year Ended   |    
|         |  | December 31, |    
|         |  |              |    
|Customer |  | 2004         |     |  | 2003 |  |     | 2002 | 
|         |  |              |     |  |      |  |     |      | 
|A        |  |              | 18% |  |      |  | 1%  |      |  |  | 0%  | 
|B        |  |              | 15% |  |      |  | 12% |      |  |  | 6%  | 
|C        |  |              | 4%  |  |      |  | 12% |      |  |  | 11% | 
|D        |  |              | 2%  |  |      |  | 10% |      |  |  | 11% | 







|                          |  |              |     |  |      |   |     |      |  |   |     | 
|------------------------- |  | ------------ | --- |  | ---- | - | --- | ---- |  | - | --- | 
|                          |  | Year Ended   |    
|                          |  | December 31, |    
|                          |  |              |    
|Capital Expenditures, net |  | 2004         |     |  | 2003 |   |     | 2002 | 
|                          |  |              |     |  |      |   |     |      | 
|United States             |  | $            | 1.3 |  |      | $ | 1.5 |      |  | $ | 5.1 | 
|Other countries           |  |              | 0.8 |  |      |   | 1.4 |      |  |   | 2.6 | 
|                          |  |              |     |  |      |   |     |      | 
|                          |  | $            | 2.1 |  |      | $ | 2.9 |      |  | $ | 7.7 | 
|                          |  |              |     |  |      |   |     |      | 

F-37



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##### Table of Contents



OPENTV CORP.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                      |  |              |      |  |      |   |      | 
|--------------------- |  | ------------ | ---- |  | ---- | - | ---- | 
|                      |  | December 31, |     
|                      |  |              |     
|Long-Lived Assets(*): |  | 2004         |      |  | 2003 |  
|                      |  |              |      |  |      |  
|United States         |  | $            | 10.3 |  |      | $ | 21.5 | 
|Other countries       |  |              | 2.6  |  |      |   | 3.6  | 
|                      |  |              |      |  |      |  
|                      |  | $            | 12.9 |  |      | $ | 25.1 | 
|                      |  |              |      |  |      |  






Note 16. Quarterly Consolidated Financial Data
(Unaudited)




|                                                             |  |             |             |   |              |   |             |         |  |   |             |   |  |   |             |  
|------------------------------------------------------------ |  | ----------- | ----------- | - | ------------ | - | ----------- | ------- |  | - | ----------- | - |  | - | ----------- | -
|2004 Quarter Ended                                           |  | December 31 |             |   | September 30 |   |             | June 30 |  |   | March 31    |  
|                                                             |  |             |             |   |              |   |             |         |  |   |             |  
|Revenues                                                     |  | $           | 24,097      |   |              | $ | 16,577      |         |  | $ | 19,097      |   |  | $ | 17,398      |  
|Net loss                                                     |  | $           | (6,300      | ) |              | $ | (4,763      | )       |  | $ | (1,962      | ) |  | $ | (8,937      | )
|Net loss per share, basic and diluted                        |  | $           | (0.05       | ) |              | $ | (0.04       | )       |  | $ | (0.02       | ) |  | $ | (0.07       | )
|Shares used in per share calculation  basic and
    diluted |  |             | 121,980,908 |   |              |   | 121,830,392 |         |  |   | 121,420,281 |   |  |   | 120,004,281 |  

|                                                             |  |             |             |   |              |   |             |         |  |   |            |   |  |   |            |  
|------------------------------------------------------------ |  | ----------- | ----------- | - | ------------ | - | ----------- | ------- |  | - | ---------- | - |  | - | ---------- | -
|2003 Quarter Ended                                           |  | December 31 |             |   | September 30 |   |             | June 30 |  |   | March 31   |  
|                                                             |  |             |             |   |              |   |             |         |  |   |            |  
|Revenues                                                     |  | $           | 16,040      |   |              | $ | 17,073      |         |  | $ | 15,738     |   |  | $ | 15,346     |  
|Net loss                                                     |  | $           | (12,875     | ) |              | $ | (11,918     | )       |  | $ | (9,236     | ) |  | $ | (20,065    | )
|Net loss per share, basic and diluted                        |  | $           | (0.11       | ) |              | $ | (0.10       | )       |  | $ | (0.13      | ) |  | $ | (0.28      | )
|Shares used in per share calculation  basic and
    diluted |  |             | 118,481,309 |   |              |   | 116,157,971 |         |  |   | 72,358,351 |   |  |   | 72,275,480 |  



F-38



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##### Table of Contents



OPENTV CORP.


SCHEDULE II


VALUATION AND QUALIFYING ACCOUNTS


|                                 |      |                                                      |   |         |               |  |   |            |   |  |             |        |   |  |   |       | 
|-------------------------------- | ---- | ---------------------------------------------------- | - | ------- | ------------- |  | - | ---------- | - |  | ----------- | ------ | - |  | - | ----- | 
|                                 |      | For the Years Ended December 31, 2004, 2003 and 2002 |  
|                                 |      |                                                      |  
|                                 |      |                                                      |   | Charged |               |  |  
|                                 |      | Balance at                                           |   |         | (Credited) to |  |   | Write-Offs |   |  |            
|                                 |      | Beginning of                                         |   |         | Operating     |  |   | Net of     |   |  | Balance at  |       
|                                 |      | Year                                                 |   |         | Expenses      |  |   | Recoveries |   |  | End of Year |       
|                                 |      |                                                      |   |         |               |  |   |            |   |  |             |       
|Allowance for Doubtful Accounts: |      |                                                      |   |         |               |  |   |            |   |  |             |        |   |  |   |      
|                                 | 2004 |                                                      | $ | 789     |               |  | $ | (187       | ) |  | $           | (43    | ) |  | $ | 559   | 
|                                 | 2003 |                                                      |   | 1,966   |               |  |   | 168        |   |  |             | (1,345 | ) |  |   | 789   | 
|                                 | 2002 |                                                      |   | 1,186   |               |  |   | 1,758      |   |  |             | (978   | ) |  |   | 1,966 | 

F-39