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                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                               ----------------

                                   FORM 20-F

[_]REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
   EXCHANGE ACT OF 1934 or

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934 or

  For the fiscal year ended December 31, 2000

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934

  For the transition period from          to

                         Commission File No. 001-15473

                               ----------------

                                 OpenTV Corp.
            (Exact name of registrant as specified in its charter)

                            BRITISH VIRGIN ISLANDS
                (Jurisdiction of incorporation or organization)

                           401 East Middlefield Road
                            Mountain View, CA 94043
                  (Addresses of principal executive offices)

                               ----------------

  Securities registered or to be registered pursuant to Section 12(b) of the
                                     Act:

                                     None

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

                     Class A Ordinary Shares, no par value

Securities for which there is a reporting obligation pursuant to Section 15(d)
                                  of the Act:

                                     None

           As of December 31, 2000, the registrant had outstanding:

               34,829,632 Class A Ordinary Shares, no par value

               30,631,746 Class B Ordinary Shares, no par value

                               ----------------

   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

   Indicate by check mark which financial statement item the Registrant has
elected to follow:  Item 17 [_] Item 18 [X]

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<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----

 <C> <C>      <S>                                                         <C>
 PART I..................................................................   1

      ITEM I. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.....    1
           A. Directors and Senior Management...........................    1
           B. Advisors..................................................    1
           C. Auditors..................................................    1
      ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE...................    1
           A. Offer Statistics..........................................    1
           B. Method and Expected Timetable.............................    1
      ITEM 3. KEY INFORMATION...........................................    2
           A. Selected Financial Data...................................    2
           B. Capitalization and Indebtedness...........................    3
           C. Reasons for the Offer and Use of Proceeds.................    3
           D. Risk Factors..............................................    3
      ITEM 4. INFORMATION ON THE COMPANY................................   11
           A. History and Development of the Company....................   11
           B. Business Overview.........................................   14
           C. Organizational Structure..................................   25
           D. Property, Plants & Equipment..............................   25
      ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS..............   26
           A. Operating Results.........................................   26
           B. Liquidity and Capital Resources...........................   31
           C. Research and Development, Patents & Licenses, etc. .......   32
           D. Trend Information.........................................   32
      ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES................   33
           A. Directors and Executive Officers..........................   33
           B. Compensation..............................................   36
           C. Board Practices...........................................   37
           D. Employees.................................................   38
           E. Share Ownership...........................................   38
      ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.........   43
           A. Major Shareholders........................................   43
           B. Related Party Transactions................................   46
           C. Interests of Experts and Counsel..........................   46
      ITEM 8. FINANCIAL INFORMATION.....................................   47
           A. Consolidated Statements and Other Financial Information...   47
           B. Legal Proceedings.........................................   47
           C. Significant Changes.......................................   47
      ITEM 9. THE OFFER AND LISTING.....................................   47
           A. Plan of Distribution......................................   47
           B. Markets...................................................   47
           C. Selling Shareholders......................................   48
           D. Dilution..................................................   48
           E. Expenses of the Issue.....................................   48
     ITEM 10. ADDITIONAL INFORMATION....................................   48
           A. Share Capital.............................................   48
           B.   Articles of Association and Memorandum of Association of
              Association...............................................   48
           C. Material Contracts........................................   52
           D. Exchange Controls.........................................   56
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>  <C>      <C>                                                          <C>
     E.       Taxation....................................................  57
     F.       Dividends and Paying Agents.................................  61
     G.       Statement by Experts........................................  61
     H.       Documents on Display........................................  61
     I.       Subsidiary Information......................................  62
     ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..  62

PART II..................................................................   64

     ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES......  64
     ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.............  64
     ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS....  64
     ITEM 15. [RESERVED]..................................................  64
     ITEM 16. [RESERVED]..................................................  64

PART III.................................................................   64


PART IV..................................................................   65

     ITEM 17. Financial Statements........................................  65
     ITEM 18. Financial Statements........................................  65
     ITEM 19. Exhibits....................................................  65
</TABLE>


                                       ii
<PAGE>

   The terms "OpenTV", "our company", "we", "us" and "our" as used in this
annual report on Form 20-F (this "annual report") refer to OpenTV Corp. and
its subsidiaries, including OpenTV, Inc. and Spyglass, Inc., and its
predecessors as a combined entity, except where the context requires
otherwise.

            CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

   This annual report contains forward-looking statements that involve
inherent risks and uncertainties. These statements relate to our future plans,
objectives, expectations and intentions. We use words such as "expect,"
"anticipate," "project," "believe," "plan," "intend," "future," and other
similar expressions to identify forward-looking statements. You should not
place undue reliance on these forward-looking statements. Our actual results
may differ materially from those anticipated in these forward-looking
statements. Factors that could contribute to differences include, but are not
limited to, those discussed in Item 3.D, entitled "Risk Factors", and
elsewhere in this annual report.

   You should rely only on the information contained in this annual report
when making a decision about whether to invest in our Ordinary Shares. The
information contained in this annual report is accurate only as of the date of
this annual report.

                                    PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

A. Directors and Senior Management.

   Not Applicable.

B. Advisors.

   Not Applicable.

C. Auditors

   Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

A. Offer Statistics.

   Not Applicable.

B. Method and Expected Timetable.

   Not Applicable.

                                       1
<PAGE>

ITEM 3. KEY INFORMATION

A. Selected Financial Data.

              Selected Historical and Consolidated Financial Data

<TABLE>
<CAPTION>
                          For  the period
                           from July 1,
                           1996 (date of
                           inception) to            Year Ended December 31,
                           December 31,   ----------------------------------------------
                               1996          1997        1998        1999        2000
                          --------------- ----------  ----------  ----------  ----------
                           (in thousands of U.S. dollars, except share and per share
                                                     data)
<S>                       <C>             <C>         <C>         <C>         <C>
Consolidated Statement
 of Operations Data:
Revenues:
 Royalties..............     $     --     $    2,382  $    2,788  $   14,782  $   29,898
 License fees...........           287         1,255       1,578       2,964      13,444
 Services and other.....           731         3,322       5,102       8,205      19,805
                             ---------    ----------  ----------  ----------  ----------
  Total revenues........         1,018         6,959       9,468      25,951      63,147
                             ---------    ----------  ----------  ----------  ----------
Operating expenses:
 Cost of services and
  other revenues(1).....           587         3,290       4,736       5,949      15,454
 Research and
  development(2)........         2,590         6,219       7,514      13,172      34,062
 Sales and
  marketing(3)..........           845         4,323       7,418      11,415      26,381
 General and
  administrative(4).....         1,126         3,929       3,982       5,971      14,160
 Amortization of
  goodwill..............           --            --          --          --      169,284
 Amortization of
  intangibles...........           --            --          --        1,210       6,226
 Amortization of share-
  based compensation....           --            --           13      13,098      14,426
 Non-cash warrant
  expense...............           --            --          --       68,569      24,908
                             ---------    ----------  ----------  ----------  ----------
  Total operating
   expenses.............         5,148        17,761      23,663     119,384     304,901
                             ---------    ----------  ----------  ----------  ----------
 Loss from operations...        (4,130)      (10,802)    (14,195)    (93,433)   (241,754)
Investment loss.........           --            --          --          --      (11,687)
Interest and other
 income (expense), net..           172           113          (7)        823      12,121
Minority interest.......           --            --          --        2,153          34
                             ---------    ----------  ----------  ----------  ----------
 Loss before income
  taxes.................        (3,958)      (10,689)    (14,202)    (90,457)   (241,286)
Income tax benefit......           --            --          --          --          509
                             ---------    ----------  ----------  ----------  ----------
 Net loss...............        (3,958)      (10,689)    (14,202)    (90,457)   (240,777)
Preferred stock deemed
 dividend...............           --            --          --       31,250         --
                             ---------    ----------  ----------  ----------  ----------
  Net loss attributable
   to ordinary
   shareholders.........     $  (3,958)   $  (10,689) $  (14,202) $ (121,707) $ (240,777)
                             =========    ==========  ==========  ==========  ==========
Net loss per share
 attributable to
 ordinary shareholders,
 basic and diluted......     $   (0.43)   $    (0.43) $    (0.43) $    (4.19) $    (4.61)
                             =========    ==========  ==========  ==========  ==========
Shares used in computing
 net loss per share
 attributable to
 ordinary shareholders,
 basic and diluted......     9,210,877    24,973,614  33,212,803  29,065,478  52,190,338
                             =========    ==========  ==========  ==========  ==========
</TABLE>
--------
(1) Exclusive of $53 and $2,603 share-based compensation for the years ended
    1999 and 2000.

(2) Exclusive of $662 and $1,538 share-based compensation for the years ended
    1999 and 2000.

(3) Exclusive of $556 and $2,100 share-based compensation for the years ended
    1999 and 2000.

(4) Exclusive of $13, $11,827 and $8,185 share-based compensation for the years
    ended 1998, 1999 and 2000.

                                       2
<PAGE>

       Selected Historical and Consolidated Financial Data--(Continued)

<TABLE>
<CAPTION>
                                              As of December 31,
                                  --------------------------------------------
                                   1996   1997     1998      1999      2000
                                  ------ -------  -------  -------- ----------
                                        (in thousands of U.S. Dollars)
<S>                               <C>    <C>      <C>      <C>      <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents........ $5,357 $   293  $ 3,324  $  6,307 $   94,003
Working capital (deficit)........  3,627  (2,272)  (1,459)  182,238    217,294
Total assets.....................  7,482   4,878   10,038   206,790  2,181,430
Convertible notes payable to
 shareholders....................    --      --     7,000       --         --
Redeemable common stock..........    --      --       117       --         --
Total shareholders' equity
 (deficit).......................  4,677    (158)  (4,783)  194,561  2,142,190
</TABLE>

B. Capitalization and Indebtedness.

   Not Applicable.

C. Reasons for the Offer and Use of Proceeds.

   Not Applicable.

D. Risk Factors.

   Any investment in our Class A Ordinary Shares involves a high degree of
risk. You should consider carefully the following information about risks,
together with the other information contained in this annual report, before
you decide whether to buy or sell our Class A Ordinary Shares. If any of the
following risks actually occur, our business, results of operations and
financial condition could suffer significantly. In any such case, the market
price of our Class A Ordinary Shares could decline, and you may lose all or
part of the money you paid to buy our Class A Ordinary Shares.

We have a history of losses and may experience losses in the future

   We have incurred significant net losses since our inception and, at
December 31, 2000, we had an accumulated deficit of approximately $391
million. We expect that we will continue to incur significant sales and
marketing, product development and administrative expenses. As a result, we
will need to generate significant revenue to achieve and maintain
profitability. We cannot be certain that we will achieve, sustain or increase
profitability in the future. Any failure to significantly increase revenue as
we implement our product and distribution strategies would adversely affect
our business, operating results and financial condition.

Our limited operating history and the risks we encounter as a relatively new
company make the prediction of our future results difficult

   We began operations as an independent company in July 1996 and the OpenTV
system was first deployed in mid-1997. Accordingly, we have a limited
operating history, which makes the prediction of future results difficult. Our
prospects must be considered in light of the risks frequently encountered by
companies in an early stage of development, particularly companies in new
markets such as interactive television. Our ability to achieve and sustain
profitability will require, among other things:

  .  widespread adoption of the OpenTV system by multiple industry
     participants and its acceptance by the television viewing public

  .  continued improvements to our technology and operations

  .  the successful development and growth of our applications business as a
     complement to our platform products business

  .  our timely and successful response to competitive developments

  .  the attraction, retention and motivation of qualified employees

                                       3
<PAGE>

   If we fail to successfully meet these challenges, our financial performance
may be adversely affected. Our failure to gain broad market acceptance would
result in us being unable to successfully market and sell our products.

The market price of our Class A Ordinary Shares has fluctuated significantly
and could fluctuate significantly

   Since our initial public offering in November 1999 until April 12, 2001,
the market price as of closing of our Class A Ordinary Shares on the Nasdaq
National Market has varied from a low of $7.63 to a high of $226.00. These
price fluctuations, as well as price fluctuations on the Euronext Amsterdam
N.V.'s stock market, or the AEX, on which rights in respect of our Class A
Ordinary Shares are traded, have been or in the future could be a result of a
number of factors, including:

  .  variations in our operating results that may cause us to fail to meet
     analysts' or investors' expectations

  .  general economic and stock market conditions

  .  changes in financial estimates by securities analysts

  .  earnings and other announcements by, and changes in market evaluations
     of, companies in the interactive television industry

  .  the announcement and/or consummation of mergers or acquisitions with, or
     equity investments in, other entities

  .  announcements by us or our competitors of technological innovations, new
     products or services

  .  changes in business or regulatory conditions that affect us

  .  sales or proposed sales of substantial amounts of our Ordinary Shares by
     MIH Limited or Sun Microsystems or any of our other large shareholders

  .  the trading activity of our Class A Ordinary Shares

   The securities of many technology and Internet-related companies, including
interactive television technology companies, have experienced and continue to
experience extreme price and volume fluctuations, including significant
downturns in their market price, often unrelated to the operating performance
of these companies. In the past, following periods of volatility in the market
price of these securities, shareholders have often instituted securities class
action litigation against these companies. If we were to be involved in such a
class action suit, it could have an adverse effect on our business, financial
condition and results of operations.

Interactive television is a new and emerging business, and we cannot guarantee
that it will attract widespread market acceptance or demand

   Our success depends upon, among other things, broad acceptance of the
concept of interactive television by industry participants, including
broadcast and pay-television networks, system operators and manufacturers of
televisions and set-top boxes, and their ability to successfully market
interactive television to television viewers and advertisers. To date,
interactive television has been broadly accepted in many countries in Europe
including the United Kingdom, France, Spain and Italy, but it has not yet been
broadly accepted in other parts of the world. There have been several well-
financed and high-profile, but unsuccessful, attempts in the United States to
develop and deploy systems in the broad category of interactive television.
Many key industry participants have avoided participating in interactive
television for a variety of reasons, including:

  .  inconsistent quality of service

  .  need for new and expensive hardware in homes

  .  inadequate transmission facilities and broadcast centers

                                       4
<PAGE>

  .  complicated and expensive processes for creating interactive content

  .  inability to align the conflicting interests of various participants

  .  uncertain returns from interactive television-related investments.

   Accordingly, such participants may perceive interactive television
negatively and be reluctant to participate.

The failure by network operators to select us as their interactive software
platform will result in us being unable to penetrate new markets, including
the United States market

   Our growth and future success depends substantially upon our ability to
penetrate new markets and convince network operators to adopt and maintain
their use of the OpenTV system. We have entered into a number of non-exclusive
agreements with network operators providing for the launch of OpenTV-based
interactive services. If network operators determine that our service is not
viable as a business proposition or if they determine that the service does
not meet their business or operational strategies, they will not choose, or
may stop using, the OpenTV system as their interactive software platform.

   Furthermore, EchoStar (operator of the DISH Network) is currently the only
major network operator in the United States with which we have an agreement to
deploy the OpenTV system. If our partnership with EchoStar is not successful,
or we are not able to form relationships with other United States network
operators, including cable network operators, we may have a difficult time
penetrating the United States market. If we are unable to penetrate the United
States market, it will have an adverse effect on our business, financial
condition and results of operations.

We have historically derived a significant portion of our revenue from a
limited number of other customers, and the loss of any significant customers
could have an adverse effect on our operating results

   We derived approximately 14% of our revenue during the fiscal year ended
2000 from one customer, Motorola. In addition, 26% of our revenue for the
fiscal year ended 2000 consisted of royalties received from several customers
that sell set-top boxes to British Sky Broadcasting (BSkyB). If BSkyB were to
stop or reduce using our software platform, or stop or reduce purchasing set-
top boxes containing our software, our royalty revenue as well as our expected
applications and professional services revenue may significantly decline or
not materialize, which could have an adverse effect on our business, financial
condition and results of operations.

   Although we expect that our reliance on any particular customer will
decline as the market for digital interactive television develops and our
customer base expands, our failure to enter into a sufficient number of
licensing agreements or sustain revenues from major customers during a
particular period could have an adverse effect on our future operating
results.

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

   We face competition from a number of companies, including many that have
significantly greater financial, technical and marketing resources and a
better recognized brand name than we do. Current and potential competitors in
one or more aspects of our business include interactive television technology
companies, Internet-related companies, broadband interactive service providers
and information appliance technology vendors.

   Interactive television technology companies. Several companies have
developed technologies relevant to interactive television. Microsoft and
Liberate Technologies are software developers that are working to create
interactive television solutions and that have established significant
industry relationships that could hinder the adoption of the OpenTV system.
Microsoft offers set-top boxes with Internet access, interactive program
listings and simultaneous television and Internet usage. Microsoft has also
acquired equity interests in several network operators. These investments may
potentially give Microsoft influence in the network operator's choice of
interactive software. With its vastly greater financial, technical and
marketing resources, Microsoft will likely be

                                       5
<PAGE>

a strong competitor in the market for interactive television software.
Liberate is a software company that enables the delivery of Internet-enabled
content and applications to information appliances. It licenses its software
to network operators and information appliance and set-top box manufacturers.
It has significant resources and relationships with U.S. and U.K. cable
operators.

   Canal+ and Scientific-Atlanta are companies that have vertically integrated
software for interactive television. Canal+ is also one of the largest network
operators in Europe. It originally developed its Mediahighway interactive
system for distribution on its pay-television platforms and has successfully
marketed Mediahighway to a limited number of third parties. Scientific-Atlanta
is one of the largest set-top box manufacturers in the world. Its PowerTV
subsidiary has developed interactive software that is distributed with
substantially all Scientific-Atlanta digital set-top boxes and is also
licensed to other manufacturers.

   In addition, certain companies, such as NDS Ltd., a non-wholly owned
subsidiary of News Corp., may attempt to expand from the conditional access
and interactive application markets to the interactive television platform
market. For example, NDS formed an alliance with Microsoft to promote a
solution that would compete with our set-top box software platform.

   In the United States, Gemstar-TV Guide could potentially slow down the
deployment of our interactive television software platform. Pursuant to a ten-
year commitment, AT&T is currently deploying Gemstar-TV Guide's electronic
program guide in all of its set-top boxes. Gemstar-TV Guide also has
relationships with other network operators and has announced a 10-year
agreement with Charter Communications. The memory-intensive characteristic of
this application could preclude any other piece of software from co-existing
with it in standard set-top boxes. Should Gemstar-TV Guide's application be
rolled out systematically on Motorola's DCT-2000 set-top box, we could face a
significant challenge in penetrating the U.S. cable market. In the future,
Gemstar-TV Guide may choose to bundle its current programming guide
application with middleware that would elevate its product to a proprietary
portal, acting as a platform to launch newly-developed applications. If
Gemstar-TV Guide pursues this strategy its offering would compete directly
with the features provided by our middleware and applications.

   Internet-related companies. We face competition from Internet-related
companies such as America Online, Yahoo! and Real Networks. These competitors
are seeking to meld Internet browsing and traditional broadcast, cable or
satellite television programming into a single medium, and to offer many
services over the Internet which are similar to those enabled by OpenTV. For
example, Real Networks offers technology enabling streaming video over the
Internet. Additionally, interactive programming guides are available over the
Internet from several sources. We believe that the Internet will continue to
offer functionality that competes with OpenTV's products.

   Applications providers. We believe that our applications business has the
potential to provide a substantial source of future revenue, and we face
competition from numerous parties in this area. Companies that compete with
our efforts to develop and launch applications on the OpenTV platform include
dedicated applications providers (such as Gemstar/TV Guide, NDS, Worldgate,
Telefonica, Agency.com and MetaTV), other middleware providers (such as
Canal+, Liberate, Microsoft and PowerTV), content providers (such as America
Online), and Internet-related companies (such as Yahoo!, Infospace and
Excite@Home). We expect that competition in the area of applications will
intensify as the market for interactive television services in general
develops.

   Information appliance technology vendors. The market for Internet
technologies and services is extremely competitive, and competition is likely
to increase in the future. Our Device Mosaic and Prism technologies currently
face competition from other information appliance technology vendors and
service providers such as BSQUARE, Liberate, Microsoft, Oracle, Phone.com, Sun
Microsystems, on-line service companies, Internet access providers and
networking software companies. We anticipate additional competition from other
established and emerging companies. Additionally, we consider a significant
source of competition for our Internet solutions to be our customers' internal
resources. We expect competition to persist and intensify as the information
appliance market develops and competitors focus on additional product and
service offerings.

                                       6
<PAGE>

   This rapidly evolving competitive landscape places significant pressure on
us to properly direct the evolution of our products, industry relationships
and business plan in order to compete effectively. If we fail to compete
effectively, our business will suffer.

Our inability to properly manage our growth could adversely affect us

   Our development activities and operations have expanded rapidly since 1996,
and in particular we completed a significant merger with Spyglass, Inc. in
July 2000. We expect that significant further expansion will be necessary to
meet our growth objectives and to take advantage of market opportunities. A
significant portion of this growth has been international, a trend that can be
expected to continue. Our expansion to date has placed substantial strain on
our managerial, operational and financial resources and systems. To manage our
growth, we must successfully implement, constantly improve and effectively
utilize our operational and financial systems across international boundaries
while aggressively expanding our workforce. We must also maintain and
strengthen the breadth and depth of our current strategic relationships while
rapidly developing new relationships. Our existing or planned operational and
financial systems may not be sufficient to support this growth, and our
management may not be able to effectively identify, manage and exploit
existing and emerging market opportunities either in specific countries or on
a worldwide basis. If our potential growth is not adequately managed, our
business will suffer.

Rapid technological advances or the adoption of incompatible standards by our
industry could render our products and services obsolete or non-competitive

   The migration of television from analog to digital transmission; the
convergence of television, the Internet, communications and other media; and
other emerging trends are creating a dynamic and unpredictable environment in
which to operate. Our ability to anticipate these trends and adapt to new
technologies is critical to our success.

   Recent attempts to establish industry-wide standards for interactive
television software include an initiative by cable network operators in the
United States to create a uniform platform for interactive television called
Open Cable and an initiative by European industry participants to create a
platform called "MHP". The establishment of these standards or other similar
standards could hurt our business, particularly if our products require
significant redevelopment in order to conform to the newly established
standards.

   Any delay or failure on our part to respond quickly, cost-effectively and
sufficiently to these developments could render our existing products and
services obsolete or non-competitive and have an adverse effect on our
business, financial condition and results of operations. We may have to incur
substantial expenditures to modify or adapt our products or services to
respond to these developments. We must stay abreast of cutting-edge
technological developments and evolving service offerings to remain
competitive and increase the utility of our services. We must be able to
incorporate new technologies into the products we design and develop in order
to address the increasingly complex and varied needs of our customer base.

Unanticipated fluctuations in our quarterly operating results could affect the
market price of our Class A Ordinary Shares

   We believe that quarter-to-quarter comparisons of our financial results are
not necessarily meaningful indicators of our future operating results and
should not be relied on as an indication of future performance. If our
quarterly operating results fail to meet the expectations of analysts, the
trading price of our Class A Ordinary Shares could be negatively affected. Our
quarterly operating results have varied substantially in the past and may vary
substantially in the future depending upon a number of factors described below
and elsewhere in this annual report, including many that are beyond our
control.

   Our operating results may vary from quarter to quarter as a result of a
number of factors, including:

  .  the ability to enter into licensing and service agreements with new and
     existing customers

                                       7
<PAGE>

  .  the number, size and scope of network operators deploying OpenTV-enabled
     interactive services and the associated rollout to subscribers

  .  the rate of subscriber growth of network operators offering OpenTV-
     enabled interactive services

  .  changes in our relationships with network operators

  .  increased competition in general and any changes in our pricing
     policies, relative to our historical policies, that may result from
     increased competitive pressure

  .  potential downturns in our customers' businesses or in the domestic or
     international markets

  .  changes in the mix of revenue attributable to domestic and international
     sales

  .  changes in the mix of revenue attributable to higher-margin software
     license revenue as opposed to lower-margin service revenue

  .  the rate of expansion of our sales and support organizations

  .  varying budgeting cycles of our customers and potential customers

  .  our ability to develop and introduce on a timely basis new or enhanced
     versions of our products that can compete favorably in the marketplace

  .  the timing of revenue recognition associated with major licensing and
     service agreements

  .  the timing of upgrades by existing network operators

  .  software defects and other product quality problems

   A high percentage of our expenses, particularly compensation, is fixed in
advance of any particular quarter. This means that any of the factors listed
above could cause significant variations in our revenues and earnings in a
particular given quarter. Any decline in revenues or a greater than expected
loss for any quarter could cause the market price of our Class A Ordinary
Shares to decline.

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

   As of December 31, 2000, MIH Limited indirectly owned 98.6% of our
outstanding Class B Ordinary Shares and 0.1% of our Class A Ordinary Shares,
collectively representing 89.7% of the voting rights with respect to our
Ordinary Shares. MIH Limited, which is publicly traded on the Nasdaq National
Market and Euronext Amsterdam N.V.'s stock market, is controlled by MIH
Holdings Limited, which is in turn controlled by Naspers Limited. Both MIH
Holdings and Naspers are publicly traded on the Johannesburg Stock Exchange.
As a result of its ownership of our Ordinary Shares, MIH Limited and its
parent companies effectively control us and have sufficient voting power,
without the vote of any other shareholder, to determine the outcome of any
action requiring approval of our shareholders, including amendments to our
Articles of Association and Memorandum of Association for any purpose (which
could include increasing or reducing our authorized capital or authorizing the
issuance of additional shares). In addition, our board of directors has a
majority of members that are officers and/or directors of MIH Limited. MIH
Limited has agreed not to cause us to take specified actions without the
consent of certain of our shareholders. We engage in transactions with
subsidiaries of MIH Limited and its parent companies in the ordinary course of
business. The interests of MIH Limited and its parent companies may diverge
from your interests, and they may be in a position to cause or require us to
act in a way that is inconsistent with the general interests of the holders of
our Class A Ordinary Shares.

Our strategic investors may acquire voting control of our company and, as a
result, certain decisions may be made by them that may be detrimental to your
interests.

   Our Class B Ordinary Shares are exchangeable for our Class A Ordinary
Shares under certain circumstances. If MIH Limited, Sun Microsystems or a
strategic investor that acquires Class B Ordinary Shares

                                       8
<PAGE>

elects to exchange its Class B Ordinary Shares for Class A Ordinary Shares,
certain of our strategic investors have the right to exchange their Class A
Ordinary Shares for such Class B Ordinary Shares. The Class B Ordinary Shares
entitle holders to ten votes per share while Class A Ordinary Shares entitle
holders to one vote per share. As a result, these strategic investors could
acquire the power to determine the outcome of any action requiring shareholder
approval. The interests of these strategic investors and their parent
companies could diverge from your interests, and they could be in a position
to cause or require us to act in a way that is inconsistent with the general
interests of the holders of our Class A Ordinary Shares.

We depend upon key personnel to manage and grow our business

   Our future success and performance is dependent on the continued services
and performance of our executive officers and other key personnel. There is a
shortage of qualified marketing, technical and financial personnel in our
industry, and the competition for such personnel is intense. Accordingly, the
loss of the services of any of our executive officers and other key employees
could materially adversely affect our business.

We need to recruit and retain qualified personnel to successfully run and
expand our business and our inability to do so may have an adverse effect on
our business

   Our future success will depend in large part on our ability to attract and
retain experienced technical, sales, financials marketing, and management
personnel. New employees will generally require substantial training in the
use of our products, which in turn will require significant resources and
management attention. If we do not attract and retain such personnel, this
could adversely affect our ability to grow our business.

   Moreover, our business requires highly trained consulting and support
personnel to assist customers with installation and deployment. We will need
to increase our consulting and support staff to support new customers and the
expanding needs of our existing customers. Hiring consulting and support
personnel is very competitive in our industry due to the limited number of
people available with the necessary technical skills and understanding of the
digital interactive television and wireless communications markets, and we
have experienced difficulty in recruiting qualified personnel, especially
technical personnel. There is a risk that even if we invest significant
resources in attempting to attract, train and retain these qualified
personnel, we will not be successful in our efforts, which may have a negative
effect on our business and future operating results.

   To achieve our business objectives, we may recruit and employ skilled
technical professionals from other countries to work in the United States.
Limitations imposed by federal immigration laws and the availability of visas
could adversely affect our ability to attract necessary qualified personnel.
This also may have a negative effect on our business and future operating
results.

We may have difficulty consummating or integrating future acquisitions, and
certain consequences of those acquisitions that we do complete could adversely
affect our operating results

   In addition to our completed mergers with Spyglass and CableSoft
Corporation, in the future we may acquire other businesses or new
technologies. As a result of these acquisitions, we may need to integrate
product lines, technologies, widely dispersed operations, and distinct
corporate cultures. The product lines or technologies of the acquired
companies may need to be altered or redesigned in order to be made compatible
with our software products or the software architecture of our customers.
These integration efforts may not succeed or may distract our management from
operating our existing business. Our failure to successfully manage future
acquisitions could seriously harm our operating results.

Our multinational operations expose us to certain financial and operational
risks

   Our revenues are dependent upon our marketing efforts in a number of
countries throughout the world, particularly the United Kingdom, the United
States, France, Spain, South Africa, Italy, Australia, and Germany.

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<PAGE>

For the year ended December 31, 2000, approximately 30.7% of our revenues were
attributable to the United Kingdom, 29.3% of our revenues were attributable to
the United States and 40% of our revenues were attributable to other
countries. In addition, we currently receive revenue denominated in euro and
incur expenses in the local currencies of countries where we have established
offices. Operations in several different countries expose us to a number of
risks, such as:

  .  changes in legal and regulatory requirements

  .  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

  .  potentially adverse tax consequences

   Any of these factors could have an adverse effect on our business,
financial condition and results of operations.

Because much of our success and value lies in our ownership and use of
intellectual property, our failure to protect our property and develop new
technology may negatively affect us

   Our ability to effectively compete is dependent in part upon the
maintenance and protection of our intellectual property, including technology
we acquired through our merger with Spyglass. We rely on patent, trademark,
trade secret, and copyright law, as well as confidentiality procedures and
licensing arrangements, to establish and protect our rights in our technology.
We typically enter into confidentiality or license agreements with our
employees, consultants, customers, strategic partners and vendors, in an
effort to control access to and distribution of our software, documentation
and other proprietary information. Despite these precautions, it may be
possible for a third party to copy or otherwise obtain and use our software
and other proprietary information without authorization. Policing unauthorized
use of our software and proprietary information is difficult. The steps we
take may not prevent misappropriation of our intellectual property and the
agreements we enter into may not be enforceable in some instances. In
addition, effective patent, copyright, trademark and trade secret protection
may be unavailable or limited in certain foreign countries or, alternatively,
such protection may be difficult to enforce. Litigation may be necessary in
the future to enforce or protect our intellectual property rights or to
determine the validity and scope of our intellectual property rights and the
proprietary rights of others. In addition, third parties may seek to challenge
the validity and scope of our intellectual property rights. Such litigation
could cause us to incur substantial costs and diversion of resources, which in
turn could adversely affect our business.

   In the future, we may receive notices of claims of infringement of other
parties' proprietary rights or claims for indemnification resulting from
infringement claims. The emerging enhanced-television industry is highly
litigious, particularly in the area of on-screen program guides. The defense
of any such claims could cause us to incur significant costs and could result
in the diversion of resources with respect to the defense of any claims
brought, which could adversely affect our operating results and financial
condition. As a result of such infringement claims, a court could issue an
injunction preventing us from distributing certain products, which could
adversely affect our business. If any claims or actions are asserted against
us, we may seek to obtain a license under a third party's intellectual
property rights in order to avoid any litigation. However, a license under
such circumstances may not be available on commercially reasonable terms, if
at all.

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Government regulations may adversely affect our business

   The telecommunications, media, broadcast and cable television industries
are subject to extensive regulation by governmental agencies. These
governmental agencies continue to oversee and adopt legislation and regulation
over these industries, which may affect our business, market participants with
which we have relationships or the acceptance of interactive television in
general. For example, the United States Federal Communications Commission has
promulgated a Notice of Inquiry concerning the distribution and legal
classification of interactive television services, as well as other policy and
legal questions, which may lead to regulation in these areas. In addition,
future legislation or regulatory requirements regarding privacy issues could
be enacted to require notification to users that captured data may be used by
marketing entities to target product promotion and advertising to that user.
Any of these developments may adversely affect our business.

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

   We are organized under the laws of the British Virgin Islands (BVI).
Several of our directors and executive officers reside outside the United
States, and a portion of our assets is located outside the United States. As a
result, it may be difficult or impossible for investors to effect service of
process upon such persons within the United States or to enforce against such
persons judgments obtained in the United States courts, including judgments
predicated upon the civil liability provisions of the federal securities laws
of the United States.

   We have been advised by our BVI counsel, Harney Westwood & Riegels, that
judgments of United States courts predicated upon the civil liability
provisions of the federal securities laws of the United States may be
difficult to enforce in BVI courts and that there is doubt as to whether BVI
courts will enter judgments in original actions brought in BVI courts
predicated solely upon the civil liability provisions of the federal
securities laws of the United States.

Because we are a British Virgin Islands company, you may have difficulty
protecting your interests in respect of decisions made by our board of
directors

   Our corporate affairs are governed by our Articles of Association and
Memorandum of Association and by the International Business Companies Act of
the British Virgin Islands. Principles of law relating to such matters as the
validity of corporate procedures, the fiduciary duties of management and the
rights of our shareholders may differ from those that would apply if we were
incorporated in the United States or another jurisdiction. The rights of
shareholders under BVI law are not as clearly established as are the rights of
shareholders in many other jurisdictions. Thus, our shareholders may have more
difficulty protecting their interests in the face of actions by our board of
directors or our principal shareholders than shareholders would have as
shareholders of a corporation incorporated in another jurisdiction.

Certain provisions contained in our charter documents could deter a change in
control of OpenTV

   Certain provisions of our Articles of Association and Memorandum of
Association may discourage attempts by other companies to acquire or merge
with us, which could reduce the market value of our Class A Ordinary Shares.
The comparatively low voting rights of our Class A Ordinary Shares as compared
to our Class B Ordinary Shares, as well as other provisions of our Articles of
Association and Memorandum of Association, may delay, deter or prevent others
from attempting to acquire control of OpenTV.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

   Our legal name is OpenTV Corp., and we were incorporated on September 30,
1999 as an international business company under the International Business
Companies Act of the British Virgin Islands. The address of our registered
office in the British Virgin Islands is c/o Havelet Trust Company (BVI)
Limited, P.O. Box 3186,

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<PAGE>

Road Town, Tortola, British Virgin Islands, and the telephone number at that
address is (284) 494-5471. Our principal place of business is located at the
headquarters office of our principal operating subsidiary, OpenTV Inc., which
is located at 401 East Middlefield Road, Mountain View, CA 94043 in the United
States, and the telephone number at that address is (650) 429-5500.

Background

   THOMSON multimedia S.A. and Sun Microsystems, Inc. formed a joint
development and marketing alliance in 1994 to produce software solutions for
digital television. The alliance began shipping its first product line in
March 1996. In July 1996, THOMSON multimedia and Sun Microsystems formed
Thomson Sun Interactive, LLC, a new joint venture entity dedicated to digital
interactive television.

   THOMSON multimedia and Sun Microsystems agreed with MIH Limited in June
1997 to convert Thomson Sun Interactive, LLC, into OpenTV, Inc., a newly
formed Delaware corporation, and to transfer part of their interests in the
enterprise to a subsidiary of MIH. These transactions were completed in early
1998. THOMSON multimedia sold the remainder of its interest in OpenTV, Inc. to
MIH and Sun Microsystems in April 1999.

   In September 1999 OpenTV Corp. was formed to act as a holding company for
OpenTV, Inc., which then became our principal operating subsidiary. We
completed a strategic financing round in October 1999 and completed our
initial public offering in November 1999.

   In July 2000, we completed our merger with Spyglass, a leading provider of
strategic Internet consulting, software and professional services that enable
content providers, service operators and device manufacturers to capitalize on
the potential of the Internet.

   We are now the leading worldwide provider of software that enables digital
interactive television. We build a complete software platform that enables
digital interactive television and brings on-demand content to other digital
communications devices. Our solutions address the needs of digital
communications networks and include operating middleware, content
applications, content creation tools, professional services expertise and
strategic consulting.

   As of December 31, 2000, our software has been shipped with or installed in
more than 13.9 million digital set-top boxes worldwide and has been selected
by 40 digital cable, satellite and terrestrial communications networks in over
50 countries, including BSkyB in the United Kingdom; TPS and Noos in France;
PrimaCom in Germany; Via Digital in Spain; Stream in Italy; DIRECTV(TM) Latin
America LLC in Latin America; and EchoStar's DISH(TM) Network and USA Media
Group in the United States. In addition, 31 digital set-top box manufacturers
have licensed our software, and more than 900 developers have joined our
OpenAdvantage program for independent application developers.

Recent Developments

   A summary of some of the more significant developments relating to us and
our business that have occurred since January 1, 2000 is set forth below.

 Acquisition of Spyglass, Inc.

   On March 26, 2000, we signed a definitive merger agreement with Spyglass,
Inc. to acquire all of Spyglass' outstanding common stock in a stock-for-stock
transaction. The merger was consummated on July 24, 2000. Spyglass
shareholders became entitled to receive 0.7236 of our Class A Ordinary Shares
in exchange for each share of Spyglass common stock, resulting in an aggregate
of approximately 12.7 million Class A Ordinary Shares issuable in the
transaction. We also reserved approximately 2.5 million additional Class A
Ordinary Shares for issuance upon the exercise of stock options and warrants
of Spyglass that were assumed by us in the merger.

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<PAGE>

   As a result of our merger with Spyglass, we acquired Spyglass' Device
Mosaic and Prism technologies, which we are incorporating into future versions
of our set-top box software to enable full Internet web browsing. We use
Spyglass' team of professional services specialists to serve our customer base
of network operators and set-top box manufacturers. We believe the addition of
this team of professionals will enable us to accelerate and simplify the
process of integrating our set-top box software and our applications, as well
as third-party applications, on their systems. In addition, we expect Spyglass
Prism technology to position us as a key enabler in the delivery of Internet
solutions to wireless devices. This technology enables web content to be
reformatted so that it is accessible on cellular phones, handheld computers
and other wireless devices.

 Sale of Acadia Venture (Spyglass DSIC, Inc.)

   By virtue of our merger with Spyglass, we acquired Spyglass' entire
interest in Spyglass DSIC, Inc., a co-owned venture between Spyglass and
General Instrument Corporation commonly referred to as "Acadia" that provides
integration services for third parties developing applications for General
Instrument's digital set-top boxes. In accordance with the terms of the
venture's operating agreement, the closing of the Spyglass merger enabled
General Instrument to exercise an option to purchase Spyglass' interest in
Acadia. General Instrument exercised this option, and on November 13, 2000 we
signed a definitive stock purchase agreement with General Instrument providing
for the sale of Spyglass' interest in the venture to General Instrument for a
purchase price of $5,000,000. The sale was completed on January 16, 2001.

 Creation of Spyglass Integration Venture

   On November 13, 2000, we established a co-owned venture with General
Instrument named Spyglass Integration, Inc. for the purpose of providing
integration, testing and development services to digital cable and satellite
operators. We contributed 370,858 of our Class A Ordinary Shares for a 90%
interest in this venture, which shares were then transferred to General
Instrument in exchange for a three-year license of certain General Instrument
patents on a royalty-free, worldwide, non-exclusive basis. General Instrument
acquired the remaining 10% interest in the venture for a purchase price of
$2,000,000.

 Acquisition of CableSoft Corporation

   On November 13, 2000, we signed a definitive merger agreement with
CableSoft Corporation to acquire all of CableSoft's outstanding common stock
in a stock-for-stock transaction. CableSoft is a leading provider of "on-
demand information" software solutions for broadband network operators, and
General Instrument was one of CableSoft's primary shareholders. Under the
terms of this merger, which was completed on November 13, 2000, CableSoft
shareholders became entitled to receive an aggregate of 1,342,134 of our Class
A Ordinary Shares in exchange for all of their shares of CableSoft common
stock. All of the outstanding convertible debt of CableSoft was converted into
the right to receive an aggregate 87,430 of our Class A Ordinary Shares. In
addition we reserved 148,031 of our Class A Ordinary Shares for issuance upon
the exercise of the stock options of CableSoft that were assumed by us in the
merger.

 Creation of OpenStar Venture

   On February 22, 2000, we entered into an agreement with EchoStar
Communications Corporation and two of its subsidiaries (collectively
"EchoStar") to develop a low-cost, hard-drive set-top box specification for
the TV-viewing market in the United States and elsewhere throughout the world.
EchoStar contributed to OpenStar Corporation, a newly formed subsidiary of
EchoStar, a non-exclusive, perpetual, royalty-free worldwide license to all of
EchoStar's existing intellectual property which enables hard drive
functionality in a satellite receiver. Immediately following the formation of
OpenStar, we purchased 50% of the OpenStar shares from EchoStar in exchange
for 2,252,252 of our Class A Ordinary Shares and the contribution of a non-
exclusive perpetual royalty-free worldwide license to certain OpenTV
intellectual property to OpenStar.

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Capital Expenditures

   Our principal capital expenditures for each of fiscal 2000, 1999 and 1998
were for computers and equipment, software, furniture and fixtures and
leasehold improvements.

   In fiscal 2000, we spent approximately $3.79 million, $4.18 million, $0.70
million and $1.98 million, respectively, for computers and equipment,
software, furniture and fixtures and leasehold improvements.

   In fiscal 1999, we spent approximately $1.48 million, $0.77 million, $0.16
million and $0.16 million, respectively, for computers and equipment,
software, furniture and fixtures and leasehold improvements.

   In fiscal 1998, we spent approximately $1.39 million, $0.05 million, $0.07
million and $0.34 million, respectively, for computers and equipment,
software, furniture and fixtures and leasehold improvements.

B. Business Overview.

Our Business

   We are the leading worldwide provider of software solutions that enable and
manage digital interactive television, or iTV. We augment our core business
with professional service support and iTV content offerings. As of the end of
the year 2000, our software has been deployed worldwide on over 13.9 million
set-top boxes, with 40 network operators in over 50 countries having selected
our OpenTV Runtime software as their interactive platform. Our digital iTV
solutions create the opportunity for a network operator to enhance a
television viewer's experience by providing an audio and video television
environment capable of supporting software applications for shopping, e-mail,
games, banking and other interactive services.

   Our solutions are designed to enable network operators to deliver
interactive content through a low-cost digital set-top box for viewing on
existing analog televisions. Our software platform operates within the
existing digital infrastructure, allowing network operators to deploy digital
iTV services to a large number of viewers without incurring significant
expenses for hardware or infrastructure upgrades. Our solutions are designed
to function equally well with higher-powered set-top boxes so that a network
operator will have the ability to offer a unified iTV service to its complete
customer base. We have developed a software platform that can support and
operate with alternate operating systems and hardware features such as a hard-
drives for personal video recording and modems for web browsing on the
Internet.

   We also offer software solutions for the delivery and management of
interactive experiences on mobile/wireless devices through our Spyglass Prism
and Device Mosaic products.

   We began expanding our applications business in late September 2000 through
our OpenTVi division. OpenTVi is dedicated to developing a core suite of
interactive applications. Once a network operator has instituted our core
interactive software platform, we can then offer to that network operator a
variety of integrated or modular applications such as email, commerce, games,
customer service and personalized advertising delivery. The applications can
be acquired in a generic format, or they may be customized by OpenTVi Studios,
OpenTVi's production team. In addition, OpenTVi Studios offers producers and
content developers customization services and support for creating interactive
programming that can run on the OpenTV platform.

   We support our solutions with our professional services division, which
assists network operators, set-top box manufacturers and service providers
with integration and launch consulting.

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The OpenTV System

   The OpenTV system consists of the following comprehensive set of software
products designed to enable the development and delivery of iTV in a digital
environment:

  .  OpenTV Runtime. This is our specialized operating system, or middleware,
     that manages the interactive television environment.

  .  OpenStreamer. This is our software that resides at a network operator's
     or e-commerce provider's central broadcasting facility or head-end and
     that enables real-time interactive services by mixing Internet content
     in with audio and video streams into subscriber homes.

  .  OpenTV Publisher. This is our server software that enables real-time
     interactive services by accessing Internet content in an XML format and
     presenting it in a manner suitable for a typical television viewer.

  .  Service Platform Suite. This is a suite of mostly server-based
     components designed to provide an extensible and modular solution that
     integrates commerce, advertising and communications functionalities into
     iTV applications.

  .  Device Mosaic. This is an HTML-compatible Internet browser technology
     that enables television viewers to browse the World Wide Web on their
     television sets.

  .  Spyglass Prism. This is a server-based content delivery and
     transformation platform that transforms richly formatted HTML-authored
     Internet content into an MPEG format for viewing on set-top boxes and
     information appliances.

  .  Application Development Tools. These are our Software Developers Kit,
     OpenAuthor and OpenTV Developers Suite products, which enable network
     operators and third-party developers to author interactive television
     applications.

  .  Applications for Interactive Television. These are our in-house iTV
     applications, developed by OpenTVi, often in collaboration with content
     and e-commerce partners, interactive television applications and
     services.

 OpenTV Runtime

   Our core product is our OpenTV Runtime software, a modular, easily ported,
and easy-to-install software platform for the delivery of interactive
television. OpenTV Runtime resides in each subscriber's set-top box where it
coordinates the digital broadcast and interactive services offered to that
subscriber.

   OpenTV Runtime is composed of a comprehensive set of software components
that supports specialized digital interactive television features. It also
includes an interpreter that translates between application software and the
specific instruction set of the set-top box's processor on a real-time basis.
OpenTV Runtime offers the following significant advantages for network
operators:

  .  Ease of Installation. OpenTV Runtime can either be loaded on a set-top
     box by its manufacturer or it can be downloaded by a network operator
     directly into digital set-top boxes in subscribers' homes by "flash
     downloads" that typically occur in early morning hours and that are
     completed within ten minutes, with minimal interruption to service.
     These downloads have already been successfully performed for initial
     installation and upgrades of OpenTV Runtime without any subscriber
     intervention. Using the flash download mechanism, network operators can
     upgrade field-deployed set-top boxes that incorporate the appropriate
     hardware to support these extensions as the subscriber base becomes
     ready for new services.

  .  Maximum Flexibility and Compatibility. OpenTV Runtime is designed so
     that network operators can employ a wide variety of set-top box and
     head-end equipment brands, chip set vendors and conditional access
     systems. Accordingly, applications written for OpenTV Runtime can run on
     varying

                                      15
<PAGE>

     combinations of equipment on the same or different platforms. For
     example, BSkyB is running common applications across its system, even
     though the set-top boxes in its system are provided by five separate
     manufacturers.

  .  Small Memory Footprint and Low Processing Power Requirements. OpenTV
     Runtime is currently designed to meet the market need for digital
     interactive services to run on a low-cost set-top box having low
     processing and hardware memory requirements. OpenTV Runtime uses the
     experience of digital streaming to effect this advantage by enabling the
     set-top box to acquire only the applications it needs at the time the
     subscriber desires them.

  .  Broadcast Technology. Our broadcast technology is designed to limit
     bandwidth consumption and server usage. We achieve these goals through
     broadcasting a continual stream of interactive programming that viewers
     can select and access without delay.

  .  Modular Architecture. OpenTV Runtime is based on modular architecture
     making it easy to upgrade and extend to cover new hardware and software
     features. New versions of OpenTV Runtime are compatible with earlier
     versions of OpenTV Runtime, allowing existing applications to operate on
     new versions of OpenTV Runtime without modification to the applications.

  .  Television Protocol Compatibility. OpenTV Runtime interfaces with
     established television protocols, including MPEG.

  .  Internet Protocol Compatibility. In addition to interactive television
     services, OpenTV Runtime is capable of providing key Internet
     applications, such as e-mail and chat. OpenTV Runtime also supports
     standard protocols such as TCP/IP and HTTP, in order to permit
     programming that leverages Internet technologies and e-commerce
     infrastructure.

  .  Comprehensive Applications Programming Interfaces (API). Since our
     initial deployment of OpenTV Runtime, we have extended our APIs so that
     the system can run a wide array of services. For instance, TPS is
     currently running over 40 different interactive applications.

   Future Developments. We are currently shipping the third version of OpenTV
Runtime. The first, OpenTV 1.0, was released in the second quarter of 1996 and
was replaced by OpenTV EN1 in the second quarter of 1998. OpenTV EN1 features
more advanced graphics, modem services, video synchronization and greater
reliability than OpenTV 1.0. The newest product, OpenTV EN2, was released in
the second quarter of 1999. OpenTV EN2 features upgraded modularity, new
Internet protocol extensions, video scaling and graphic improvements.

   In the future, we intend to develop and offer two different types of OpenTV
Runtime. The first type will retain the small footprint of the existing
product and will be able to operate on platforms featuring affordable
infrastructure and hardware. The second type will exploit the increased
functionality of broadband networks and more sophisticated hardware, including
set-top boxes with higher memory, hard drives and DVDs.

   As part of our partnership with Sun Microsystems, we have agreed to develop
future versions of our OpenTV Runtime software that incorporate Sun's Java
technology and are compatible with the appropriate JavaTV application
programming interfaces. These versions will be dedicated to the next
generation set-top box that, among other things, is expected to encompass
larger memory and processing power. Software developers are able to write
applications that will run on OpenTV Runtime as well as platforms from other
vendors that are Java compatible. We believe this functionality will expand
the number of third-party developers creating applications for our OpenTV
system.

   We recently announced an agreement with Panasonic to develop a future
version of our OpenTV Runtime software that includes support for the European
DVD/MHP interactive television standard, which is also based on Java
technology.

   Extensions. OpenTV Runtime's modular architecture supports extensions that
can be chosen to achieve the exact product specification appropriate to a
given network. Using this approach, our customers have the

                                      16
<PAGE>

ability to tailor their solutions to particular cost, market and technical
requirements while retaining the option to add features later when and if
those parameters change. For example, we have developed personal video
recording technology that will utilize a hard drive attached to the set-top
box, enabling personalized television including time-shifting applications. In
this regard, we entered into an agreement with EchoStar to develop a low-cost,
hard-drive set-top box specification for the television-viewing market in the
United States and elsewhere throughout the world. In addition, ViaDigital and
BSkyB have announced their intention to offer their set-top box incorporating
our integrated platform and personal video recording technology. In addition,
we recently added extensions to our products to support broadband
communication via cable modems, including both the European DVB and the United
States Open Cable DOCSIS cable modem standards.

 OpenStreamer

   OpenStreamer is a system that resides at a network operator's or e-commerce
provider's head-end and that is used to broadcast interactive content via
standard digital broadcast facilities. As our second generation broadcasting
product, OpenStreamer is a high-level software product that allows
broadcasters to bundle data with audio and video signals for reception by
OpenTV Runtime enabled digital receivers. OpenStreamer is capable of updating
a data stream in real-time, allowing up-to-the-second transmission of sports
scores, stock quotes or other time-sensitive data. For example, viewers
watching a sporting event will be able to get updated selected statistics and
scores from other games on demand rather than having to wait for the
broadcaster to provide these updates.

   In addition to real-time data updates, OpenStreamer allows network
operators to broadcast multiple streams of data reliably and efficiently. It
reduces deployment and maintenance costs by relying on a single, OpenTV-
supplied hardware architecture capable of interfacing with any standard
multiplexer broadcast system.

   OpenStreamer consists of the following components:

  .  Application Streamer software that runs the head-end portion of the
     OpenTV interactive application, responds to external data sources and
     updates data in real-time, and then plays out the stream to the
     broadcast streamer. We enable third parties to develop their own
     application streamers to help facilitate the proliferation of third-
     party applications.

  .  Broadcast Streamer software that prepares the data from the application
     streamers for broadcast and outputs the streams to the broadcaster's
     hardware multiplexer.

 OpenTV Publisher

   OpenTV Publisher is an XML-based client-server solution that is designed to
provide network operators with a development environment and software
components that allow them to transform standard web-based content into media-
rich, broadcast-ready iTV applications. OpenTV Publisher combines iTV
technology with standard Internet protocols, uses worldwide web page
paradigms, and supports dynamic, real-time content updates. OpenTV Publisher
also uses advanced caching and pre-fetching techniques designed to optimize
bandwidth requirements and improve access time to enhance the end-user's
experience. OpenTV Publisher is integrated with OpenStreamer, which allows for
the provision of a broad range of broadcast services with minimal integration
work

 Service Platform Suite

   OpenTV's Service Platform Suite is an extensible and modular solution that
we are developing to integrate commerce, advertising and communications
functionalities into iTV applications. The Service Platform Suite is a
collection of mostly server-based components located at a network operator's
head-end. We anticipate releasing these components in three phases beginning
in the second quarter of 2001.

   The Service Platform Suite is designed to allow network operators to build
on their existing relationships with subscribers by managing and profiling
viewers at an individual level. It proactively and effectively manages the
set-top box return path and the flow of data coming back from end users. The
Service Platform Suite also provides a solution that manages and implements
advertisements across the entire advertising inventory within a network
operator's portfolio of services and allows network operators to track
purchases made by end users.

                                      17
<PAGE>

   The Service Platform Suite will consist of the following inter-operating
software components:

  .  OpenTV Runtime. Using OpenTV Runtime, the Service Platform Suite will
     provide a set of set-top box-based functionality available to
     applications (including third-party applications).

  .  OpenTV Publisher. OpenTV Publisher will be used to develop and produce
     interactive content via standard digital broadcast facilities.

  .  Service Gateway. The Service Gateway manages communication traffic and
     will able to translate transactions from the limited protocols supported
     by set-top boxes to standard Internet protocols such as HTTP. Content
     filters will translate content formats not supported by the set-top
     boxes into alternative formats that are supported by set-top boxes.

  .  Transaction Manager. The Transaction Manager will create for network
     operators a record of commerce orders placed by content providers.

  .  Viewer Manager. The Viewer Manager will profile a network operator's
     viewers at an individual level to simplify commerce transactions as well
     as to target advertising and commerce selections.

  .  Advertising Manager. The Advertising Manager will oversee advertising
     assets and campaigns across a network operator's portfolio of services
     and support reporting and billing services.

  .  Interactive Service Manager. The Interactive Service Manager will
     provide centralized management and administration of interactive
     services and help network operators to minimize operational costs.

 Device Mosaic

   Device Mosaic is both a stand-alone product as well as an integrated
feature with our OpenTV Runtime software to enable television viewers to
browse the World Wide Web from their television sets. Device Mosaic is fully
compatible with the HTML format and well-suited for a set-top box since it
requires relatively little memory. Device Mosaic's modular design makes it
scalable across a broad range of information appliances, and specifically with
television set-top boxes where such modular design allows for features to be
added to support the latest needs of televisions and set-top boxes as they are
developed. Device Mosaic is in SONY's most recent Cablevision set-top boxes,
the Zenith Internet-ready television set, and the TiVo Personal Video
Recorder.

 Spyglass Prism

   Spyglass Prism is a server-based content delivery and transformation
platform designed to efficiently bring the Internet to information appliances.
Spyglass Prism dynamically transforms richly formatted HTML-authored Web
content into an MPEG format used in the OpenTV-enabled set-top boxes and
televisions. It can also transform Internet content into formats such as WAP,
which are compatible with the relatively limited display capabilities of
information appliances such as mobile phones, navigation devices, and personal
digital assistants. Spyglass Prism takes into account low bandwidth, high
latency, length of memory and battery life, and other limitations by
dynamically converting content for optimal delivery and display on a wide
variety of information appliances.

 Application Development Tools

   We provide two different application development tools for authoring
interactive television applications and content for use on the OpenTV system.
The tools are used by network operators, independent application developers,
and our own application developers. The OpenTV Software Developers Kit is
targeted at sophisticated programmers, while OpenAuthor is designed for
content developers with little or no programming experience. Our OpenTV
Software Developers Kit and OpenAuthor can be purchased as part of a combined
product called OpenTV Developers Suite.

                                      18
<PAGE>

   Software Developers Kit. OpenTV Software Developers Kit, or SDK, is a
complete content development environment for programmers who want to create
interactive television services that are high in graphic content and have the
look and feel of television. SDK allows for numerous applications to be built
directly using our applications programming interfaces. Applications developed
with SDK make the most efficient use of a set-top box's limited memory and
processing power, yet produce broadcast-quality television images.

   Software programmers can use the C programming language, the most commonly
used language in the software industry, to develop OpenTV applications. These
programmers benefit from SDK because it provides them with full and direct
access to all the features of the OpenTV architecture. SDK provides graphical
and command-line tools along with application program interfaces. These
application program interfaces can be used to create compelling new
interactive applications, including interactive advertising, gaming, shopping
and information services.

   OpenAuthor. OpenAuthor allows users to create an OpenTV application,
without writing a single line of code, by assembling and customizing pre-built
software components using a familiar point-and-click graphical interface. This
type of design allows operators to focus on content rather than software
programming. The complete authoring process can take place on a single
personal computer. Users can create their own content, import it into
OpenAuthor and design an application. Since the authoring station is connected
to an actual digital receiver, a user can fully simulate the real television
broadcast environment, thereby saving time and money.

   OpenAuthor has many competitive advantages, including giving users the
ability to create media-rich, dynamic content without requiring knowledge of
the specific capabilities of audio, video and graphic hardware within
interactive digital receivers. Applications are created using a page-based
paradigm that is already familiar to most users. Through its "plug-in" design,
OpenAuthor can be extended by developers to create new features by developing
and adding new pre-built components to OpenAuthor as application requirements
grow. For example, all of BSkyB's interactive shopping services were built
using OpenAuthor.

   OpenTV Developers Suite. OpenTV Developers Suite bundles the SDK together
with OpenAuthor. Using both tools, a customer can extend the functionality of
OpenAuthor by creating their own plug-in components. The plug-in design allows
third parties to approach the performance of SDK-authored applications while
maintaining the ease of use afforded by OpenAuthor.

 Applications for Interactive Television

   We develop and market interactive applications for use by our customers
that populate iTV services. Our principal goal is to offer a set of core
applications that we believe will be applicable across numerous platforms.
Core applications are those that will have consistent appeal in multiple
interactive television markets. These core applications can come in a generic
form or they can be delivered customized to the network operator. Some of the
applications that we are currently developing or offering to network operators
include the following:

  .  E-mail. Allows viewers to retrieve and review e-mail messages with a
     remote control and, using an infrared keyboard, send messages over the
     Internet.

  .  Enhanced Sports Broadcast. Allows viewers watching a sports event to act
     as a "couch commander" by selecting among various camera angles to watch
     at a particular time, to pull up player statistics and scores from other
     games at will, and to order merchandise related to the event or sport.
     Multiple camera angles may be used to follow a particular favorite
     player, to see instant replays or highlights of the game.

  .  Enhanced Television. Allows viewers to control the information on their
     television by interacting with graphical overlays that provide
     information without interrupting programming.

  .  Information Services. Supports the provision of information such as
     sports scores, general news, financial news and stock quotes and allows
     the viewer to selectively retrieve such information.

  .  Shopping. Allows viewers to instantaneously purchase goods and services,
     while accessing relevant and entertaining information about the items.

                                      19
<PAGE>

  .  Weather. Allows viewers to instantly access the weather forecast for
     their local area, for other areas they plan to visit, and for skiing and
     beach resorts.

   As we continue to roll out our OpenTV solutions to more network operators,
we expect to generate an increasing portion of our revenue from recurring
revenue in advertising and transaction fees, as well as license fees and
royalties, associated with our applications business. We intend to continue
developing our strategic relationships with content providers in order to
maximize the value of our OpenTV system for network operators.

Professional Services Consulting

   As a result of our merger with Spyglass, we have added a significant
professional services consulting team to our business. Our combined team of
professionals has been providing services that include custom engineering for
defining, developing and delivering complete, end-to-end project solutions
that help customers Internet-enable a variety of devices as well as deliver
HTML-based applications to information appliances such as television set-top
boxes and wireless phones.

   Our professional services consulting team is experienced in providing
customers with comprehensive services throughout their product development
cycle, from strategic consulting and design through custom application
development and implementation, systems integration, quality testing and
documentation, and support. These services have been provided on a project
basis to assist customers in developing unique products or services utilizing
Device Mosaic, Spyglass Prism and other third-party technologies.

   We plan to continue providing these professional services and, in
particular, we intend to focus these services on iTV deployment projects,
specifically in the area of systems integration, while promoting our in- house
middleware and applications solutions. With the addition of the professional
services team from Spyglass, we believe we will be able to deliver to our
customers a more complete solution, and faster integration of our products
into their systems. We also believe that offering these services will help to
facilitate the adoption of our products in the marketplace, as we gain a
better understanding of the specific technology needs of the interactive
television industry and improve our ability to enhance the functionality and
ease of use of our OpenTV Runtime software.

   We offer the following additional technical support programs to our
customers:

  .  Program Management. Assists network operators in their upgrade and
     launch of interactive services and interactive applications.

  .  Integration Services. Provides support to set-top box manufacturers,
     chip set manufacturers and conditional access vendors as they port and
     integrate OpenTV Runtime into their programs.

  .  Development Tools Technical Support. Provides user training seminars and
     coordinates bug-fixes and other support for our application development
     products.

   We believe that technical support is an important part of our relationship
with our customers. Our technical support services are available during normal
business hours or, for an additional fee, available on a 24-hour a day, 7-day
a week basis. Customers electing to enter into support agreements with us
receive free product updates and a reduced price on full upgrades.

Customer and Industry Relationships

   We have established significant relationships with network operators, set-
top box manufacturers, chip set manufacturers, conditional access vendors and
independent application developers around the world. Our customer and industry
relationships include the following as of the end of December 2000:

  .  40 network operators that use or have committed to use our OpenTV
     Runtime software, generally along with our head-end software for
     broadcasting interactive content, our application development tools and
     other specially developed applications

  .  31 set-top box manufacturers that license OpenTV Runtime for
     distribution in their set-top boxes

                                      20
<PAGE>

  .  nine chip set manufacturers that use our software tools to assure the
     compatibility of their products with our OpenTV Runtime

  .  seven conditional access vendors with which we have worked to ensure the
     compatibility of our OpenTV system

  .  several leading application and technology development companies with
     which we have strategic relationships

   Since the introduction of our OpenTV Runtime system in late 1996, our
number of customers and the number of set-top boxes deployed with our software
have both grown rapidly. The following table demonstrates our recent growth
(all figures cumulative):

<TABLE>
<CAPTION>
                                                                         Dec.
                                    June 30, June 30, June 30, June 30,  31,
                                      1997     1998     1999     2000    2000
                                    -------- -------- -------- -------- ------
   <S>                              <C>      <C>      <C>      <C>      <C>
   Network operators deploying
    OpenTV set-top boxes..........      2         7       13       23       31
   Set-top box manufacturers
    shipping......................      3         4       12       15       17
   Set-top boxes deployed (000s)..    252     1,121    3,501    9,321   13,900
</TABLE>

 Network Operators

   Set-top boxes with our software have been deployed by 31 network operators
in over 50 countries around the world. Another nine network operators are
planning to deploy set-top boxes using the OpenTV platform within the next
year. The following chart provides information about network operators that
are currently using the OpenTV system:

<TABLE>
<CAPTION>
       Network Operator              Country         Deployment      Type
   ------------------------  ----------------------- ---------- --------------
   <S>                       <C>                     <C>        <C>
   TPS                       France                    Q4:96    Satellite
   MultiChoice South Africa  South Africa              Q2:97    Satellite
    (related party)
   Telia Infomedia TV        Sweden                    Q4:97    Cable
   France Telecom            France                    Q4:97    Cable
   Noos                      France                    Q4:97    Cable
   Tele Danmark Kabel-TV     Denmark                   Q1:98    Cable
   MultiChoice Middle East   Middle East               Q2:98    Satellite
    (related party)
   BSkyB                     United Kingdom            Q4:98    Satellite
   FUN (FreeTV)              Germany                   Q4:98    Satellite
   CBSat                     China                     Q4:98    Satellite
   Stream                    Italy                     Q1:99    Satellite
   Via Digital               Spain                     Q2:99    Satellite
   Austar                    Australia                 Q2:99    Satellite
   FOXTEL                    Australia                 Q2:99    Satellite
   Senda                     Sweden                    Q3:99    Terrestrial
   STAR Digital              Turkey                    Q3:99    Satellite/MMDS
   Image Wireless            Canada                    Q3:99    MMDS
   MultiChoice Hellas        Greece                    Q4:99    Satellite
    (related party)
   Casema                    Netherlands               Q4:99    Cable
   MediaKabel                Netherlands               Q4:99    Cable
   E-Vision                  United Arab Emirates      Q4:99    Cable
   PolSat                    Poland                    Q4:99    Satellite
   QuieroTV                  Spain                     Q1:00    Terrestrial
   EchoStar                  United States             Q2:00    Satellite
   Viasat Broadcasting       Scandinavian Region       Q3:00    Satellite
   Galaxy Satellite          Australia/United States   Q3:00    Satellite
    Broadcasting (TVB)
   Irish Multichannel        Ireland                   Q3:00    MMDS
   PrimaCom                  Germany                   Q4:00    Cable
   DigiTurk                  Turkey                    Q4:00    Satellite
   Galaxy Latin America      Latin America             Q4:00    Satellite
    (DirecTV)
   ntl France                France                    Q1:01    Cable
</TABLE>


                                      21
<PAGE>

   The following nine network operators are planning to launch digital
interactive services on our OpenTV platform within the next year:

<TABLE>
<CAPTION>
                Network Operator                Country         Type
     --------------------------------------  ------------- ---------------
     <S>                                     <C>           <C>
     Bell ExpressVu                          Canada        Satellite
     Golden Channels                         Israel        Cable
     Media Corporation                       Singapore     Terrestrial
     Pacific Digital Media                   Taiwan        Satellite
     Shaw Communications                     Canada        Cable/Satellite
     Sky New Zealand                         New Zealand   Satellite
     United Broadcasting Corp. (UBC)         Thailand      Cable/Satellite
     United Pan-Europe Comm. (UPC)/Wizja TV  Poland        Satellite
     USA Media Group                         United States Cable
</TABLE>

 Set-Top Box Manufacturers

   We market and license our OpenTV Runtime software and our software
development tools to digital set-top box manufacturers. With our modular
software platform that can be easily ported, we have been able to establish
relationships with 31 set-top box manufacturers. We believe that our extensive
base of relationships with set-top box manufacturers is an important advantage
of the OpenTV system as it provides network operators with a broad choice of
compatible, competitively priced hardware alternatives.

   The following table lists the set-top box manufacturers that have completed
porting and integration of our software and have begun shipments of OpenTV-
enabled set-top boxes.

<TABLE>
<CAPTION>
                    Manufacturer              Shipping Began
       -------------------------------------- --------------
       <S>                                    <C>
       Sagem                                      Q4:96
       UEC Technologies                           Q1:97
       Pace Micro Technology                      Q2:97
       Asia Digital Broadcast                     Q3:97
       Amstrad (Manufactured by Samsung)          Q4:98
       Grundig                                    Q4:98
       Humax Electronics                          Q4:98
       Matsushita/Panasonic                       Q4:98
       Samsung Electro-Mechanics Company          Q4:98
       THOMSON Multimedia                         Q4:98
       Italtel                                    Q1:99
       EchoStar                                   Q2:99
       Nokia Satellite Systems                    Q3:99
       Visionetics                                Q4:99
       Galaxis                                    Q2:00
       Sony                                       Q3:00
       Philips                                    Q4:00
</TABLE>

                                       22
<PAGE>

   We are continuing to build relationships with additional set-top box
manufacturers by targeting certain strategic vendors. The following
manufacturers have signed licensing agreements with us and we expect them to
begin producing set-top boxes containing our OpenTV Runtime software in the
near future once the porting and integration of our software has been
completed:

<TABLE>
     <S>                                    <C>
     Avias Technology International         General Instrument
     CPS Europe                             Tae Young Telstar
     Daewoo Electronics                     Technisat Digital
     Digital World                          TechSan Electronics
     Hughes Network Systems                 Zenith Electronics*
     Hyundai Digital Technology             Zinwell
     Interisa Electronica
     KiRyung Electronics
</TABLE>

*  agreement assigned to General Instrument

 Chip Set Manufacturers

   We also license our software tools to chip set manufacturers to ensure the
compatibility of their products with the OpenTV system. By doing so, we are
able to maximize the portability and compatibility of the OpenTV system. Our
relationship with chip set vendors helps us anticipate the evolution of their
products 12 to 24 months in advance, giving us time to plan enhancements to
our OpenTV system that will take advantage of the chip set vendors' new
product features. Furthermore, some of these vendors have developed software
that is embedded into their chip sets and designed to work with the OpenTV
platform as a means to minimize time-to-market and technical risk for hardware
manufacturers. To date, the following chip set manufacturers have licensed our
software tools:

<TABLE>
     <S>                                    <C>
     Conexant                               NEC Electronics (UK)
     Fujitsu Microelectronics               ST Microelectronics
     IBM                                    Toshiba
     Infineon                               VLSI Technology
     LSI Logic
</TABLE>

 Conditional Access Vendors

   Conditional access vendors produce systems that scramble and decode
information streams to prevent access by unauthorized parties. We have
developed relationships with seven conditional access vendors that have
licensed our software tools or with which we have consulted to ensure the
compatibility of their products with our OpenTV system. Since the ability to
integrate with multiple conditional access systems is difficult to achieve, we
believe our relationships with these vendors are an important competitive
advantage. The following conditional access vendors have ensured the
compatibility of their systems with our OpenTV system:

<TABLE>
     <S>                                    <C>
     France Telecom                         NDS
     Motorola                               Philips
     Mindport (related party)               Telenor
     Nagra USA
</TABLE>

                                      23
<PAGE>

 Selected Application and Technology Partners

   We are pursuing strategic relationships with leading application and
technology providers that can create complementary applications for our
software platform. For example, we entered into a partnership with Diva that
will enable their video-on-demand technology to integrate with our OpenTV
Runtime software in today's low-cost set-top boxes. Because of our leadership
position in the interactive television space, we are typically able to
structure these relationships as revenue sharing arrangements. In addition to
our other strategic relationships, we have entered into strategic
relationships with the following application and technology providers:

<TABLE>
<CAPTION>
                    Company                                  Application
   ------------------------------------------  ----------------------------------------
   <S>                                         <C>
   Commerce TV                                 Transaction management
   Digital ADCO joint venture (Motorola/ACTV)  Interactive advertising
   Diva                                        Video on demand
   Health Hero                                 Health and wellness programming
   ICTV                                        Internet web browsing
   Lagardere                                   Automotive and women's style programming
   Visiware                                    Games
   Wink                                        Transaction management
   World Theater                               Music
</TABLE>

 Independent Application Developers

   Numerous independent application developers have begun authoring programs
for use with the OpenTV system, with many of these developers using our
application development tools. We believe the proliferation of independent
developers will facilitate the acceptance of the OpenTV system to the extent
that it results in the availability of a rich and diverse set of applications.
To this end, we have created the OpenAdvantage program for independent
developers that create applications for the OpenTV system. The OpenAdvantage
program provides its members, more than 900 independent developers, with
various OpenTV-related resources, including access to pre-release versions of
our software tools and certification of applications authored using our
application development tools.

Sales and Marketing

   Our sales force is organized geographically with offices in Mountain View,
California; London, England; Paris, France; Seoul, South Korea; Beijing,
China; Tokyo, Japan; Sydney, Australia; Munich, Germany; and Madrid, Spain. We
expect to open additional United States and international offices in the
future, from time to time, as the circumstances of our business may require.
Our sales efforts are primarily focused on network operators, because we
believe they heavily influence the adoption of our OpenTV system. Secondarily,
we are focusing our sales efforts on system integrators and set-top box
manufacturers.

   We focus our marketing efforts on the following activities:

  .  promoting the OpenTV brand with network operators, set-top box
     manufacturers, advertisers and the creative and financial communities

  .  educating key communities on our products and services using targeted
     media

  .  providing our developers with marketing information for the development
     of compelling products and services, including upgrades and updates

In addition, we have an affiliate and partner marketing group that coordinates
our activities with customers after an initial sale has been made. This group
extends our marketing reach through joint marketing campaigns with customers,
assists in campaigns to educate subscribers on the use of our products and
focuses on the establishment of our brand.

                                      24
<PAGE>

Competition

   We face competition from a number of companies in the new and rapidly
evolving digital interactive television and information appliance markets. We
expect to face significant barriers in our efforts to secure broad market
acceptance of our products, including intense competition at several different
levels. Current and potential competitors in one or more aspects of our
business include dedicated interactive television technology companies,
Internet-related companies, broadband interactive device providers and
information appliance technology lenders. These competitors are more fully
described under Item 3.D in the section entitled "Risk Factors--The market for
our products and services is subject to significant competition, which could
adversely affect our business."

C. Organizational Structure.

   The chart below sets forth the organizational structure of OpenTV Corp. and
its subsidiaries. All of our subsidiaries are wholly-owned, except for
Spyglass Integration, Inc., of which OpenTV US Holdings, Inc. owned 90% as of
December 31, 2000, and except for OpenTV Inc., of which OpenTV US Holdings,
Inc. owned 88% as of December 31, 2000. The minority shareholders in OpenTV,
Inc. have the right to exchange their shares in OpenTV, Inc. for shares in
OpenTV Corp., generally on a one-for-one basis.

[Chart depicting organizational structure of OpenTV Corp. and its direct and
indirect subsidiaries, including (i) OpenTV, Inc., a Delaware corporation, (of
which OpenTV US Holdings, Inc., a wholly-owned subsidiary of OpenTV Corp. and
a Delaware corporation, owned 88% as of December 31, 2000), and (ii) Spyglass,
Inc., a Delaware corporation, (of which OpenTV US Holdings, Inc. owned 100% as
of December 31, 2000).]

D. Property, Plants & Equipment.

   Our corporate headquarters and executive offices are in Mountain View,
California, where we occupy approximately 78,257 square feet of space under
three separate leases. The first lease is for 36,257 square feet of space and
expires on October 31, 2004. The second lease is for 25,000 square feet of
space and also expires on October 31, 2004. The third lease is for 17,000
square feet of space and expires on August 31, 2003.

   In addition to our corporate headquarters, we have other domestic offices
in Naperville, Illinois; Lexington, Massachusetts; Burlington, Massachusetts;
Cambridge, Massachusetts; Menlo Park, California, and international offices in
London, England; Berkshire, England; Paris, France; Seoul, South Korea;
Beijing, China; Tokyo, Japan; Sydney, Australia; Munich, Germany and Madrid,
Spain.

   We expect that we will from time to time open additional U.S. and
international offices in the future as the circumstances of our business may
require.

                                      25
<PAGE>

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A. Operating Results.

Revenues

   We currently generate revenues from the following sources:

  .  royalties from the delivery of our OpenTV Runtime software in set-top
     boxes

  .  license fees for our software products, and

  .  fees for professional services, training, and maintenance and software
     development services

   We adopted the provisions of Statement of Position 97-2 ("SOP 97-2"),
Software Revenue Recognition, as amended by Statement of Position 98-4,
Deferral of the Effective Date of Certain Provisions of SOP 97-2, effective
January 1, 1998. SOP 97-2 delineates the accounting for software products,
products including software that is not incidental to the product, and
maintenance revenues. Under SOP 97-2, we recognize product license revenue
upon shipment if a signed contract exists, delivery has occurred, the fee is
fixed and determinable and collection of the resulting receivables is
probable. We recognize royalties upon notification from licensees of revenues
earned.

   For contracts with multiple obligations (e.g., maintenance and other
services), and for which vendor-specific objective evidence of fair value for
the undelivered elements exists, we recognize revenue for the delivered
elements based upon the residual contract value as prescribed by Statement of
Position No 98-9, "Modification of SOP No 97-2 with Respect to Certain
Transactions." Generally we have vendor-specific objective evidence of fair
value for the maintenance element of software arrangements based on the
renewal rates for maintenance in future years as specified in the contracts.
In such cases, we defer the maintenance revenue at the outset of the
arrangement and recognize it ratably over the period, during which the
maintenance is to be provided, which generally commences on the date the
software is delivered. Vendor-specific objective evidence of fair value for
the service element is determined based on the price charged when those
services are sold separately. We recognize revenue allocated to maintenance
and support fees, for ongoing customer support and product updates, ratably
over the period of the relevant contract. Payments for maintenance and support
fees are generally made in advance and are non-refundable. For revenue
allocated to consulting services and for consulting services sold separately,
we recognize revenue as the related services are performed. Maintenance and
consulting services revenues are included in services and other revenue.

   For product licenses sold with integration services, we recognize revenue
based on the completed contract method. Revenue from software development
contracts of less than six months duration is recognized based on the
completed contract method and for longer term contracts generally on the
percentage of completion method. Under the percentage of completion method the
extent of progress towards completion is measured based on actual costs
incurred to total estimated costs. Provisions for estimated losses on
uncompleted contracts are made in the period in which estimated losses are
determined. Revenue from integration services and software development
contracts are included in services and other revenue.

   Revenues from professional services agreements are recognized on the
percentage of completion method based on the hours incurred relative to total
estimated hours for fixed bid contracts or based on the hours incurred
multiplied by the hourly rate for time and material engagements. Related costs
are reported as cost of service revenues. Professional services revenues are
included in services and other revenue.

   We enter into arrangements with network operators whereby we license our
application software to network operators in exchange for a percentage of the
subscription revenue they earn from their customers. Where we have delivered
all of the software under the arrangement, we recognize the revenue as the
network operator reports to us our revenue share, which is done generally on a
quarterly basis. Under arrangements where we have committed to deliver
unspecified future applications, we recognize the revenue earned on the
delivered applications on a subscription basis over the term of the
arrangement.

   Revenue from the sale of hardware components and manuals are recognized
upon shipment and included in services and other revenue.

                                      26
<PAGE>

Operating expenses

   We have no cost of revenue associated with royalties. Cost of revenue for
software license fees includes direct costs of packaging, printed
documentation and third-party royalties. To date, these costs have been
immaterial. Cost of revenue for services consists primarily of headcount-
related expenses, costs related to outside consultants, travel and overhead
associated with software development, program management, customer and
technical support and training.

   Research and development expenses consist primarily of salary and other
related costs for personnel and independent consultants for our development
efforts. We believe that continued investment in research and development is
critical to attaining our strategic objectives. We plan to increase the level
of research and development expenses, both to develop new versions of the
OpenTV Runtime system and to create interactive applications and services.

   Sales and marketing expenses consist primarily of personnel and related
costs for our direct sales force and marketing staff, and marketing programs,
including tradeshows, public relations and marketing materials. We plan to
increase the level of sales and marketing expenses, as we increase spending on
advertising and marketing programs to build the OpenTV brand and establish
additional international sales and support offices to expand our presence in
new geographic markets.

   General and administrative expenses consist primarily of personnel and
related costs for general corporate functions, including finance, human
resources legal, systems operations and facilities. We expect general and
administrative expenses to grow to support a larger number of OpenTV employees
worldwide.

   Non-cash expenses include amortization of intangibles, amortization of
goodwill, amortization of stock-based compensation and non-cash warrant
expense. Amortization of intangibles includes the amortization of acquired
intellectual property. Amortization of stock-based compensation includes the
amortization of deferred compensation, which represents the difference between
the exercise price and deemed fair market value for options to purchase shares
granted to our employees and the fair value attributable to options granted to
non-employees. Non-cash warrant expense represents the fair value of warrants
issued to strategic investors.

 Losses

   From inception through December 31, 2000, we have an accumulated deficit of
$391.3 million, and have not achieved profitability on a quarterly or annual
basis.

                                      27
<PAGE>

Results of Operations

   The following table sets forth the results of our operations. The
historical results are not necessarily indicative of results to be expected
for any future period.

<TABLE>
<CAPTION>
                           Year Ended December 31,          Year Ended December 31,
                         -----------------------------  ------------------------------------
                           1998      1999      2000        1998         1999         2000
                         --------  --------  ---------  ----------   ----------   ----------
                          (amounts in thousands of
                                U.S. dollars)            (percentage of total revenues)
<S>                      <C>       <C>       <C>        <C>          <C>          <C>
Revenues:
 Royalties.............. $  2,788  $ 14,782  $  29,898          29%          57%          47%
 License fees...........    1,578     2,964     13,444          17           11           21
 Services and other.....    5,102     8,205     19,805          54           32           32
                         --------  --------  ---------  ----------   ----------   ----------
  Total revenues........    9,468    25,951     63,147         100          100          100
                         --------  --------  ---------  ----------   ----------   ----------
Operating expenses:
 Cost of services and
  other revenues
  (exclusive of $53 and
  $2,603 share-based
  compensation in 1999
  and 2000).............    4,736     5,949     15,454          51           23           25
 Research and
  development (exclusive
  of $662 and $1,538
  share-based
  compensation in 1999
  and 2000).............    7,514    13,172     34,062          79           51           54
 Sales and marketing
  (exclusive of $556 and
  $2,100 share-based
  compensation in 1999
  and 2000).............    7,418    11,415     26,381          78           44           42
 General and
  administrative
  (exclusive of $13,
  $11,827 and $8,185
  share-based
  compensation in 1998,
  1999 and 2000)........    3,982     5,971     14,160          42           23           22
 Amortization of
  goodwill..............      --        --     169,284         --           --           268
 Amortization of
  intangibles...........      --      1,210      6,226         --             5           10
 Amortization of share-
  based compensation....       13    13,098     14,426         --            50           23
 Non-cash warrant
  expense...............      --     68,569     24,908         --           264           39
                         --------  --------  ---------  ----------   ----------   ----------
  Total operating
   expenses.............   23,663   119,384    304,901         250          460          483
                         --------  --------  ---------  ----------   ----------   ----------
Loss from operations....  (14,195)  (93,433)  (241,754)       (150)        (360)        (383)
Interest income.........      --        898     12,232         --             3           19
Interest expense........      (75)      (73)       --          --           --           --
Other income (expense),
 net....................       68        (2)      (111)        --           --           --
Investment loss.........      --        --     (11,687)        --           --           (19)
Minority interest.......      --      2,153         34         --             8          --
                         --------  --------  ---------  ----------   ----------   ----------
Loss before income
 taxes..................  (14,202)  (90,457)  (241,286)       (150)        (349)        (383)
Income tax benefit......      --        --         509         --           --           --
                         --------  --------  ---------  ----------   ----------   ----------
Net loss................ $(14,202) $(90,457) $(240,777)       (150)%       (349)%       (383)%
                         ========  ========  =========  ==========   ==========   ==========
</TABLE>

 Revenues

   Our revenues increased 143% from $26.0 million for the year ended December
31, 1999 to $63.1 million for the year ended December 31, 2000. The overall
increase in total revenue was in part due to the Spyglass acquisition on July
24, 2000, higher royalties from increased deployments and increased license
fees. As a result of the Spyglass acquisition, revenues from the United States
as a percentage of total revenues increased from 7% in 1999 to 29% in 2000.
Total revenues increased 174% from $9.5 million for the year ended December
31, 1998 to $26.0 million for the year ended December 31, 1999. For the year
ended December 31, 2000, Motorola accounted for 14% of total revenues.

                                      28
<PAGE>

   Royalties. Royalties increased 102% from $14.8 million for the year ended
December 31, 1999 to $29.9 million for the year ended December 31, 2000. The
$15.1 million increase was attributable to greater deployments of set-top
boxes from 3.2 million during the year ended December 31, 1999 to 6.6 million
during the year ended December 31, 2000. Royalties increased 430% from $2.8
million for the year ended December 31, 1998 to $14.8 million for the year
ended December 31, 1999. The $12.0 million increase was attributable to
significant growth in deployments by our leading network operator BSkyB, an
increase in the number of network operators deploying OpenTV from 10 to 20,
and an increase in our average royalty rate.

   License fees. License fees increased 354% from $3.0 million for the year
ended December 31, 1999 to $13.4 million for the year ended December 31, 2000.
The $10.4 million increase was primarily attributable to $7.1 million from the
sale of Device Mosaic, a Spyglass product, and a year-over-year 200% increase
in the sale of OpenStreamer and SDK products. License fees increased 88% from
$1.6 million for the year ended December 31, 1998 to $3.0 million for the year
ended December 31, 1999. This $1.4 million increase was attributable to a 78%
increase in the sale of our SDK product, and the launches of OpenAuthor and
OpenStreamer during the first quarter of 1999.

   Services and other revenues. Services and other revenue increased 141% from
$8.2 million for the year ended December 31, 1999 to $19.8 million for the
year ended December 31, 2000. The $11.6 million increase was primarily
attributable to our professional services revenues. We were able to expand our
interactive television professional services business by accessing Spyglass'
management expertise, personnel and current base of professional services
customers. Services and other revenue increased 61% from $5.1 million for the
year ended December 31, 1998 to $8.2 million for the year ended December 31,
1999. The $3.1 million increase was primarily attributable to $900,000 of
revenues recognized in 1999 under a long-term software development contract,
an increase in demand for services due to a larger customer base, and an
increase of $2.2 million in maintenance and support revenues.

 Operating expenses

   Our total operating expenses increased 155% from $119.4 million for the
year ended December 31, 1999 to $304.9 million for the year ended December 31,
2000. Excluding non-cash charges associated with amortization of goodwill and
other intangibles, share-based compensation and warrant expense, our total
operating expenses increased 147% from $36.5 million for year ended December
31, 1999 to $90.1 million for the year ended December 31, 2000. The overall
increase in total operating expenses was primarily due to the Spyglass
business and increased headcount. Total operating expenses increased 405% from
$23.7 million for the year ended December 31, 1998 to $119.4 million for the
year ended December 31, 1999. Excluding non-cash charges associated with
share-based compensation, warrant expense and amortization of intangibles, our
total operating expenses increased 54% from $23.7 million for the year ended
December 31, 1998 to $36.5 million for the year ended December 31, 1999 due to
increased headcount, investment in research and development, and marketing.

   Cost of services and other revenue. Our total cost of services and other
revenues increased 160% from $5.9 million for the year ended December 31, 1999
to $15.4 million for the year ended December 31, 2000. The $9.5 million
increase was attributable to the related costs associated with providing
professional services which began in the third quarter of 2000, and an
increase in the number of personnel. Cost of services and other revenues
increased 26% from $4.8 million for the year ended December 31, 1998 to $5.9
million for the year ended December 31, 1999. The $1.1 million increase was
attributable to an increase in demand for services due to a larger customer
base and related increase in the number of personnel.

   Research and development. Research and development expenses increased 159%
from $13.2 million for the year ended December 31,1999 to $34.1 million for
the year ended December 31, 2000. The $20.9 million increase was attributable
to an increase in the number of personnel developing new products, $1.0
million of in-process technology costs related to the Spyglass acquisition and
a $2.3 million non-recurring development fee related to warrants issued to
General Instruments Corporation. Research and development expenses increased
75% from $7.5 million for the year ended December 31, 1998 to $13.2 million
for the year ended December 31, 1999. The $5.7 million increase was primarily
due to an increase in the number of personnel developing enhanced
functionality for OpenTV Runtime and related software applications.

                                      29
<PAGE>

   Sales and marketing. Sales and marketing expenses increased 131% from $11.4
million for the year ended December 31, 1999 to $26.4 million for the year
ended December 31, 2000. Sales and marketing expenses increased 54% from $7.4
million for the year ended December 31, 1998 to $11.4 million for the year
ended December 31, 1999. The $15.0 million and $4.0 million increases in
fiscal year 2000 and 1999, respectively, were primarily attributable to the
initiation of new marketing programs, an increase in the number of personnel,
and opening of new overseas sales offices. In fiscal year 2000, we also
incurred additional marketing expenses to support our corporate rebranding
initiative, resulting from the Spyglass acquisition.

   General and administrative. General and administrative expenses increased
137% from $6.0 million for the year ended December 31, 1999 to $14.2 million
for the year ended December 31, 2000. The $8.2 million increase was primarily
due to an increase in the number of personnel, and general and administrative
costs related to the acquisition of Spyglass. General and administrative
expenses increased 50% from $4.0 million for the year ended December 31, 1998
to $6.0 million for the year ended December 31, 1999. The $2.0 million
increase was primarily due to an increase in the number of personnel.

   Amortization of goodwill. Goodwill is stated at cost less accumulated
amortization. In fiscal year 2000, we acquired Spyglass and CableSoft
resulting in $1.9 billion and $36.0 million of goodwill, respectively.
Goodwill was determined based on the residual difference between the amount of
consideration paid, including certain acquisition-related costs, and the
values assigned to identified net tangible and intangible assets. The
amortization of goodwill related to these acquisitions is being amortized over
five years on a straight-line basis and totaled $169 million in fiscal year
2000.

   Amortization of intangibles. Intangible assets, which are principally
acquisition-related, are stated at cost less accumulated amortization.
Amortization is computed on a straight-line basis over the estimated benefit
periods of 1.5 to 5 years. Cost of intangible assets as of December 31, 1999
and 2000 was $7.8 million and $79.7 million, respectively. Amortization
expense for the years ended December 31, 1999 and 2000 was $1.2 million and
$6.2 million, respectively.

   Amortization of share-based compensation. We recorded a deferred
compensation charge of $24.7 million related to the Spyglass acquisition for
the year ended December 31, 2000. We recorded a deferred compensation charge
of $22.5 million for the year ended December 31, 1999, representing the
difference between the exercise price and deemed fair market value for options
to purchase shares granted to our employees and the fair value attributable to
options granted to non-employees. We recorded a deferred compensation charge
of $49,000 for the year ended December 31, 1998. Share-based compensation of
$2.6 million, $1.5 million, $2.1 million, and $8.2 million was amortized over
the vesting period to cost of services and other revenues, research and
development, sales and marketing, and general and administrative expenses,
respectively, for the year ended December 31, 2000. Share-based compensation
of $53,000, $662,000, $556,000, and $11.8 million was amortized to cost of
services and other revenues, research and development, sales and marketing,
and general and administrative expenses, respectively, for the year ended
December 31, 1999. Share-based compensation of $13,000 was amortized to
general and administrative expenses for the year ended December 31, 1998.

   Non-cash warrant expense. In October 1999, we completed a private placement
of Series C-1 and Series C-2 Convertible Preference Shares with warrants. The
fair value attributable to the warrants of $63.9 million was recorded in
operating expenses as a non-cash warrant expense in the year ended December
31, 1999. The warrants were valued using the Black Scholes option pricing
model.

   In November 1999, we issued warrants to purchase 700,000 Class A Ordinary
Shares to General Instrument Corporation. The fair value attributable to the
performance warrants of $37.5 million was recorded in the year ended December
31, 1999. This fair value was calculated at each reporting date using the
Black Scholes option pricing model. The resulting warrant expense was
amortized on a straight line basis over a period of 18 months. Accordingly,
$4.7 million and $24.9 million were amortized as non-cash warrant expense for
the years ended December 31, 1999 and 2000, respectively. In addition, $7.9
million was credited to additional paid-in capital in 2000 due to the change
in value of shares.

                                      30
<PAGE>

   Interest and other income (expense), net. Interest income increased from
$0.9 million for the year ended December 31, 1999 to $12.2 million for the
year ended December 31, 2000. The $11.3 million increase was primarily due to
the increase in cash equivalents and short-term and long-term debt security
investments in fiscal year 2000. Interest income increased from zero for the
year ended December 31, 1998 to $0.9 million for the year ended December 31,
1999. The increase was primarily due to the investment of proceeds from our
sale of convertible preference shares and our initial public offering.
Interest expense on the convertible notes payable to shareholders was $75,000
for the year ended December 31, 1998 and $73,000 for the year ended December
31, 1999.

   Investment loss. We incurred a loss of $11.7 million for the year ended
December 31, 2000, $10.0 million related to the impairment of two long-term
private equity investments and $1.7 million was realized on the sale of
marketable equity securities.

   Minority interest. In November 2000, we entered into a series of definitive
agreements with Motorola, Inc. and its subsidiary General Instrument
Corporation. One of the agreements provided for the establishment of a co-
owned venture, Spyglass Integration Inc. (formerly known as OpenTV Integration
Company), for the purpose of providing integration, testing and development
services for digital cable and satellite operators. The establishment of this
venture resulted in the recognition of a minority interest of $34,000 for the
year ended December 31, 2000.

   Pursuant to a reorganization that occurred in October 1999, MIH Limited,
the majority shareholder of OpenTV, Inc. exchanged its shares of common stock
in OpenTV, Inc. for Ordinary Shares in OpenTV Corp. The exchange resulted in
the recognition of a minority interest of $2.2 million for the shareholders
remaining at the OpenTV, Inc. level for the year ended December 31, 1999.

   Income taxes. We recognized an income tax benefit of $0.5 million in 2000.
The income tax benefit is comprised of $1.1 million in current tax provision,
offset by $1.6 million in deferred tax benefit. There was no income tax
expense in 1998 and 1999 since we incurred operating losses.

B. Liquidity and Capital Resources.

   Since inception, we have financed our operations largely through equity
transactions and short-term loans from shareholders. At December 31, 2000, we
had an accumulated deficit of $391.3 million and cash and short-term
marketable debt securities of $209.4 million.

   Our operating activities utilized cash in the amount of $11.0 million, $8.4
million and $7.4 million for the years ended December 31, 1998, 1999 and 2000,
respectively. The net cash utilized during the years ended December 31, 1998
and 1999 was primarily to fund our research and development and marketing
efforts. The net cash utilized during the year ended December 31, 2000 was due
to the expansion of our company worldwide and the costs related to develop,
produce and market our products and services.

   Net cash utilized for investing activities was $2.6 million and $183.3
million for the years ended December 31, 1998 and 1999, respectively. Net cash
of $81.6 million was provided from investing activities for the year ended
December 31, 2000. The net cash utilized for the year ended December 31, 1998
was primarily for the purchase of computer systems and equipment. The net cash
utilized for the year ended December 31, 1999 was primarily for the purchase
of short-term marketable debt securities. The net cash provided for the year
ended December 31, 2000 was primarily acquired from Spyglass.

   Net financing activities provided cash of $16.8 million, $194.6 million and
$14.1 million for the years ended December 31, 1998, 1999 and 2000,
respectively. The net cash provided in 1998 was from notes payable to
shareholders of $7.0 million and payment on a receivable from a shareholder of
$9.7 million. Net cash provided in 1999 was from our initial public offering
of Class A Ordinary Shares for net proceeds of $157.0 million and the sale of
the sale of convertible preference shares for net proceeds of $31.3 million.
Net cash provided in 2000 was primarily from stock options and warrants
exercised.

                                      31
<PAGE>

   We believe that our cash resources and available credit facilities will be
sufficient to meet anticipated cash needs for working capital and capital
expenditures for at least the next twelve months from the date of this filing.

 Recent Accounting Pronouncements

   In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS
No. 133"), which establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts (collectively referred to as derivatives), and for hedging
activities. SFAS No. 133, as amended, is effective for all quarters of fiscal
years beginning after June 15, 2000. To date, we have not entered into any
derivative financial instrument contracts. Thus, we believe that SFAS No. 133
will not have a material impact on our financial position or results of
operations.

   In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 or SAB 101, "Revenue Recognition in
Financial Statements," which provides guidance on the recognition,
presentation, and disclosure of revenue in financial statements filed with the
SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue
and provides guidance for disclosures related to revenue recognition policies.
The adoption of SAB 101 did not have a material effect on our financial
position or results of operations.

C. Research and Development, Patents & Licenses, etc.

   As a result of sustained research and development efforts over the past
several years, we have built a substantial intellectual property portfolio. We
currently have 34 patents issued in the United States, with another 55
pending. We are also filing and have been granted patents internationally in
all the major markets where we intend to be active. We believe that our patent
portfolio protects many of the key elements necessary to support digital
interactive television.

   Our ability to compete is dependent in part upon our ability to protect and
further mature our internally developed intellectual property. We rely on
patent, trademark, trade secret and copyright law, as well as confidentiality
procedures and licensing arrangements to establish and protect our rights in
our technology. We believe that our current portfolio of patents is strong.
This portfolio of patents contains many early patents in the digital
interactive television field. Nevertheless, other companies may develop
technologies that are similar or superior to our patents. These factors are
discussed in Item 3.D "Risk Factors--Because much of our success and value
lies in our ownership and use of intellectual property, our failure to protect
our property and develop new proprietary technology may negatively affect us."

D. Trend information

   In 2000 we acquired 100% of Spyglass through the exchange of shares for a
total purchase price of $2.1 billion. The net assets of Spyglass were $169.2
million which resulted in goodwill of approximately $1.9 billion. This
goodwill is being amortized over the estimated benefit period of 5 years on a
straight-line basis. At December 31, 2000, the net book value of this goodwill
was approximately $1.8 billion. There has been a trend in the technology
sector recently of decreased market values attributable to, among other
things, decreases in multiples of expected future revenue, decreases in
expected profitability and cash flows due to changes in business models, and a
re-evaluation of the sector as a whole. There has been a decrease in our
market capitalization since the acquisition. However, we have assessed the
forecast revenues and expenses of the Spyglass business today with those at
the time of the acquisition and determined that there has not been an
impairment in the goodwill as a result of the acquisition. We will continue to
review the recoverability of the goodwill on a quarterly basis in the future.
In the event that we do determine in the future that the goodwill is impaired,
we will record a write down in the quarter the impairment is determined, the
impact of which could be material to our profitability.

                                      32
<PAGE>

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Executive Officers.

   The following table sets forth certain information with respect to our
executive officers and directors as of April 16, 2001. All positions indicated
are with OpenTV Corp. only.

<TABLE>
<CAPTION>
   Name                Age                       Position
   ----                ---                       --------
<S>                    <C> <C>
Executive Officers
 James Ackerman.......  36 Chief Executive Officer and Director
 Scott H. Ray.........  36 Executive Vice President and Chief Financial Officer
 James F. Brown.......  36 Senior Vice President, Strategic Development
 Vincent Dureau.......  41 Chief Technology Officer

Other Directors
 Jan Steenkamp........  38 Chairman of the Board of Directors
 Jacobus P. Bekker....  48 Director
 Craig L. Enenstein...  32 Director
 William J. Raduchel..  54 Director
 Allan M. Rosenzweig..  45 Director
 Jacobus D.T.
  Stofberg............  50 Director
 Stephen F. Ward......  47 Director
</TABLE>

   Set forth below is information regarding the relevant business experience
for our executive officers and directors.

   James Ackerman has served as President and Chief Executive Officer of
OpenTV Corp. since April 2001. Prior to that, Mr. Ackerman served as President
and Chief Operating Officer of OpenTV Corp. from December 2000. He served as
President and Chief Operating Officer of OpenTV, Inc. from September 2000 to
April 2001. Mr. Ackerman also has served as a Director of OpenTV Corp. since
January 2001. Prior to joining us he was Chief Executive Officer of British
Interactive Broadcasting (BiB), parent company to Open Interactive, where he
was responsible for the launch of the new interactive platform Open
Interactive and was responsible for building the business in the United
Kingdom and abroad, as well as across all broadcast platforms. During this
period, Mr. Ackerman worked in collaboration with us as one of our key
customers. Prior to his position at BiB, Mr. Ackerman was the Managing
Director of Sky Ventures Ltd, a wholly owned subsidiary of BSkyB, where he was
responsible for BSkyB's joint venture channels, including Nickelodeon,
Paramount, the History Channel, National Geographic Channel, Granada Sky
Broadcasting Channels, QVC, Sky News Australia and Playboy. While at BSkyB,
Mr. Ackerman was also responsible for the domestic and international
distribution of the Sky channels on cable platforms. From October 1994 to May
1996, Mr. Ackerman was Vice President, International, for A&E Television
Networks in New York responsible for launching international versions of the
History Channel including a joint venture between A&E and BSkyB.

   Scott H. Ray joined us in March 2001 as Executive Vice President and Chief
Financial Officer of OpenTV, Inc. and was appointed Executive Vice President
and Chief Financial Officer of OpenTV Corp. in April 2001. Prior to this, Mr.
Ray served as the Chief Financial Officer of BarterTrust from July 2000, where
he also assumed the role of Chief Operating Officer in September 2000. From
March 1998 to February 2000, Mr. Ray was the Controller of BayView Capital
Corporation and the Chief Financial Officer of its main operating
subsidiaries, including BayView Bank. In February 2000, he assumed the role of
Chief Financial Officer of BayView Capital Corporation. From July 1994 to
March 1998, Mr. Ray served a Treasurer and then Chief Financial Officer of
Silicon Valley Bancshares and its operating subsidiary Silicon Valley Bank.
Between August 1987 and July 1994, Mr. Ray worked for Coopers & Lybrand and
Price Waterhouse in the assurance services practice until January 1991 and
then in practices providing a variety of financial advisory services. Mr. Ray
is a certified public accountant and a certified forensic accountant.

                                      33
<PAGE>

   James F. Brown has served as Senior Vice President, Strategic Development
of OpenTV Corp. since November 1999 and served as General Counsel and
Secretary of OpenTV Corp. from November 1999 to December 2000. Mr. Brown
joined OpenTV, Inc. in August 1999 as Senior Vice President, General Counsel
and Secretary, and presently serves as OpenTV, Inc.'s Executive Vice
President, Strategic Development, Secretary and General Manager of its OpenTV
Interactive division. From June 1998 until he joined us, Mr. Brown was a
partner in the law firm of McDermott Will & Emery. From June 1989 to June
1998, he had been associated with the law firm of Pillsbury Madison & Sutro,
where he was a partner from January 1996 to June 1998. In his previous law
practice, Mr. Brown focused on transactions involving emerging growth
companies, primarily in the cable television, telecommunications, software and
digital technology areas. Such transactions involved corporate finance,
mergers and acquisitions, strategic investments, joint ventures and software
licensing matters. Mr. Brown is also a Certified Public Accountant.

   Vincent Dureau has worked for us since our inception and has served as our
Chief Technology Officer since May 1998. He is responsible for developing
technologies and business relationships that will bring integrated, cost-
effective solutions to our customers and partners. Prior to becoming our CTO,
Mr. Dureau served as our Senior Vice President of Engineering. From 1984 to
the time he helped start our company, Mr. Dureau held a variety of positions
in Thomson's research department in Paris and Los Angeles, where he helped
develop technology in the fields of multimedia, consumer user interfaces,
video compression and interactive television. Mr. Dureau holds a degree in
Agronomy from the Institut National Agronomique and M.S. degrees from
Universite Paris VII in Applied Mathematics and Ecole Nationale Superieure des
Telecommunications in Computer Science.

   Jan Steenkamp has served as Chairman of the Board of Directors of OpenTV
Corp. since April 2001. Prior to that, Mr. Steenkamp served as Chief Executive
Officer of OpenTV Corp. from November 1999 and served as President of OpenTV
Corp. from November 1999 to December 2000. He has served as Chief Executive
Officer of OpenTV, Inc. since August 1997 and served as President of OpenTV,
Inc. from August 1997 to September 2000. Mr. Steenkamp has served as a
Director of OpenTV Corp. since October 1999 and served as a Director of
OpenTV, Inc. from May 1999 to May 2000. From 1985 until he joined OpenTV in
1997, Mr. Steenkamp held a variety of management positions within the MIH
Holdings group of companies. He was the Commercial Director of Irdeto
Consultants, a Netherlands-based subsidiary of MIH Limited that develops
digital conditional access and subscriber management systems. During his time
at Irdeto, Mr. Steenkamp managed business and product development as it grew
from 50 to 250 employees. While working at MIH Holdings, Mr. Steenkamp
initiated the introduction of pay television in Greece, managed a project team
to establish pay television in Italy and was active in the acquisition and
development of Nethold's European operations in the Netherlands, Belgium,
Finland, Sweden, Denmark and Norway. Mr. Steenkamp studied Electrical
Engineering at Witwatersrand Technicon. Mr. Steenkamp also is a Director of
MIH Limited and Chief Executive Officer of MIH Technologies.

   Jacobus P. Bekker has served as a Director of OpenTV Corp. since October
1999. Mr. Bekker founded MIH Holdings in 1985 with Mr. Stofberg and has held a
variety of positions within the MIH Holdings group of companies since that
time. Mr. Bekker was Chief Executive Officer of MIH Holdings until 1997, when
he became the Managing Director of Naspers Limited. He is also currently the
Chairman of the board of directors of M-Web and a Director of MIH Holdings
Limited, SSIH, M-Net Ltd., MTN and M-Cell. Mr. Bekker is also a Director of a
number of South African print media companies and served as a Director of
NetHold from September 1995 to April 1997.

   Craig L. Enenstein has served as a Director of OpenTV Corp. since November
1999. Mr. Enenstein is also Senior Vice Presidents Business Development and
Strategy for Liberty Digital, Inc., and is responsible for leading Liberty
Digital's interactive infrastructure and Internet investment activities as
well as developing its business strategy. Prior to joining Liberty Digital,
Mr. Enenstein was employed by Knowledge Universe, LLC, an education
corporation led by Michael Milken, Lowell Milken and Larry Ellison, which
invests in companies focused on education products and services and education
Internet companies. Prior to joining Knowledge Universe, Mr. Enenstein served
as a strategy consultant for Bain & Co. and LEK Consulting. Mr. Enenstein
holds

                                      34
<PAGE>

an M.B.A. in finance from the Wharton School of Business, an M.A. in
international studies from the Lauder Institute at the University of
Pennsylvania and a B.A. from the University of California at Berkeley.

   William J. Raduchel has served as a Director of OpenTV Corp. since October
1999 and served as a Director of OpenTV, Inc. from May 1999 to May 2000. Mr.
Raduchel has been Executive Vice President and Chief Technology Officer of AOL
Time Warner, Inc. since January 2001 and before that had been Senior Vice
President and Chief Technology Officer of America Online, Inc. from September
1999 to January 2001. Prior to joining America Online, he was the Chief
Strategy Officer of Sun Microsystems, Inc., where he also had been Chief
Information Officer, acting Vice President of Human Resources, Chief Financial
Officer and Vice President of Corporate Planning and Development. Mr. Raduchel
joined Sun in 1988 after executive positions at Xerox Corporation and McGraw-
Hill, Inc. He holds A.M. and Ph.D. degrees in economics from Harvard
University and a B.A. from Michigan State University. Mr. Raduchel is also a
Director of MIH Limited, Niku Corporation and Chordiant Software.

   Allan M. Rosenzweig has served as a Director of OpenTV Corp. since October
1999 and served as a Director of OpenTV, Inc. from June 1997 to May 2000. Mr.
Rosenzweig is also Group Director, Corporate Finance and a Director of MIH
Limited, a Director of MIH Holdings Limited and Chief Executive Officer of
Mindport. Prior to joining MIH Limited in 1996, Mr. Rosenzweig was the
Director of Corporate Finance of NetHold. In addition, he was previously the
Managing Director of Intertax (Pty) Ltd., an international tax consultancy
firm. He also serves as a Director of Union Transport, Inc.

   Jacobus D.T. Stofberg has served as a Director of OpenTV Corp. since
October 1999 and served as Chairman of the Board of Directors of OpenTV Corp.
from October 1999 to April 2001. Mr. Stofberg also has served as a Director of
OpenTV, Inc. since January 1999 and has served as its sole Director since May
2000. Mr. Stofberg is Chief Executive Officer and a Director of MIH Limited,
and serves as Managing Director of MIH Holdings Limited and as a Director of
Naspers Limited. Mr. Stofberg was one of the original members of the MIH
Holdings management team and has held a variety of positions within the MIH
Holdings group of companies since 1985.

   Stephen F. Ward has served as a Director of OpenTV Corp. since March 2000.
Since January 2000, Mr. Ward has served as a Director and Chief Financial
Officer of MIH Limited. Mr. Ward also serves as a Director of MIH Holdings
Limited. Before joining MIH Limited, Mr. Ward was a senior partner with
PricewaterhouseCoopers N.V. (an affiliate of PricewaterhouseCoopers LLP) where
during his thirteen years as a partner he was involved in advising
multinational, publicly traded companies as well as serving in various
management positions. Mr. Ward is a fellow of the Institute of Chartered
Accountants in England and Wales and a Dutch Registered Accountant.

   Messrs. Steenkamp and Ackerman were appointed to our Board of Directors in
connection with their employment with us. Pursuant to the terms of the
Investors' Rights Agreement described under Item 10.C below, MIH Limited has
the right to appoint five Directors to our Board of Directors. Accordingly,
MIH Limited has appointed Messrs. Stofberg, Bekker, Rosenzweig, Ward, and
Raduchel to our Board of Directors. Also pursuant to the terms of the
Investors' Rights Agreement described under Item 10.C below, America Online,
General Instrument and subsidiaries of Liberty Digital and Time Warner have
the right to collectively appoint one Director to our Board of Directors, and
they have used this right to appoint Mr. Enenstein.

                                      35
<PAGE>

B. Compensation.

   The aggregate salary, bonus and other compensation paid by us and our
subsidiaries to our executive officers and directors as a group during the
fiscal year ended December 31, 2000 was approximately $2.4 million. Our
directors do not currently receive cash compensation for serving as directors
other than the reimbursement of out-of-pocket expenses incurred in attending
meetings.

   The following table presents information about the compensation awarded to,
earned by or paid to our chief executive officer and each of our other
executive officers whose salary and bonus for the fiscal years ended December
31, 1999 and December 31, 2000 equaled or exceeded $100,000.

                          Summary Compensation Table
                (amounts in U.S. dollars, except share amounts)

<TABLE>
<CAPTION>
                                                                   Long-Term
                                                                  Compensation
                                     Annual Compensation             Awards
                              ---------------------------------   ------------
                                       Bonus Paid
                                      in Following                 Securities
   Name and Principal                   Year for   Other Annual    Underlying   All Other
        Position         Year Salary  Current Year Compensation     Options    Compensation
   ------------------    ---- ------- ------------ ------------   ------------ ------------
<S>                      <C>  <C>     <C>          <C>            <C>          <C>
Jan Steenkamp(1)........ 2000 238,000   122,184      184,020 (2)     81,000          --
 Chief Executive Officer 1999 210,625   150,000       70,435 (3)    200,000          --
  and Director

James Ackerman(1)(4).... 2000 143,056    77,250       38,791 (5)    200,000       13,507 (6)
 President and Chief
  Operating Officer

Randall Livingston(7)... 2000 272,500   126,304          --          10,000        1,250 (8)
 Executive Vice          1999  90,000   108,000          --         540,000      160,250 (9)
  President, Office of
  the CEO, Chief
  Financial Officer and
  Director

James Brown............. 2000 207,000    81,144          --          15,000          --
 Senior Vice President,  1999 107,758    60,000          --         160,000          --
  Strategic Development
  and General Manager,
  OpenTV Interactive

Vincent Dureau.......... 2000 196,500    74,277        3,000 (9)     23,000        3,000(10)
 Chief Technology        1999 178,250    53,653        4,000 (9)                   3,000(10)
  Officer                                                            60,000

Thomas Jackson(11)...... 2000 161,833       --        68,176(12)     19,000          --
 Senior Vice President,  1999 100,758    25,000      126,129(13)                     --
  Sales                                                             220,000
</TABLE>
--------
 (1) Mr. Steenkamp was our Chief Executive Officer and Mr. Ackerman was our
     President and Chief Operating Officer until April 2001, when Mr.
     Steenkamp became Chairman of our Board of Directors and Mr. Ackerman
     became our President and Chief Executive Officer.

 (2) Represents amounts paid to offset taxes paid by Mr. Steenkamp, and to
     reimburse Mr. Steenkamp for part of his housing expenses and automobile
     expenses. The total also includes a bonus payment of $1,000.

 (3) In 1999, Mr. Steenkamp was reimbursed for part of his housing expenses
     and was provided a leased automobile by us.

 (4) Mr. Ackerman did not receive any compensation from us during 1999.

 (5) Represents amounts paid to offset taxes paid by Mr. Ackerman and to
     reimburse Mr. Ackerman for part of his automobile and other expenses.

 (6) Represents amounts paid to Mr. Ackerman to reimburse relocation expenses.

 (7) Mr. Livingston terminated his employment and relationship as a director
     with us in April 2001.

 (8) Represents matching contributions in the amount of $1,250 made by us to
     Mr. Livingston's 401(k) plan account in the fiscal year ending December
     31, 2000.

                                      36
<PAGE>

 (8) Represents amounts paid to Mr. Livingston for consulting services
     rendered prior to September 1, 1999.

 (9) Represents a bonus payment.
(10) Represents matching contributions in the amount of $3,000 made by us to
     Mr. Dureau's 401(k) plan account in the fiscal year.
(11) Mr. Jackson terminated his employment with us in October 2000.
(12) Represents amounts Mr. Jackson earned as commissions.
(13) Represents amounts Mr. Jackson earned as commissions, amounts paid to
     offset taxes paid by Mr. Jackson, amounts paid to reimburse Mr. Jackson
     for relocation expenses and a bonus payment of $25,000.

                       Option Grants in Last Fiscal Year

   The following table sets forth information concerning options to purchase
shares granted to our executive officers during the year ended December 31,
2000. No stock appreciation rights were granted during this period.
<TABLE>
<CAPTION>
                                    % of Total
                                      Options
                                    Granted to
                                    Directors,                       Potential Realizable
                                     Employees                         Value at Assumed
                         Number of      and                         Annual Rates of Stock
                           Shares   Consultants Exercise            Price Appreciation for
                         Underlying   in Last    Price                  Option Term(2)
                          Options     Fiscal     ($ Per  Expiration ----------------------
          Name            Granted     Year(1)    Share)     Date      5%($)      10%($)
          ----           ---------- ----------- -------- ---------- ---------- -----------
<S>                      <C>        <C>         <C>      <C>        <C>        <C>
James Ackerman..........  200,000     10.3614%   $33.19   10/02/10  $4,174,288 $10,578,465
Jan Steenkamp...........   81,000      4.1964     54.25   07/17/10   2,763,520   7,003,302
Randall Livingston(3)...   10,000      0.5181     54.25   07/17/10     341,175     864,605
James Brown.............   15,000      0.7771     54.25   07/17/10     511,763   1,296,907
Vincent Dureau..........   23,000      1.1916     54.25   07/17/10     784,703   1,988,592
Thomas Jackson(4).......   19,000      0.9843     54.25   07/17/10     648,233   1,642,750
</TABLE>
--------
(1) Percentages shown under "% of Total Options Granted to Employees in the
    Last Fiscal Year" are based on options to purchase an aggregate of
    approximately 1,930,226 shares granted during the fiscal year ended
    December 31, 2000 to employees, directors and consultants of OpenTV under
    the OpenTV, Inc 1998 Stock Option/Stock Issuance Plan, as amended and
    restated, and the OpenTV Corp. 1999 Share Option/Share Issuance Plan, as
    amended and restated.

(2) The potential realizable value is calculated based on the ten-year term of
    the option at the time of grant. Share price appreciation of 5% and 10%
    (compounded annually) is assumed in accordance with rules promulgated by
    the Securities and Exchange Commission and does not represent our
    prediction of our share price performance. The potential realizable values
    at 5% and 10% appreciation are calculated by assuming that the estimated
    fair market value on the date of grant appreciates at the indicated rate
    for the entire term of the option and that the option is exercised at the
    exercise price and sold on the last day of its term at the appreciated
    price. We do not necessarily agree that this method can properly determine
    the value of an option. Actual gains, if any, on share option exercises
    depend on numerous factors, including our future performance, overall
    market conditions and the option holder's continued employment with us
    throughout the entire vesting period and option term, which factors are
    not reflected in this table.

(3) Mr. Livingston terminated his employment and relationship as a director
    with us in April 2001.

(4) Mr. Jackson terminated his employment with us in October 2000.

C. Board Practices.

   Our board of directors generally has four regular meetings per year, but
meets on a more frequent basis from time to time as circumstances warrant. Our
board of directors has three standing committees: a compensation committee, an
audit committee and an investment committee.


                                      37
<PAGE>

   The compensation committee consists of Messrs. Steenkamp, Stofberg and
Ward. The compensation committee establishes salaries, incentives and other
forms of compensation for our directors, executive officers, employees and
consultants and administers our stock option incentive and other benefit
plans. Compensation for our chief executive officer is reviewed and approved
by the full board of directors.

   The audit committee consists of Messrs. Enenstein, Raduchel and Ward. The
charter of the audit committee provides that the primary function of the audit
committee is to assist the Board of Directors in fulfilling its oversight
responsibilities. The audit committee reviews our financial statements,
financial reporting process, and the audit efforts of our independent
auditors, and provides an open avenue of communication among the independent
accountants, our financial and executive officers and the Board of Directors.
The audit committee meets with management and our independent auditors as it
deems appropriate.

   The investment committee consists of Messrs. Enenstein, Raduchel,
Rosenzweig and Steenkamp. The investment committee reviews and approves equity
investments from $10 million to $35 million in any single venture or company.
Equity investments of less than $10 million may be approved by our President.
Equity investments greater than $35 million must be approved by the full Board
of Directors.

D. Employees.

   As of December 31, 1998, 1999 and 2000 we employed 117, 233 and 484,
respectively, full-time equivalent employees, excluding temporary personnel
and consultants. We are not subject to any collective bargaining agreements
and believe our relationship with our employees is satisfactory.

E. Share Ownership.

Aggregate Options to Purchase Securities

   At December 31, 2000, our executive officers and directors as a group held
the following options to purchase our Class A Ordinary Shares.

<TABLE>
<CAPTION>
     Option                       Purchase                                           Expiration
     Shares                        Price                                                Date
     ------                       --------                                         --------------
     <S>                          <C>                                              <C>
     137,928                       $ 1.05                                          January 2008
     515,000                         1.05                                          July 2008
     205,000                         1.05                                          February 2009
      70,000                         2.10                                          May 2009
      58,334                         2.90                                          July 2009
      60,000                         6.00                                          August 2009
     383,334                         6.00                                          September 2009
     129,000                        54.25                                          July 2010
     200,000                        33.19                                          October 2010
</TABLE>


1999 Share Option/Share Issuance Plan

   Adoption. Our board of directors adopted the 1999 Share Option/Share
Issuance Plan (the "1999 Plan") in October 1999 and amended the 1999 Plan in
November 1999. Our shareholders approved the amended plan in November 1999.

   Share Reserve. Since our inception, we have reserved an aggregate of
8,980,000 Class A Ordinary Shares for issuance under the 1999 Plan, 1,502,807
of which had been issued as of December 31, 2000. As of December 31, 2000,
options to purchase 5,430,912 shares were outstanding under the 1999 Plan.
These outstanding options include the Assumed Options described under "Awards
Granted/Assumed" below. If options or shares awarded under the 1999 Plan are
forfeited or cancelled, expire or otherwise terminate without being exercised,
then those options or shares will again become available for issuance under
the 1999 Plan.

                                      38
<PAGE>

   Administration. The compensation committee of our board of directors
administers the 1999 Plan. The committee has complete discretion to make all
decisions relating to the interpretation, operation and amendment of the 1999
Plan. The committee has discretion to determine the following:

  .  grant recipients

  .  grant dates

  .  number of shares

  .  type of award

  .  exercisability of the award

  .  vesting requirements

  .  exercise price

  .  type of consideration

  .  any other terms and conditions of award eligibility

   Eligibility. The following groups of individuals are eligible to
participate in the 1999 Plan:

  .  employees

  .  members of our board of directors who are not employees

  .  consultants

   Structure of Plan. The plan is divided into the following two programs:

  .  an option grant program, under which eligible individuals may be granted
     options to purchase Class A Ordinary Shares

  .  a share issuance program, under which eligible persons may be issued
     Ordinary Shares directly, either through the immediate purchase of such
     shares or as a bonus for services rendered to us (the "Share Issuance
     Program")

   Option Grant Program. Options to purchase our Class A Ordinary Shares may
be either incentive stock options ("incentive options") qualifying for
favorable tax treatment under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") or options which do not so qualify ("non-
statutory options") as designated by the committee, in its sole discretion.
The exercise price of incentive options granted under the plan will be no less
than the fair market value of our Class A Ordinary Shares at the time the
option is granted. The exercise price may be paid in cash, in previously owned
Ordinary Shares valued at fair market value on the exercise date or through a
cashless exercise procedure involving a same-day sale of some or all of the
purchased shares. The other terms of the incentive options will be determined
by the committee. Any options intended to qualify as incentive options will be
designed to meet all the requirements of Code Section 422. Incentive options
are not transferable, except by will or the laws of descent and distribution.
The exercise price and other terms of non-statutory options granted under the
1999 Plan will be determined by the committee. The committee may provide that
non-statutory options will be transferable.

   Share Issuance Program. Under the Share Issuance Program, we may issue our
Class A Ordinary Shares directly, either through immediate purchase of such
shares or as a bonus for services rendered to us. The purchase price and other
terms of shares issued under the Share Issuance Program will be determined by
the committee. The committee may, in its discretion, subject any shares issued
under the Share Issuance Program to vesting and a right of repurchase by us.

   Repurchase Rights. The committee has the discretion to authorize the
issuance of unvested Ordinary Shares upon the exercise of options granted or
as shares are otherwise issued under the 1999 Plan. If the

                                      39
<PAGE>

purchaser or optionee ceases to be employed by or provide services to us, any
or all of the Ordinary Shares issued to the purchaser or optionee which are
unvested at the time of cessation shall be subject to repurchase by us at the
purchase or exercise price paid for such shares. The terms and conditions upon
which the repurchase rights are exercisable by us are set forth in the
repurchase rights agreements evidencing such rights.

   Corporate Transaction. Options will automatically vest upon the occurrence
of certain change of control events, if such options are not assumed or
exchanged for equivalent rights by the successor entity in accordance with the
terms of the plan. In the event of a corporate transaction that does not
result in the automatic vesting of options and other awards, the board of
directors or the compensation committee has discretion to accelerate vesting
of such options and other awards.

   Amendments and Termination. The board of directors may amend the 1999 Plan
at any time. If the board of directors amends the 1999 Plan, shareholder
approval will only be sought if required by applicable law. The 1999 Plan will
terminate upon the earliest of (i) October 21, 2009, (ii) the date on which
all shares available for issuance under the 1999 Plan have been issued as
vested shares, or (iii) the termination of all outstanding options in
connection with certain corporate transactions.

   Awards Assumed. Effective as of October 23, 1999, options (the "Assumed
Options") to purchase 5,141,114 shares of OpenTV, Inc. common stock under the
1998 Plan (see "OpenTV, Inc. 1998 Stock Option/Stock Issuance Plan" below)
were assigned to and assumed by OpenTV Corp. The Assumed Options thereupon
represented the right to purchase under the 1999 Plan an identical number of
our Class A Ordinary Shares. The issuance of Class A Ordinary Shares pursuant
to the exercise of Assumed Options has reduced, and in the future will reduce,
the total number of shares available for issuance under the 1999 Plan. In
addition to the Assumed Options, options to purchase 161,000 shares of OpenTV,
Inc. common stock under the 1998 Plan were outstanding as of October 23, 1999.
These options were not assigned to, or assumed by, OpenTV Corp. See "OpenTV,
Inc. 1998 Stock Option/Stock Issuance Plan," and "Exchange Plan" below.

     The compensation committee recently offered to cancel certain options
granted to employees with exercise prices in excess of $80.00 and grant those
employees new options in the future. Eligible employees were required to elect
whether or not to accept the compensation committee's offer by February 6,
2001 and to the extent they elected to accept the offer were required to
submit for cancellation all options held by them with exercise prices in
excess of $80.00 and any other options granted to them since August 5, 2000.
Under the terms of the offer, options will be granted on August 7, 2001 to
eligible employees who accepted the offer with a per share exercise price
equal to the then fair market value of an OpenTV Class A Ordinary Share,
provided the employee continuously will have been an employee through that
date. Under the terms of these new grants, the number of shares that may be
purchased under the new options will be the same number of shares that could
have been purchased under the canceled options. The vesting schedules of the
new stock options will be the same as the schedules applicable to the canceled
options. The new options will also be subject to the same rules regarding
early termination due to the termination of employment as were the canceled
grants.

OpenTV, Inc. 1998 Stock Option/Stock Issuance Plan

   The OpenTV, Inc. board of directors adopted, and its shareholders approved,
the OpenTV, Inc. 1998 Stock Option/Stock Issuance Plan (the "1998 Plan") on
January 26, 1998. The OpenTV, Inc. board of directors amended and restated the
1998 Plan on February 11, 1999 and on August 13, 1999. The terms of the 1998
Plan are generally identical to those of the 1999 Plan, except that the 1998
Plan is administered by the OpenTV, Inc. board of directors and options and
awards issued under the 1998 Plan entitle the holders to acquire shares of
Class A Common Stock of OpenTV, Inc.

   Most of the options issued under the 1998 Plan have been assigned to and
assumed by OpenTV Corp. As of December 31, 2000, options to purchase 159,000
shares of Class A Common Stock of OpenTV, Inc. remained outstanding. The 1998
Plan will remain in existence for the sole purpose of governing these
remaining options, until such time as such options have been exercised and the
underlying shares have become transferable by the holders. Options or shares
awarded under the 1998 Plan that are forfeited or cancelled will no longer be
available for issuance under the 1998 Plan.

                                      40
<PAGE>

Option Plans Assumed in the Spyglass and CableSoft Mergers

   We assumed the following option plans in connection with our merger with
Spyglass (collectively, the "Assumed Spyglass Plans"): (i) the Spyglass, Inc.
1995 Stock Incentive Plan, (ii) the Spyglass, Inc. 1995 Director Stock Option
Plan, (iii) the AllPen Software 1997 Stock Option Plan, and (iv) the Navitel
Communications 1997 Stock Option Plan. All of the options to purchase Spyglass
common stock outstanding under the Assumed Spyglass Plans were converted in
the merger into options to purchase our Class A Ordinary Shares. As of
December 31, 2000, options to purchase 1,614,248 of our Class A Ordinary
Shares were outstanding under the Assumed Spyglass Plans. The Assumed Spyglass
Plans will remain in existence for the sole purpose of governing these
remaining options, until such time as such options have been exercised and the
underlying shares have become transferable by the holders. Options awarded
under the Assumed Spyglass Plans that are forfeited or cancelled will no
longer be available for issuance under Assumed Spyglass Plans, and no new
options will be granted to employees under the Assumed Spyglass Plans.

   We assumed the following option plans in connection with our merger with
CableSoft (collectively, the "Assumed CableSoft Plans"): (i) the CSS
Acquisition Corporation 2000 Special Stock Incentive Plan, and (ii) the CSS
Acquisition Corporation 2000 Stock Plan. All of the options to purchase
CableSoft common stock outstanding under the Assumed CableSoft Plans were
converted in the merger into options to purchase our Class A Ordinary Shares.
As of December 31, 2000, options to purchase 148,031 of our Class A Ordinary
Shares were outstanding under the Assumed CableSoft Plans. The Assumed
CableSoft Plans will remain in existence for the sole purpose of governing
these remaining options, until such time as such options have been exercised
and the underlying shares have become transferable by the holders. Options
awarded under the Assumed CableSoft Plans that are forfeited or cancelled will
no longer be available for issuance under Assumed CableSoft Plans, and no new
options will be granted to employees under the Assumed CableSoft Plans.

2000 Exchange Plan

   Our board of directors adopted the OpenTV Corp. 2000 Exchange Plan in May
2000 and amended and restated the plan in August 2000. This exchange plan was
adopted for the purpose of allowing holders of shares of OpenTV, Inc. common
stock acquired pursuant to the exercise of options granted under the 1998 Plan
the ability to exchange such shares at their election for OpenTV Corp. Class A
Ordinary Shares, generally on a one-for-one basis subject to customary
antidilution adjustments, pursuant to the exercise of exchange rights granted
under the exchange plan. Such exchange rights may be exercised at any time
from the date of grant through May 12, 2015.

   As of December 31, 2000, 385,103 shares of OpenTV, Inc. common stock had
been exchanged, and 385,103 OpenTV Corp. Class A Ordinary Shares had been
issued, under the exchange plan. In addition, a total of 1,118,872 shares of
OpenTV, Inc. common stock held as of that date by certain of our employees and
former employees were eligible for exchange pursuant to exercise of exchange
grants under the exchange plan.

   As of December 31, 2000, a total of 159,000 shares of OpenTV, Inc. common
stock were issuable pursuant to the exercise of options granted to certain of
our employees and former employees under the 1998 Plan. Upon issuance, the
shares of OpenTV, Inc. common stock issuable upon the exercise of those
options will be eligible for exchange pursuant to the exercise of exchange
rights granted under the exchange plan.

1999 Employee Stock Purchase Plan

   The board of directors of OpenTV, Inc. and OpenTV Corp. adopted the OpenTV
Inc. 1999 Employee Stock Purchase Plan in October 1999 and the shareholders of
OpenTV Corp. and the shareholders of OpenTV, Inc. approved the plan in
November 1999. The purchase plan was amended and restated by the board of
directors of OpenTV, Inc. in January 2001, and the amended and restated plan
was adopted by the board of directors of OpenTV Corp. in March 2001.

                                      41
<PAGE>

   Share Reserve. 500,000 Class A Ordinary Shares have been reserved for
issuance under the purchase plan in 2001. The purchase plan provides that on
December 31, 2001 and on December 31 of each of the next seven years the
number of shares in the reserve automatically will be increased by the lower
of:

  .  5% of our outstanding shares on a fully-diluted basis

  .  500,000 shares

  .  a smaller number of shares as determined by the board

Consistent with the foregoing, the board has determined that the number of
shares in the reserve automatically will be reset at 500,000 (as adjusted to
reflect any stock split that from time to time may be effected) on each
December 31 for issuance during the following year.

   Eligibility. The purchase plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Code. The purchase plan
provides a means by which employees may purchase our Class A Ordinary Shares
through payroll deductions. The purchase plan is implemented by offerings of
purchase rights to eligible employees. Generally, all full-time employees who
have been employed for at least ten days may participate in the purchase plan.
However, no employee may participate in the purchase plan if immediately after
we grant the employee a purchase right, the employee has voting power over, or
the value of, 5% or more of our outstanding capital stock or the capital stock
of any parent company or subsidiary of OpenTV Corp.

   Administration. The board of OpenTV Corp. is responsible for administering
the purchase plan, unless such responsibilities are delegated to a committee
of the board. The board has the authority to construe, interpret and amend the
purchase plan. Under the purchase plan, the board may specify offerings of up
to 27 months in length. The first offering will begin on the effective date of
these offerings. Unless the board otherwise determines, Ordinary Shares are
purchased for accounts of participating employees at a price per share equal
to the lower of:

  .  85% of the fair market value of a share on the first day of the
     offering; or

  .  85% of the fair market value of a share on the purchase date.

   The fair market value of the shares on the first date of our first offering
period was $20 per share, at which price our Class A Ordinary Shares were
first sold to the public in our initial public offering. Otherwise, fair
market value generally means the closing sales price (rounded up where
necessary to the nearest whole cent) for such shares (or closing bid, if no
sales were reported) as quoted on the Nasdaq National Market on the trading
day prior to the relevant determination date, as reported in The Wall Street
Journal.

   The board may provide that employees who become eligible to participate
after the offering period begins nevertheless may enroll in the offering.

   Participating employees may authorize payroll deductions of up to 15% of
their base compensation for the purchase of shares under the purchase plan.
Employees may end their participation in the offering at any time up to ten
days before a purchase date. Participation ends automatically on termination
of employment with us or our affiliates.

   Other Provisions. Our board may grant eligible employees purchase rights
under this plan only if the purchase rights together with any other purchase
rights granted under other employee stock purchase plans established by us or
our affiliates do not permit the employee's rights to purchase our Class A
Ordinary Shares to accrue at a rate which exceeds $25,000 of the fair market
value of our Class A Ordinary Shares for each

                                      42
<PAGE>

calendar year in which the purchase rights are outstanding. Transactions not
involving OpenTV's receipt of consideration, such as a merger, consolidation,
reorganization, stock dividend or stock split, may change the class and number
of shares subject to the purchase plan and to outstanding options. In that
event, our board will appropriately adjust the purchase plan as to the class
and the maximum number of shares subject to the purchase plan. We will also
adjust outstanding rights as to class, number of shares and purchase limits of
such outstanding rights.

   Upon a change in control of us, our board may provide that the successor
corporation will assume or substitute for outstanding purchase rights.
Alternatively, its board may shorten the offering period and provide that our
shares will be purchased for the participants immediately before the change in
control.

   Shares Issued. To date, a total of 100,186 of our Class A Ordinary Shares
have been issued pursuant to purchase rights granted under the purchase plan.

   Termination. The purchase plan will terminate on December 31, 2009 unless
the board terminates it sooner.

401(k) Plan

   We maintain the OpenTV, Inc. 401(k) Plan for eligible United States
employees. In order to be a participant in the 401(k) plan, an employee must
have attained age 21. A participant may contribute up to the lesser of 25% of
his/her total annual compensation or the statutorily prescribed annual limit.
The annual limit for 2000 was $10,500. We may make discretionary contributions
as a percentage of participants' contributions, subject to established
conditions and limits. The 401(k) plan is intended to qualify under Section
401 of the Internal Revenue Code, so that contributions by us or our employees
to the 401(k) plan, and income earned on the 401(k) plan contributions, are
not taxable to employees until withdrawn, and so that our contributions, if
any, will be deductible by us when made.

Cash Bonus Plan

   Certain of our employees and executive officers are eligible to participate
in our cash bonus plan. This plan is an annual incentive award plan that
provides for a target bonus equal to a specified percentage of base salary for
each participant. The actual bonus earned may be higher or lower depending on
the extent to which company and individual performance objectives are
achieved. Typically, the compensation committee or the board of directors
reviews and approves the performance objectives for the company and individual
officers. Our objectives consist of operating, strategic and financial goals
that are considered critical to our fundamental long-term goal of building
shareholder value.

   The compensation committee or board of directors determines actual bonus
awards based on the degree to which we have met corporate goals and
participants have met their individual goals. Typically, awards are paid in
cash in January or February following the performance year.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders.

   The table below sets forth certain information as of December 31, 2000 with
respect to the beneficial ownership of each class of our voting securities by
(1) each person who is known by us to be the beneficial owner of more than 5%
of any class of our voting securities, and (2) all directors and executive
officers as a group. Except as otherwise indicated, and subject to applicable
community property laws, the persons named in this table have sole voting and
investment power with respect to all Ordinary Shares held by them. Applicable
percentage ownership in the following table is based on 34,829,632 Class A
Ordinary Shares and 30,631,746 Class B Ordinary Shares outstanding as of
December 31, 2000.


                                      43
<PAGE>

   Beneficial ownership of Ordinary Shares is determined in accordance with
the rules of the SEC and generally includes any Ordinary Shares over which a
person exercises sole or shared voting or investment powers, or of which a
person has a right to acquire ownership at any time within 60 days of December
31, 2000. In particular, the beneficial ownership of Class A Ordinary Shares
for each shareholder shown below includes the number of Class B Ordinary
Shares for each shareholder, which may be exchanged into Class A Ordinary
Shares on a one-for-one basis, held by the beneficial owners noted.

Class A Ordinary Shares

<TABLE>
<CAPTION>
                                                     Shares beneficially
                                                            owned
                                                     -----------------------
                                                                    Percent
                                                       Number       of Class
                                                     ----------     --------
   <S>                                               <C>            <C>
   Beneficial Owner
   MIH Limited(1)................................... 30,571,614 (2)   47.0
   Sun Microsystems(3)..............................  8,495,696 (4)   20.0
   Motorola(5)......................................  5,388,650 (6)   14.9
   AOL Time Warner(7)...............................  3,701,319 (8)   10.3
   Capital Group International, Inc.(9).............  2,421,600        7.0
   EchoStar Communications..........................  2,252,252        6.5
   Liberty Digital..................................  2,252,252(10)    5.4
   Directors and officers as a group (11
    persons)(11).................................... 33,739,062       50.5

Class B Ordinary Shares

<CAPTION>
                                                     Shares beneficially
                                                            owned
                                                     -----------------------
                                                                    Percent
                                                       Number       of Class
                                                     ----------     --------
   <S>                                               <C>            <C>
   Beneficial Owner
   MIH Limited(1)................................... 30,206,154       98.6
   Sun Microsystems(3)..............................  7,594,796       19.9(12)
   Directors and officers as a group (11
    persons)(13).................................... 30,510,150       99.6
</TABLE>
--------
  * Less than 1%.

 (1) MIH Limited holds its shares through its wholly-owned subsidiary, OTV
     Holdings Limited.

 (2) Includes 30,206,154 Class B Ordinary Shares, which may be exchanged into
     Class A Ordinary Shares generally on a one-for-one basis.

 (3) Sun Microsystems, Inc. holds its shares through its wholly-owned
     subsidiary, Sun TSI Subsidiary, Inc.

 (4) Includes 7,594,796 shares of Class B Common Stock of OpenTV Inc., which
     may be exchanged into Class B Ordinary Shares of OpenTV Corp. generally
     on a one-for-one basis and then exchanged into Class A Ordinary Shares of
     OpenTV Corp. generally on a one-for-one basis.

 (5) Motorola holds its shares through its wholly-owned subsidiary, General
     Instrument Corporation.

 (6) Includes 1,481,970 Class A Ordinary Shares subject to exercisable
     warrants, but does not include an additional 175,000 Class A Ordinary
     Shares subject to warrants that are not exercisable. Also includes
     121,596 Class B Ordinary Shares, which may be exchanged into Class A
     Ordinary Shares generally on a one-for-one basis.

 (7) AOL Time Warner holds its shares through its subsidiaries, America
     Online, Inc. and TWI OTV Holdings, Inc.

 (8) Includes 1,126,126 Class A Ordinary Shares subject to exercisable
     warrants.

 (9) Represents shares deemed to be beneficially owned by Capital Group
     International, Inc. and Capital Guardian Trust Company, which is a
     wholly-owned subsidiary of Capital Group International. Although Capital
     Group International does not have any investment or voting power over
     these shares, it may be deemed to be the beneficial owner of these
     shares.

                                      44
<PAGE>

(10) Includes 1,126,126 Class A Ordinary Shares subject to exercisable
     warrants and 303,996 Class B Ordinary Shares, which may be exchanged into
     Class A Ordinary Shares generally on a one-for-one basis.

(11) Includes 1,126,126 Class A Ordinary Shares. 1,126,126 Class A Ordinary
     Shares subject to exercisable warrants and 303,996 Class B Ordinary
     Shares, which may be exchanged into Class A Ordinary Shares generally on
     a one-for-one basis, held by Liberty Digital, and 30,206,154 Class B
     Ordinary Shares, which may be exchanged into Class A Ordinary Shares
     generally on a one-for-one basis, held by MIH Limited with respect to
     which we believe certain of our directors may have or share the power to
     vote, or to direct the voting of, such securities. If these shares are
     not included in the beneficial ownership calculations then the directors
     and officers as a group would be deemed to hold 976,660 Class A Ordinary
     Shares, which represents 2.7% of that Class.

(12) Represents 7,594,796 shares of Class B Common Stock of OpenTV, Inc.,
     which may be exchanged into Class B Ordinary Shares of OpenTV Corp.,
     generally on a one-for-one basis.

(13) Includes 303,996 and 30,206,154 Class B Ordinary Shares, which may be
     exchanged into Class A Ordinary Shares generally on a one-for-one basis,
     held by Liberty Digital and MIH Limited, respectively, with respect to
     which we believe certain of our directors may have or share the power to
     vote, or to direct the voting of, such securities. If these shares are
     not included in the beneficial ownership calculations then the directors
     and officers as a group would be deemed to hold no Class B Ordinary
     Shares.

Significant Changes in Ownership

   In the last three years, none of the major shareholders listed in the table
above has significantly changed its respective percentage ownership except as
follows:

  .  AOL Time Warner became the holding company for America Online, Inc. and
     Time Warner, Inc., each of which is a beneficial owner of our Class A
     Ordinary Shares, in a holding company formation transaction that was
     effective as of January 11, 2001. After giving effect to this
     transaction, AOL Time Warner is deemed to be the beneficial owner of
     3,701,319 Class A Ordinary Shares beneficially owned by America Online
     and Time Warner, representing 10.3% of the Class, as of December 31,
     2000.

  .  Motorola increased its beneficial ownership from approximately
     1,075,900, or 6.1%, of our Class A Ordinary Shares as of December 31,
     1999 to a total of 5,388,650, or 14.9%, of our Class A Ordinary Shares
     as of December 31, 2000. This increase was due primarily to our
     acquisitions of Spyglass and CableSoft (General Instrument Corporation,
     which is a subsidiary of Motorola, was a shareholder and warrantholder
     in Spyglass, and a shareholder of CableSoft), the formation of our
     Spyglass Integration venture with General Instrument and General
     Instrument's purchase of shares from News America Incorporated.

  .  As indicated in their Schedule 13G filed with the Securities and
     Exchange Commission on February 12, 2001, Capital Guardian Trust Company
     and Capital Group International, Inc. may be deemed to be the beneficial
     owner of 2,421,600 Class A Ordinary Shares, or 7.0% of that Class, as of
     December 31, 2000.

Control of OpenTV

   As of December 31, 2000, MIH Limited indirectly owned 98.6% of our
outstanding Class B Ordinary Shares and 0.1% of our Class A Ordinary Shares,
collectively representing 89.7% of the voting rights with respect to our
Ordinary Shares. MIH Limited, which is publicly traded on the Nasdaq National
Market and on Euronext Amsterdam N.V.'s stock market is controlled by MIH
Holdings Limited, which is in turn controlled by Naspers Limited. Both MIH
Holdings and Naspers are publicly traded on the Johannesburg Stock Exchange.
As a result of its ownership of our Ordinary Shares, MIH Limited and its
parent companies effectively control us and have sufficient voting power,
without the vote of any other shareholder, to determine the outcome of any

                                      45
<PAGE>

action requiring approval of our shareholders, including amendments of our
Articles of Association and Memorandum of Association for any purpose (which
could include increasing or reducing our authorized capital or authorizing the
issuance of additional shares).

   MIH Limited has agreed not to cause us to take specified actions without
the consent of certain of our shareholders. Subject to those limitations, MIH
Limited controls how OpenTV Corp. votes its shares of OpenTV, Inc. We engage
in transactions with subsidiaries of MIH Limited and its parent companies in
the ordinary course of business.

B. Related Party Transactions.

   The following describes the significant transactions entered into between
us and our related parties during the last fiscal year.

Private Placement of Series C Preference Shares and Related Warrants

   In October 1999, we completed a private placement of 4,729,728 Series C-1
Convertible Preference Shares at $5.55 per share, 900,900 Series C-2
Convertible Preference Shares at $5.55 per share, and warrants to purchase
4,729,728 Class A Ordinary Shares (expiring in October 2001) at $5.55 per
share to America Online, Inc., General Instrument Corporation, and
subsidiaries of Liberty Digital, Inc., News Corporation, Time Warner, Inc. and
Sun Microsystems, Inc. The Series C-1 Convertible Preference Shares and Series
C-2 Convertible Preference shares converted into 5,630,628 Class A Ordinary
Shares at the time of our public offering. In connection with the investments,
OpenTV entered into strategic agreements with America Online Inc., General
Instrument Corporation, News Corporation and Time Warner, Inc.

   Our board of directors in October 2000 authorized amendment of the warrants
to provide for a "cashless" exercise feature, pursuant to which a portion of
the shares underlying the warrant would be withheld in lieu of and in
substitution for payment of the applicable exercise price.

   In October 2000, we received $6,250,000 from a subsidiary of News
Corporation in connection with the exercise of warrants to purchase 1,126,126
Class A Ordinary Shares. In December 2000, we issued 548,167 Class A Ordinary
Shares to America Online, Inc. in exchange for the "cashless" exercise of
warrants to purchase 900,900 Class A Ordinary Shares.

Executive Officer Loan

   On June 9, 2000, we entered into an employment agreement with James
Ackerman, our President and Chief Executive Officer. As part of this
agreement, we loaned Mr. Ackerman $2,408,042.72 in connection with the
purchase of a home. Twenty-five percent of the loan amount (or $602,010.68)
was forgiven by us on January 1, 2001, and the balance thereafter will be
forgiven in annual installments of $602,010.68 over a period of three years
provided that Mr. Ackerman continues to be employed by us.

Technology License and Distribution Agreement with Sun

   In March 1998, we entered into a licensing and distribution agreement with
Sun under which Sun granted us a non-exclusive, non-transferable license to
develop and distribute products based upon Sun's Java technology. In June
1999, we amended the agreement and committed to develop future versions of the
OpenTV Runtime software incorporating Sun's Java technology and compatible
with the appropriate JavaTV application programming interfaces. In December
2000, we further amended the agreement and extended our rights and payment
obligations to Sun for license, support and royalty fees through December 31,
2006.

C. Interests of Experts and Counsel.

   Not Applicable.

                                      46
<PAGE>

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information.

   See Item 18.

B. Legal Proceedings

   There are no material legal proceedings against us.

C. Significant Changes.

   There have been no significant changes since the date of the financial
statements included in this annual report.

ITEM 9. THE OFFER AND LISTING

          PRICE RANGE OF CLASS A ORDINARY SHARES AND TRADING MARKETS

   Our Class A Ordinary Shares began trading on the Nasdaq National Market and
the AEX under the symbol "OPTV" on November 23, 1999. The following table
lists the high and low closing prices on both the Nasdaq National Market and
the AEX for the periods indicated.

<TABLE>
<CAPTION>
                                                       Nasdaq
                                                      National
                                                       Market          AEX
                                                   -------------- --------------
                                                    High    Low    High    Low
                                                   ------- ------ ------- ------
<S>                                                <C>     <C>    <C>     <C>
Fiscal 1999:
 Fourth Quarter (from November 23, 1999).......... $ 89.81 $55.37 $ 92.00 $55.00
 Annual...........................................   89.81  55.37   92.00  55.00

Fiscal 2000:
 First Quarter....................................  226.00  73.81  226.50  73.50
 Second Quarter...................................   86.31  36.50  108.50  39.25
 Third Quarter....................................   69.43  30.37   67.00  33.80
 Fourth Quarter...................................   33.18   9.25   35.45  10.50
 Annual...........................................  226.00   9.25  226.50  10.50
Months ended:
 October 31, 2000.................................   33.19  23.12   35.45  23.00
 November 30, 2000................................   29.00  18.69   28.95  18.40
 December 31, 2000................................   19.06   9.25   20.00  10.50
 January 31, 2001.................................   23.81   8.43   23.40   8.40
 February 28, 2001................................   21.56  16.50   21.75  15.75
 March 31, 2001...................................   17.25   9.43   17.40   9.60
</TABLE>

   On April 12, 2001 the last reported sale price for our Class A Ordinary
Shares was $9.00 on the Nasdaq National Market and $8.90 on the AEX.

A. Plan of Distribution.

   Not Applicable.

B. Markets.

   Not Applicable.

                                      47
<PAGE>

C. Selling Shareholders.

   Not Applicable

D. Dilution.

   Not Applicable.

E. Expenses of the Issue.

   Not Applicable.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital.

   Not Applicable.

B. Articles of Association and Memorandum of Association of Association.

Objects and Purposes

   Our objects and purposes are described in Clause 4 of our Memorandum of
Association and are generally to engage in any act or activity that is not
prohibited under the laws of the British Virgin Islands.

Directors

   British Virgin Islands law and our Memorandum of Association and Articles
of Association provide that no agreement or transaction between OpenTV Corp.
and one or more of its directors or any entity in which any director has a
financial interest or to whom any director is related including as a director
of that other entity is void or voidable for this reason only or by reason
only that the director is present at the meeting of directors, or at the
meeting of the committee of directors, that approves the agreement or
transaction or that the vote or consent of the director is counted for the
purpose if the material facts of the interest of each director in the
agreement or transaction and his or her interest in or relationship to any
other party to the agreement or transaction are disclosed in good faith or are
known by the other directors and all disinterested directors, who are not of a
number sufficient to approve a resolution, approve such transaction.
Alternatively, the interest in the transaction may be disclosed or known to or
ratified by the shareholders. In addition, a director who has an interest in
any particular business to be considered at a meeting of directors or
shareholders may be counted for the purposes of determining whether the
meeting is duly constituted.

   Subject to the provisions detailed in the preceding paragraph in respect of
declarations of interest by directors, our Articles of Association provide
that the directors may, subject to the prior or subsequent approval by a
resolution of shareholders, fix the emoluments of directors with respect to
services to be rendered in any capacity to us. In addition, our Articles of
Association specifically state that directors shall be paid all travelling and
other expenses properly and necessarily incurred by them in and about the
business of the company, and in attending meetings of the directors or
committees thereof, and if any director shall be required to perform extra
services or otherwise shall be specially occupied about the company's
business, he or she shall be entitled to receive a remuneration fixed by a
disinterested quorum of the directors which may be either in addition to or in
substitution for the remuneration provided for above.

   British Virgin Islands law and our Articles of Association provide that the
management of the business and the control of OpenTV Corp. shall be vested in
the directors, who in addition to the powers and authorities expressly
conferred by the Articles of Association, may also exercise all such powers,
and do all such acts and things, as may be done by OpenTV Corp. and are not by
the Articles of Association of British Virgin Islands

                                      48
<PAGE>

law expressly directed or required to be exercised or done by a meeting of
shareholders. Our Articles of Association expressly provide that the directors
may by resolution exercise all the powers of OpenTV Corp. to borrow money and
to mortgage or charge its undertakings and property or any part thereof, to
issue debentures, debenture stock and other securities whenever money is
borrowed or as security for any debt, liability or obligation of OpenTV Corp.
or of any third party.

   Our Memorandum of Association provides that amendments to our Memorandum of
Association and Articles of Association may be made by resolution of members
or directors. Pursuant to the provisions of Clause 13.2.1 of our Memorandum of
Association, however, alterations, amendments, repeals or adoption of
provisions which are inconsistent with various provisions of the Memorandum of
Association and Articles of Association detailed therein, requires the
affirmative vote of the holders of 66% or more of the combined votes of all
the then outstanding Ordinary Shares voting together as a single class, or the
affirmative vote of 66 2/3 of the total number of directors (each, a
"Supermajority Vote"). Amendments to the provisions containing OpenTV Corp.'s
powers, by way of resolution of directors, to borrow money do not require such
a Supermajority Vote.

   British Virgin Islands law and our Memorandum of Association and Articles
of Association do not contain an age limit requirement for our directors. Our
Articles of Association provide that the directors shall be elected by the
shareholders and that the term of each director shall expire at the next
annual meeting the shareholders following the director's election.

Rights of Shareholders

   Our Articles of Association and Memorandum of Association authorize the
issuance of up to: (1) 500,000,000 Class A Ordinary Shares, (2) 200,000,000
Class B Ordinary Shares and (3) 500,000,000 preference shares. We do not have
any preference shares currently outstanding.

   Dividend Rights. Subject to the preferential and other dividend rights of
any outstanding series of preference shares, the holders of our Class A
Ordinary Shares and our Class B Ordinary Shares will be entitled to equal
dividends per share when, as and if declared by our board of directors, except
that all dividends payable in Ordinary Shares will be paid in the form of our
Class A Ordinary Shares to holders of our Class A Ordinary Shares and in the
form of our Class B Ordinary Shares to holders of our Class B Ordinary Shares.
Neither our Class A Ordinary Shares nor our Class B Ordinary Shares may be
split, divided or combined unless the other Class is proportionally split,
divided or combined. According to our Articles of Association and Memorandum
of Association, all dividends that remain unclaimed for a period of three
years after their declaration may be forfeited by our board of directors for
our benefit.

   Voting Rights. The holders of our Class A Ordinary Shares and our Class B
Ordinary Shares will generally be entitled to vote as a single Class on all
matters upon which holders of our Ordinary Shares have a right to vote,
subject to the requirements of any applicable laws. Each of our Class A
Ordinary Shares entitles its holder to one vote, and each of our Class B
Ordinary Shares entitles its holder to ten votes. Our board of directors is
not classified and all the directors stand for reelection at the same
interval.

   Liquidation Rights. In the event we are liquidated or wound up, the holders
of our Class A Ordinary Shares and Class B Ordinary Shares will be treated
equally on a per share basis and will be entitled to receive all of our
remaining assets following distribution of the preferential and/or other
amounts to be distributed to the holders of our preference shares.

   Other Provisions. We have no provisions in our Memorandum of Association
and Articles of Association for redemption, sinking fund provisions, or
providing that any shareholder has a right to share in the Company's profits.
Both of our Class A Ordinary Shares and our Class B Ordinary Shares are not
subject to further capital calls by the Company. We have no provisions in our
Memorandum of Association, Articles of Association or our bylaws which
discriminate against any existing or prospective holder of either Class of our
Ordinary Shares as a result of the existing or prospective holder's owning a
substantial number of either Class of our Ordinary Shares.


                                      49
<PAGE>

Changes to Rights of Shareholders

   The rights of our shareholders are governed by our Articles of Association
and Memorandum of Association, which must be amended in order to change the
rights of our shareholders. The affirmative vote of at least 66 2/3% of the
voting power of all outstanding shares of capital stock or 66 2/3% of the
members of our board of directors entitled to vote must approve amending or
repealing certain provisions of our Articles of Association and Memorandum of
Association, including those described in this section under "Certain Anti-
Takeover Matters."

Annual, General and Extraordinary Meetings of Shareholders

   British Virgin Islands law does not require an international business
company, such as us, to have an annual meeting. Our Articles of Association
do, however, require an annual meeting of shareholders for the election of
directors and for such other business as may come before the meeting.

   Under British Virgin Islands law, unless otherwise provided by a company's
Memorandum of Association or Articles of Association, the directors may call
meetings of shareholders at any time. Directors are required to call meetings
upon a written request from the members holding more than 50% of outstanding
voting shares. Our Articles of Association provide that extraordinary or
special meetings of shareholders may be called only by a resolution of
directors or by the chief executive officer.

   Our Articles of Association state that the directors may fix the date that
notice is given of a meeting of shareholders, whether extraordinary or annual,
as the record date for determining those shares that are entitled to vote at
the meeting.

   Our Articles of Association provide that written notice of all meetings of
shareholders, stating the time, place and purposes thereof, shall be given not
fewer than ten days before the date of the proposed meeting to those persons
whose names appear as shareholders in our share register on the date of the
notice and are entitled to vote at the meeting. However, in general, a meeting
of shareholders may be called on shorter notice if at least 90% of the total
number of shares consent or shareholders holding such number of shares waiver
the right to notice.

Limitations on Share Ownership

   British Virgin Islands law and our Memorandum of Association and Articles
of Association do not impose any limitations on the right of anyone to own,
hold or exercising voting rights to our Class A or Class B Ordinary Shares.
BVI law does not impose any limitation on the rights of non-resident or
foreign shareholders to hold or exercise voting rights on our Class A or Class
B Ordinary Shares.

Ownership Information

   British Virgin Islands law and our Articles of Association and Memorandum
of Association do not provide that information about our shareholders, even
those owning significant percentages of our shares, must be disclosed.

Limitation of Liability

   Our Articles of Association and Memorandum of Association provide that, to
the fullest extent permitted by British Virgin Islands law or any other
applicable laws, our directors will not be personally liable to us or our
shareholders for any acts or omissions in the performance of their duties.
Such limitation of liability does not affect the availability of equitable
remedies such as injunctive relief or rescission. These provisions will not
limit the liability of our directors under United States federal securities
laws.

                                      50
<PAGE>

Certain Anti-Takeover Matters

   Our Articles of Association and Memorandum of Association include a number
of provisions that may have the effect of encouraging persons considering
unsolicited tender offers or other unilateral takeover proposals to negotiate
with our board of directors rather than pursue non-negotiated takeover
attempts. These provisions are discussed in greater detail below and include a
dual Class voting stock, the inability of shareholders to act by written
consent or call a special meeting of the shareholders unilaterally, although
shareholders holding the requisite number of votes can cause a meeting to be
called by the directors, as described further in the provisions of Section
59(2) of the International Business Companies Act and the statement under the
Annual, General and Extraordinary Meetings of Shareholders heading above, an
advance notice requirement for director nominations and other actions to be
taken at annual meetings of shareholders, the requirements for approval by 66
2/3% of the shareholder votes to amend certain provisions of our Articles of
Association and Memorandum of Association, removal of a director only for
cause and the availability of authorized but unissued blank check preference
shares.

   Dual Class Voting Stock. Our Class B Ordinary Shares are entitled to ten
votes per share and our Class A Ordinary Shares are entitled to one vote per
share. Our Class B Ordinary Shares represent 89.8% of the voting power of all
our Ordinary Shares even though they represent only 46.8% of our economic
interests. Since MIH Limited indirectly owns substantially all of our
outstanding Class B Ordinary Shares, it will have effective control over any
proposals to acquire us, rendering futile any attempts to pursue unsolicited
tender offers or takeover attempts without negotiation with MIH Limited.

   No Shareholder Action by Written Consent; Special Meetings Callable Only by
Board or Chief Executive Officer. Our Articles of Association and Memorandum
of Association prohibit shareholders from taking action by written consent in
lieu of an annual or special meeting, and, thus, shareholders may take action
only at an annual or special meeting called in accordance with our Articles of
Association and Memorandum of Association. Our Articles of Association and
Memorandum of Association provide that special meetings of shareholders may
only be called by the direction of our board of directors pursuant to a
resolution adopted by our board of directors or by our chief executive
officer. These provisions could have the effect of delaying consideration of a
shareholder proposal. The provisions would also prevent the holders of a
majority of the voting power of our Ordinary Shares entitled to vote from
unilaterally using the written consent procedure to take shareholder action.

   Advance Notice Requirement. Our Articles of Association and Memorandum of
Association set forth advance notice procedures with regard to shareholder
proposals relating to the nomination of candidates for election as directors
or new business to be presented at meetings of shareholders. These procedures
provide that notice of such shareholder proposals must be timely given in
writing to our secretary prior to the meeting at which the action is to be
taken. Generally, to be timely, notice must be received at our principal
executive offices not less than 30 days nor more than 60 days prior to the
meeting. The advance notice requirement does not give our board of directors
any power to approve or disapprove shareholder director nominations or
proposals but may have the effect of precluding the consideration of certain
business at a meeting if the proper notice procedures are not followed.

   Amendment of Articles of Association and Memorandum of Association. Our
Articles of Association and Memorandum of Association require the affirmative
vote of at least 66% or more of the combined votes of all the outstanding
shares of capital stock or 66 2/3% of the members of our board of directors
entitled to vote to amend or repeal certain provisions of our Articles of
Association and Memorandum of Association, including those described in this
section entitled Certain Anti-Takeover Matters, or to approve any merger by us
that would have the effect of making changes in our Articles of Association
and Memorandum of Association which would have required such affirmative vote
if effected directly as an amendment. This requirement will render more
difficult any proposal to dilute the anti-takeover provisions of our Articles
of Association and Memorandum of Association.

   Removal of Directors Only for Cause. Our Articles of Association and
Memorandum of Association permit shareholders to remove directors only for
cause and then only by the affirmative vote of the holders of a

                                      51
<PAGE>

majority of the voting power of the Ordinary Shares. This provision may
restrict the ability of a third party to remove incumbent directors and
simultaneously gain control of our board of directors by filling the vacancies
created by removal with its own nominees.

   Preference Shares. Our Articles of Association and Memorandum of
Association provide for authorized preference shares, none of which are
outstanding. The existence of authorized but unissued preference shares may
enable our board of directors to render more difficult or discourage an
attempt to obtain control of us by means of a merger, tender offer, proxy
contest or otherwise. For example, if in the due exercise of its fiduciary
obligation our board of directors were to determine that a takeover proposal
is not in our best interests, our board of directors could cause preference
shares to be issued without shareholder approval in one or more private
offerings or other transactions that might dilute the voting or other rights
of the proposed acquirer or insurgent shareholder or shareholder group. In
this regard, our Articles of Association and Memorandum of Association grant
our board of directors broad power to establish the rights and preferences of
authorized and unissued preference shares. The issuance of preference shares
pursuant to our board of directors' authority described above could decrease
the amount of earnings and assets available for distribution to you and
adversely affect the enjoyment of rights of such holders, including voting
rights in the event a particular series of preference shares is given a
disproportionately large number of votes per share, and may have the effect of
delaying, deferring or preventing a change in control that may be favored by
certain shareholders.

Differences from United States Law

   The laws of the BVI governing the provisions of our Articles of Association
and Memorandum of Association discussed above are not significantly different
than the laws governing similar provisions in the charter documents of
Delaware companies, other than with respect to the holding of an annual
meeting for our shareholders and the amendment of our Memorandum of
Association. We are not required by the law of the BVI to hold an annual
meeting for our shareholders but we would be required to hold an annual
meeting if were incorporated under Delaware law. As our Articles of
Association require us to hold an annual meeting, this difference does not
currently create a difference between the rights of our shareholders and those
of shareholders in a Delaware corporation. If we were to eliminate our annual
meeting, then the ability of our shareholders to submit and vote on proposals
would be significantly less than that of shareholders in U.S. companies
incorporated in Delaware. In addition our board of directors may amend our
Memorandum of Association under certain circumstances without shareholder
approval, whereas Delaware law requires shareholders to approve any amendments
to a corporation's Certificate of Incorporation.

C. Material Contracts.

Material Agreements Described under Item 4.A in this Annual Report

  .  Agreement and Plan of Merger and Reorganization by and among OpenTV
     Corp., Sonnet Acquisition Corp. and Spyglass, Inc. dated as of March 26,
     2000.

  .  Agreement and Plan of Merger dated as of November 13, 2000 among OpenTV
     Corp., CableSoft Acquisition Company, CableSoft Corporation and the
     Selling Stockholders.

Material Agreements Described under Item 7.B in this Annual Report

  .  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.

  .  First Amendment to Technology License and Distribution Agreement between
     Sun Microsystems, Inc. and OpenTV, Inc., dated June 30, 1999.

  .  Second Amendment to Technology License and Distribution Agreement
     between Sun Microsystems, Inc. and OpenTV, Inc., dated December 20,
     2000.

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Other Material Agreements

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.

   In the following description, we refer to OTV Holdings Limited (a
subsidiary of MIH Limited) and Sun TSI Subsidiary (a subsidiary of Sun
Microsystems) as the existing investors, and to America Online, General
Instrument, LDIG OTV (a subsidiary of Liberty Digital) and TWI-OTV Holdings (a
subsidiary of Time Warner) as the new investors. Although News America
Incorporated is a party to the Investors' Rights Agreement, it is not referred
to as a new investor below because it sold its entire interest in OpenTV to
General Instrument Corporation and MIH Limited in separate transactions that
were completed in September 2000 and October 2000, respectively.

   The Investors' Rights Agreement contains the following provisions:

   Board of Directors. The existing investors and the new investors have
agreed to vote their shares so that our board of directors has the following
composition:


  .  so long as the new investors own Ordinary Shares equal to at least 60%
     of the issued amount, two directors designated by the new investors

  .  so long as the new investors own Ordinary Shares equal to at least 30%
     of the issued amount, one director designated by the new investors

  .  so long as Sun TSI Subsidiary owns shares equal to at least 30% of the
     aggregate amount of Class B Ordinary Shares issuable in respect of their
     shares of Class B Common Stock of OpenTV, Inc., one director designated
     by Sun TSI Subsidiary

  .  a majority of the directors designated by OTV Holdings Limited

   The voting agreement will terminate no later than October 1, 2009.
Consistent with the foregoing, OTV Holdings Limited designees (Messrs.
Stofberg, Bekker, Rosenzweig, Ward and Raduchel) presently hold five seats and
a new investor designee (Mr. Enenstein) presently holds one seat on our board
of directors. Of the two present vacancies on our board of directors, Sun TSI
Subsidiary and the new investors each have the right to designate one person
to fill one of the vacancies.

   Veto Rights. For a period not to exceed two years (other than with respect
to the required consent for affiliate transactions, which survives until the
earlier of a change of control or the new investors ceasing to own 50% of the
issued number) after November 29, 1999 without the consent of the new
investors, we may not:


  .  enter into a merger, reorganization, sale of all or substantially all of
     our assets or liquidation

  .  enter into affiliate transactions that are not on arms-length terms and
     that provide for aggregate compensation or consideration of more than
     $500,000 in any fiscal year

  .  other than issuances of Class B Ordinary Shares to Sun TSI Subsidiary
     pursuant to the Exchange Agreement and issuances of Class A Ordinary
     Shares to holders of OpenTV, Inc. common stock pursuant to exchange
     rights granted to such individuals, issue any equity securities having
     voting rights superior to our Class A Ordinary Shares

  .  increase the number of Class A Ordinary Shares eligible for the employee
     stock option plan and employee stock purchase plan in excess of 4.4
     million

  .  issue equity securities at a per share price that is less than $5.55 per
     share

  .  devote substantial resources to any line of business outside our
     existing business

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<PAGE>

   So long as the new investors have the right to designate two directors and
at least one of their directors is on our board, we may not adopt new or make
material modifications to existing stock option and other equity compensation
plans without the approval of our board of directors, including the approval
of a director designated by the new investors.

   Transfers and Exchanges of Shares. Prior to transferring any equity
securities of OpenTV Corp. to a non-affiliate, MIH Limited must first offer
such shares to the new investors. The new investors' right of first refusal is
subject to Sun's right of first refusal in respect of such equity securities
pursuant to the Shareholders' Agreement. Prior to transferring any Class B
Ordinary Shares to a non-affiliate or converting any Class B Ordinary Shares
into Class A Ordinary Shares, the existing investors and any new investor that
acquires Class B Ordinary Shares must first offer to exchange such shares for
Class A Ordinary Shares held by the new investors.


   MIH Limited must make provision for the new investors to participate in any
transfer of shares by it that will result in a change of control of OpenTV
Corp.

   Prior to transferring any shares to a non-affiliate, the new investors must
offer such shares first, to the other new investors and, second, to MIH
Limited.

   Each of these restrictions is subject to specified exceptions.

   Transfers of Warrants.  Subject to an exception in the event a new investor
is unable to obtain government approval to exercise its warrants, the warrants
held by the new investors can only be transferred to other new investors.

   Registration Rights.  Each of the existing investors and the new investors
has certain rights to require us to register its shares.


Amended and Restated Shareholders' Agreement among OpenTV Corp., OpenTV Inc.,
OTV Holdings Limited, Sun Microsystems, Inc. and Sun TSI Subsidiary, Inc.,
dated October 23, 1999.

   This agreement contains the following provisions:

 Fundamental Business Decisions

  .  If our board of directors approves any of the following fundamental
     business decisions, it must submit the matter to Sun TSI Subsidiary
     (treating Sun TSI Subsidiary as though it had exchanged its common stock
     of OpenTV, Inc. for Ordinary Shares of OpenTV Corp.) and OTV Holdings
     Limited for their approval:

    (1)  any business combination involving a change of control of OpenTV
         Corp. (unless approved by a Sun TSI Subsidiary designee to our
         board of directors);

    (2) any change to our Memorandum of Association or Articles of
        Association that (a) adversely affects Sun TSI Subsidiary's rights
        under the Exchange Agreement described herein, (b) affects Sun TSI
        Subsidiary more adversely than OTV Holdings Limited or (c) would
        impact the intellectual property rights licensed by Sun to OpenTV,
        Inc.; or

    (3) any assignment or sublicensing of licensed Sun intellectual
        property made outside of the ordinary course of business.

  .  If the board of directors of OpenTV, Inc. approves any of the following
     fundamental business decisions, it must submit the matter to Sun TSI
     Subsidiary and to us for approval:

    (1)  any business combination involving a change of control of OpenTV,
         Inc. (unless approved by a Sun TSI Subsidiary designee to the
         OpenTV, Inc. board of directors);

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<PAGE>

    (2)  any change to the charter of OpenTV, Inc. that (a) adversely
         affects Sun TSI Subsidiary's rights under the Exchange Agreement
         described herein, (b) affects Sun TSI Subsidiary more adversely
         than us or (c) would impact the intellectual property rights
         licensed by Sun to OpenTV, Inc.; or

    (3)  any assignment or sublicensing of licensed Sun intellectual
         property made outside of the ordinary course of business.

  .  Fundamental business decisions relating to OpenTV Corp. require the
     affirmative vote of at least 95% of all votes in respect of our Ordinary
     Shares exercisable by OTV Holdings Limited and Sun TSI Subsidiary
     (treating Sun TSI Subsidiary as though it had exchanged all its common
     stock of OpenTV, Inc. for Ordinary Shares of OpenTV Corp.). Fundamental
     business decisions relating to OpenTV, Inc. require the affirmative vote
     of at least 95% of all votes in respect of OpenTV, Inc. common stock
     exercisable by us and Sun TSI Subsidiary. If the 95% test is not
     satisfied, a representative of ours and of Sun TSI Subsidiary must
     attempt to resolve the deadlock and, if they are unsuccessful, a
     representative of Sun and MIH Limited must attempt to resolve the
     deadlock. If the deadlock is not resolved within 31 days, then we may
     purchase, and if we elect not to or cannot purchase, then OTV Holdings
     Limited may purchase, all of the shares of OpenTV, Inc. and OpenTV Corp.
     held by Sun at their fair market value.

   Restrictions on Transfer of Shares by Sun TSI Subsidiary. Sun TSI
Subsidiary may not transfer any shares of OpenTV, Inc. other than: (1) in
exchange for shares of OpenTV Corp. pursuant to the terms of the Exchange
Agreement described herein, or (2) 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 Shareholders' Agreement.

   Term. The Amended and Restated Shareholders' Agreement terminates when Sun
TSI Subsidiary exchanges all its shares of common stock of OpenTV, Inc. for
Ordinary Shares of OpenTV Corp.

Shareholder's Agreement among OTV Holdings Limited, OpenTV Corp., and Sun TSI
Subsidiary, Inc. dated October 23, 1999.

   This agreement provides that, prior to transferring equity securities of
us, Sun TSI Subsidiary and OTV Holdings Limited will first offer such
securities to each other.

Convertible Preferred Stock Purchase Agreement between OpenTV Corp. and Sun
TSI Subsidiary, Inc., dated October 23, 1999.

   On October 23, 1999, we entered into this Stock Purchase Agreement with Sun
TSI Subsidiary whereby we sold 4,504,504 of our C-2 Convertible Preference
Shares, which converted into an equal number of Class A Ordinary Shares upon
completion of our initial public offering, to Sun TSI Subsidiary at a purchase
price of $4,999,999.

Exchange Agreement between OpenTV Corp., OpenTV, Inc. and Sun TSI Subsidiary,
Inc., dated October 23, 1999.

   In connection with the creation of OpenTV Corp., on October 23, 1999, we
entered into an Exchange Agreement with Sun TSI Subsidiary that permits Sun
TSI Subsidiary to exchange all or a portion of its shares of Class B Common
Stock of OpenTV, Inc. for our Class B Ordinary Shares. The rate of exchange,
which is subject to customary antidilution adjustments, is one Class B
Ordinary Share for one share of Class B Common Stock of OpenTV, Inc.

   We have agreed to reserve the number of our authorized but unissued Class B
Ordinary Shares as will be sufficient to permit the exchange in full of Sun
TSI Subsidiary's OpenTV, Inc. Class B Common Stock for our Class B Ordinary
Shares.

                                      55
<PAGE>

   In order to maintain Sun TSI Subsidiary's relative interest in OpenTV
Corp., OpenTV, Inc., OpenTV Corp. and Sun TSI Subsidiary have agreed that each
time we issue additional Class A Ordinary Shares or Class B Ordinary Shares
(other than on conversion of Class B Ordinary Shares), OpenTV, Inc. will sell
and we will purchase, at a purchase price of $0.001 per share, an equal number
of shares of Class A Common Stock or Class B Common Stock of OpenTV, Inc.,
respectively.

Marketing Agreement dated as of January 22, 2001 by and between British Sky
Broadcasting Limited and OpenTV, Inc.

   Pursuant to this agreement, we and British Sky Broadcasting Limited (BskyB)
set forth the terms of our business relationship relating to BSkyB's
advertising, marketing and promoting of BSkyB hard-drive enabled set-top boxes
utilizing the OpenTV operating system and hard drive extensions in the United
Kingdom and the Republic of Ireland. As part of this agreement, we pre-paid a
total of $8.375 million to BSkyB in March 2001 relating to their advertising,
marketing and promoting of such set-top boxes. This amount will be expensed as
the marketing cost is incurred by BSkyB.

Registration Rights Agreement by and among OpenTV Corp., General Instrument
Corporation and Cablesoft Communications, Inc. dated November 13, 2000.

   The Class A Ordinary Shares acquired by General Instrument Corporation in
connection with the establishment of the Spyglass Integration venture, our
acquisition of CableSoft, and its purchase of shares from News America
Incorporated in a private sale transaction completed in October 2000, are the
subject of this Registration Rights Agreement.

Lease Agreement between Y.A. Tittle, R.G. Handley, et al, and OpenTV, Inc.,
dated January 15, 2000.

   Under this agreement, we lease approximately 17,000 square feet in an
office building located at 365 East Middlefield Road in Mountain View,
California. The term of the lease is for three years and eight months through
August 31, 2003. Our monthly rent is $42,500.00 until January 1, 2002. After
this date, our monthly rent increases to $43,350.00 until January 1, 2003. Our
rent for the remainder of the lease is $44,200.00 per month.

Lease Agreement between Renault & Handley Employees Investment Co. and OpenTV
Inc., dated January 15, 2001.

   Under this agreement, we lease approximately 25,000 square feet in an
office building located at 415 East Middlefield Road in Mountain View,
California. The term of the lease is for three years and eight months through
October 31, 2004. Our monthly rent is $175,000.00 until February 1, 2002.
After this date, our monthly rent increases to $180,280.00 until February 1,
2004. Our rent for the remainder of the lease is $196,851.20 per month.

Lease Agreement between Middlefield Road Joint Venture and OpenTV, Inc., dated
January 22, 2001.

   Under this agreement, we lease approximately 36,257 square feet in an
office building located at 401 East Middlefield Road in Mountain View,
California. The term of the lease is for three years and eight months through
October 31, 2004. Our monthly rent is $67,800.59 until November 1, 2001. After
this date, our monthly rent increases to $69,613.44 until November 1, 2002.
Then our monthly rent increases to $71,426.29 until November 1, 2003. Our rent
for the remainder of the lease is $73,239.14 per month.

D. Exchange Controls.

   There are currently no limitations either under the laws of the British
Virgin Island, the Netherlands, or the United States or in the Company's
Articles of Association, to the rights of shareholders to hold or vote Common
Shares, to pay dividends, interest or other payments to nonresident
shareholders. There are currently no restrictions in the BVI regarding our
export and import of capital, including the availability of cash and cash
equivalents for use by our affiliated companies.

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<PAGE>

E. Taxation.

                 UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

General

   This section summarizes the material U.S. federal income tax consequences
to holders of our Class A Ordinary Shares as of the date of this annual
report. The summary applies to you only if you hold our Class A Ordinary
Shares as a capital asset for tax purposes (that is, for investment purposes).
The summary does not cover state, local or foreign law, or the possible
application of U.S. federal estate or gift tax. In addition, this summary does
not apply to you if you are a member of a Class of holders subject to special
rules, such as:

  .  a dealer in securities or currencies

  .  a trader in securities that elects to use a market-to-market method of
     accounting for your securities holdings

  .  a bank

  .  a life insurance company

  .  a tax-exempt organization

  .  a person that holds our Ordinary Shares as part of a straddle or a
     hedging, integrated, constructive sale or conversion transaction for tax
     purposes

  .  a person whose functional currency for tax purposes is not the U.S.
     dollar

  .  a person liable for alternative minimum tax

  .  a person that owns, or is treated as owning, 10% or more of any Class of
     our Ordinary Shares

   The discussion is based on current law. Changes in the law may alter your
tax treatment of our holding Class Ordinary Shares, possibly on a retroactive
basis.

   The discussion does not cover tax consequences that depend upon your
particular tax circumstances. We recommend that you consult your tax advisor
about the consequences of your holding our Ordinary Shares in your particular
situation.

   For purposes of the discussion below, you are a "U.S. holder" if you are a
beneficial owner of our Class A Ordinary Shares who or which is:

  .  an individual U.S. citizen or resident alien (as specifically defined
     for tax purposes)

  .  a corporation, or entity taxable as a corporation, that was created
     under U.S. law (federal or state)

  .  an estate whose income is subject to U.S. federal income tax regardless
     of its source

  .  a trust (x) if a U.S. court can exercise primary supervision over the
     trust's administration and one or more U.S. persons are authorized to
     control all substantial decisions of the trust or (y) if it has a valid
     election in effect under applicable treasury regulations to be treated
     as a United States person

   If you are not a U.S. holder, you are a "Non-U.S. holder," and the
discussion below titled "Tax Consequences to Non-U.S. Holders" will apply to
you.

   If a partnership holds our Class A Ordinary Shares, the tax treatment of a
partner will generally depend upon the status of the partner and upon the
activities of the partnership. If you are a partner of a partnership holding
Class A Class A Ordinary Shares, you should consult your tax advisor.

                                      57
<PAGE>

Tax Consequences to U.S. Holders

 Distributions

   We have never declared or paid any cash dividends on our capital stock. We
expect to retain all earnings for use in the operation and expansion of our
business and do not anticipate paying any cash dividends in the forseeable
future. If distributions are made, however, the gross amount of any such
distribution (other than in liquidation) that you receive with respect to our
Class A Ordinary Shares generally will be taxed to you as dividend income to
the extent such distribution does not exceed our current or accumulated
earnings and profits, as calculated for U.S. federal income tax purposes
("E&P"). Such income will be includable in your gross income as ordinary
income on the date of receipt. To the extent any distribution exceeds our E&P,
the distribution will first be treated as a tax-free return of capital to the
extent of your adjusted tax basis in our Class A Ordinary Shares and will be
applied against and reduce such basis on a dollar-for-dollar basis (thereby
increasing the amount of gain and decreasing the amount of loss recognized on
a subsequent disposition of such shares). To the extent that such distribution
exceeds your adjusted tax basis, the distribution will be taxed as gain
recognized on a sale or exchange of our Class A Ordinary Shares. See "Sale or
Other Disposition of Our Class A Ordinary Shares," below. Because we are not a
U.S. corporation, no dividends-received deduction will be allowed to
corporations with respect to dividends paid by us. Dividends paid with respect
to our Class A Ordinary Shares will generally be treated as foreign source
"passive income" or, in the case of certain types of financial institutions,
"financial services income," for purposes of computing allowable foreign tax
credits for U.S. foreign tax credit purposes.

 Sale or Other Disposition of Our Class A Ordinary Shares

   Generally speaking, in connection with the sale or other taxable
disposition of our Ordinary Shares:

  .  you will recognize gain or loss equal to the difference (if any)
     between:

    .  the amount realized on such sale or other taxable disposition and

    .  your adjusted tax basis in such Ordinary Shares

  .  any gain or loss will be capital gain or loss and will be long-term
     capital gain or loss if your holding period for our Class A Ordinary
     Shares is more than one year at the time of such sale or other
     disposition.

  .  any gain or loss will generally be treated as having United States
     source for United States foreign tax credit purposes.

  .  your ability to deduct capital losses is subject to limitations.

 Passive Foreign Investment Company

   U.S. holders generally would be subject to a special, adverse tax regime
(that would differ in certain respects from that described above) if we are or
were to be classified as a passive foreign investment company for U.S. federal
income tax purposes. Although the determination of whether a corporation is a
passive foreign investment company is made annually, and thus may be subject
to change, we do not believe that we are, nor do we expect to become, a
passive foreign investment company. Notwithstanding the foregoing, we urge you
to consult your own U.S. tax advisor regarding the adverse U.S. federal income
tax consequences of owning the shares of a passive foreign investment company
and of making certain elections designed to lessen those adverse consequences.

Tax Consequences to Non-U.S. Holders

 Distributions

   If you are a Non-U.S. holder, you generally will not be subject to U.S.
federal income tax, including withholding tax, on distributions made on our
Class A Ordinary Shares unless:

  .  you conduct a trade or business in the United States and

                                      58
<PAGE>

  .  the distributions are effectively connected with the conduct of that
     trade or business (and, if an applicable income tax treaty so requires
     as a condition for you to be subject to U.S. federal income tax on a net
     income basis in respect of income from our Class A Ordinary Shares, such
     distributions are attributable to a permanent establishment that you
     maintain in the United States)

   If you fail the above test, you generally will be subject to tax in respect
of such dividends in the same manner as a U.S. holder, as described above. In
addition, any effectively connected dividends received by a non-U.S.
corporation may also, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be specified by
an applicable income tax treaty.

 Sale or Other Disposition of Our Ordinary Shares

   If you are a Non-U.S. holder, you will not be subject to U.S. federal
income tax, including withholding tax, in respect of gain recognized on a sale
or other taxable disposition of our Class A Ordinary Shares unless:

  .  your gain is effectively connected with a trade or business that you
     conduct in the United States (and, if an applicable income tax treaty so
     requires as a condition for you to be subject to U.S. federal income tax
     on a net income basis in respect of gain from the sale or other
     disposition of our Class A Ordinary Shares, such gain is attributable to
     a permanent establishment maintained by you in the United States), or

  .  you are an individual Non-U.S. holder and are present in the United
     States for at least 183 days in the taxable year of the sale or other
     disposition, and certain other conditions exist

   You will be subject to tax respect of any gain effectively connected with
your conduct of a trade or business in the United States in the same manner as
a U.S. holder, as described above. Effectively connected gains realized by a
non-U.S. corporation may also, under certain circumstances, be subject to an
additional "branch profits tax" at a rate of 30% or such lower rate as may be
specified by an applicable income tax treaty.

Backup Withholding and Information Reporting

   Payments (or other taxable distributions) in respect of our Class A
Ordinary Shares that are made in the United States or by a U.S. related
financial intermediary will be subject to U.S. information reporting rules.
Unless we are notified by the IRS, you will not be subject to "backup"
withholding of U.S. federal income tax at a rate of 31% provided that:

  .  you are a corporation or other exempt recipient, or

  .  you provide a taxpayer identification number (which, in the case of an
     individual, is his or her taxpayer identification number) and certify
     that no loss of exemption from backup withholding has occurred

   If you are not a United States person, you generally are not subject to
information reporting and backup withholding, but you may be required to
provide a certification of your non-U.S. status in order to establish that you
are exempt.

   Amounts withheld under the backup withholding rules may be credited against
your U.S. federal income tax liability, and you may obtain a refund of any
excess amounts withheld under the backup withholding rules by filing the
appropriate claim for refund with the Internal Revenue Service.

                    BRITISH VIRGIN ISLANDS TAX CONSEQUENCES

   Under the International Business Companies Act of the British Virgin
Islands as currently in effect, a holder of common equity, such as OpenTV's
Class A Ordinary Shares, who is not a resident of the British Virgin Islands
is exempt from British Virgin Islands income tax on dividends paid with
respect to the common equity and all

                                      59
<PAGE>

holders of common equity are not liable to the British Virgin Islands for
income tax on gains realized on sale or disposal of such shares: The British
Virgin Islands does not impose a withholding tax on dividends paid by a
company incorporated under the International Business Companies Act.

   There are no capital gains, gift or inheritance taxes levied by the British
Virgin Islands on companies incorporated under the International Business
Companies Act. In addition, our Class A Ordinary Shares are not subject to
transfer taxes, stamp duties or similar charges.

   There is no income tax treaty or convention currently in effect between the
United States and the British Virgin Islands.

                         NETHERLANDS TAX CONSEQUENCES

   The overview of certain Netherlands taxes set forth below is only intended
for individuals and corporate entities resident in the Netherlands that invest
in our ordinary shares. This overview describes the tax consequences that will
generally apply to such investors under the Netherlands laws in force and in
effect as of the date hereof, and is subject to changes in Netherlands law,
including changes that could have retroactive effect. Not every potential tax
consequence of such investment under the laws of the Netherlands will be
addressed. We therefore recommend that each investor consults his own tax
counsel with respect to the tax consequences of an investment in our ordinary
shares.

Netherlands income tax and corporate income tax

 Dutch resident individuals

   As a general rule, individuals who are resident or deemed to be resident in
the Netherlands for Dutch tax purposes ("Dutch resident individual") will be
taxed annually on deemed income of 4% of their net investment assets at an
income tax rate of 30%, regardless of whether any dividends are received or
any capital gains are realized. The effective income tax rate will total 1.2%.
The net investment assets for the year are the average of the investment
assets less the attributable liabilities at the beginning and the end of the
relevant year. The value of our ordinary shares forms part of the investment
assets. A basic tax-free allowance for the first EUR 17,600 (EUR 35,200 for
partner (statutory defined term)) of the net investment assets may be
available.

   However, if our ordinary shares are attributable to:

  i. an enterprise from which a Dutch resident individual derives a share of
     the profit, whether as an entrepreneur or as a person who has a co-
     entitlement to the net worth of such enterprise without being a
     shareholder, or

  ii. a Dutch resident individual who does carry out activities that exceed
      regular portfolio asset management, any benefit derived or deemed to be
      derived from our ordinary shares, including any capital gains realized
      on the disposal thereof, are generally subject to income tax at
      progressive rates with a maximum of 52%, or

  iii. a deemed or actual substantial interest of a Dutch resident
       individual, any benefit derived or deemed to be derived from our
       ordinary shares, including any capital gains realized on the disposal
       thereof, are subject to income tax at a rate of 25%. Generally, a
       Dutch resident individual has a substantial interest in us if the
       Dutch resident individual owns, directly or indirectly, whether or not
       together with his partner, shares, or certain rights over shares
       representing 5% or more of the total issued and outstanding capital
       (or the issued and outstanding capital of any Class of shares) in us,
       or rights to acquire shares, whether or not already issued, that
       represent at any time 5% or more of the total issued and outstanding
       capital (or the issued and outstanding capital of any Class of shares)
       in us, or owns profit participating certificates, or certain rights
       over profit participating certificates that relate to 5% or more of
       the annual profit or to 5% or more of the liquidation proceeds.
       Additionally, shares held by a person form part of

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<PAGE>

     a substantial interest in us if his partner or any of the relatives by
     blood or by marriage in the direct line of himself, or of his partner,
     has a substantial interest in us. A deemed substantial interest is
     present if (part of) a substantial interest has been disposed of, or is
     deemed to have been disposed of, on a non-recognition basis.

 Dutch resident entities

   Any benefit derived or deemed to be derived from our ordinary shares held
by entities, resident in the Netherlands for Dutch tax purposes ("Dutch
resident entities"), including any capital gains realized on the disposal
thereof, is generally subject to corporate income tax at a rate of 35%. No
corporate income tax will be due with respect to dividend distributions made
by us and with respect to capital gains realized on the disposal of our
ordinary shares, provided that the Dutch participation exemption applies with
respect to the holding of our ordinary shares.

   A Netherlands qualifying pension fund is not subject to corporate income
tax. Additionally, a qualifying Netherlands resident investment institution is
subject to corporate income tax at a special rate of 0 percent.

Netherlands gift, estate and inheritance taxes

   Gift, estate and inheritance taxes will rise in the Netherlands with
respect to an acquisition of our ordinary shares by way of a gift by, or on
the death of, a holder of our ordinary shares who is resident or deemed to be
resident of the Netherlands at the time of the gift or his death.

   For purposes of Netherlands gift, estate and inheritance taxes, an
individual who holds the Netherlands nationality will be deemed to be resident
in the Netherlands if he has been resident in the Netherlands at any time
during the ten years preceding the date of the gift or his death.
Additionally, for purposes of Netherlands gift tax, an individual not holding
the Netherlands nationality will be deemed to be resident in the Netherlands
if he has been resident in the Netherlands at any time during the twelve
months preceding the date of the gift. Applicable tax treaties may override
deemed residency.

Other taxes and duties

   No Netherlands capital tax, registration tax, transfer tax, stamp duty, or
any other similar documentary tax or duty will be payable in the Netherlands
in respect of or in connection with the subscription, issue, placement,
allotment or delivery of our ordinary shares.

   You should consult legal and tax advisors in the countries of your
citizenship, residence and domicile to determine the possible tax consequences
of purchasing, holding and redeeming our Class A Ordinary Shares (or rights in
respect thereof) under the laws of your respective jurisdiction.

F. Dividends and Paying Agents.

   Not Applicable.

G. Statement by Experts.

   Not Applicable.

H. Documents on Display.

   For further information with respect to us and our Class A Ordinary Shares,
we refer you to the filings we have made with the SEC. Statements contained in
this annual report concerning the contents of any contract or any other
document are not necessarily complete. If a contract or document has been
filed as an exhibit to any

                                      61
<PAGE>

filing we have made with the SEC, we refer you to the copy of the contract or
document that has been filed. Each statement in this annual report relating to
a contract or document filed as an exhibit is qualified in all respects by the
filed exhibit. We are subject to the informational requirements of the
Exchange Act and, in accordance therewith, file reports, proxy statements and
other information with the SEC. Our registration statements, including the
exhibits and schedules thereto, and such reports, proxy statements and other
information, can be inspected and copied at the public reference facilities
maintained by the SEC:

<TABLE>
<S>                           <C>                           <C>
      Judiciary Plaza           Seven World Trade Center       500 West Madison Street
         Room 1024                     13th Floor                    Suite 1400
   450 Fifth Street, N.W.       New York, New York 10048       Chicago, Illinois 60661
   Washington, D.C. 20549
</TABLE>

   Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC
maintains a website that contains registration statements, reports, proxy
statements and other information regarding registrants that file
electronically with the SEC at http://www.sec.gov.

I. Subsidiary Information.

   Not Applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates. This
discussion addresses market risk only and does not address other risks which
we face in the normal course of business, including country risk, liquidity
risk, credit risk and legal risk.

Interest Rate and Equity Market Risk

   We maintain an investment portfolio of various holdings, types and
maturities. These investments are generally classified as available-for-sale.
Available-for-sale securities are recorded on the balance sheet at fair value
with unrealized gains or losses, net of tax, reported as a separate component
of accumulated other comprehensive income.

   Most of our investments consist of cash equivalents (having a value of
approximately $94 million as of December 31, 2000) and highly liquid, high-
quality short-term and long-term debt instruments (having a value of
approximately $131 million as of December 31, 2000), which include U.S.
government agency obligations, certificates of deposit, corporate and
municipal commercial paper and notes. In the event that interest rates were to
increase immediately by 1%, we estimate that the value of these debt
instruments would decrease by approximately $600,000. Declines of interest
rates over time would be expected to reduce the interest income from our
short-term investments. We do not currently hedge these interest rate
exposures. As of December 31, 2000 we had no debt.

   Our portfolio of equity securities includes a minority equity investment in
a United Kingdom company, SurfControl plc, which is traded on the London and
EASDAQ Stock Exchanges. This investment is held by Spyglass, which we acquired
in July 2000. This investment is subject to market price volatility, and the
price per share of SurfControl ranged from approximately $15.00 per share to
$55.00 per share on the London Stock Exchange during the calendar year 2000.
We intend to liquidate our investment in SurfControl and are in the process of
doing so. In connection with our investment in and sales of SurfControl shares
during the calendar year 2000, we experienced an unrealized after-tax loss of
approximately $11.1 million and a realized after-tax loss of approximately
$1.0 million as a result of market price fluctuations. We could experience
further losses resulting from market price fluctuations as we continue to
liquidate our investment in SurfControl. Our portfolio of equity securities
also includes investments in a number of privately held companies, most of
which can still be considered in the start-up or development stages. These
investments are inherently risky as the market for the technologies or
products they have under development may never materialize. We could incur the
loss of our entire investment in these companies. During the calendar year
2000, we wrote-off $10.0 million of such investments.

                                      62
<PAGE>

Foreign Currency Exchange Rate Risk

   Our functional currencies are generally the local currencies of the
countries in which we operate. We incur most of our expenses and sell most of
our products in U.S. dollars. Most of the our customers are located outside of
the United States. Accordingly, a strengthening of the U.S. dollar could make
our products less competitive in foreign markets. We regularly assess this
risk and have established policies and business practices to protect against
the adverse effect of these and other potential exposures.

   We have established a number of subsidiaries with functional currencies
other than the U.S. dollar. We do not hedge the potential translation exposure
related to the non-U.S. dollar functional balance sheets of our subsidiaries.

                                      63
<PAGE>

                                    PART II

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

   Not Applicable.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

   We are not in material default on any of our obligations relating to
indebtedness. We have not declared any dividends and are not delinquent with
respect to the payment of dividends.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS

   During our last fiscal year, we have not materially modified any of the
rights or instruments defining the rights of our security holders. We do not
have any registered securities which are secured by our assets. The trustees or
paying agents for our securities have not changed during the last fiscal year.

ITEM 15. [RESERVED]

   Not Applicable.

ITEM 16. [RESERVED]

   Not Applicable.

                                    PART III

   [RESERVED]

                                       64
<PAGE>

                                    PART IV

ITEM 17. FINANCIAL STATEMENTS

   Not Applicable.

ITEM 18. FINANCIAL STATEMENTS

   See pages F-1 through F-29 incorporated herein by reference.

ITEM 19. Exhibits

   (a) Financial Statements

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
   <S>                                                                      <C>
   Audited Annual Financial Statements:
    Report of PricewaterhouseCoopers LLP, Independent Accountants.......... F-2
    Consolidated Balance Sheets............................................ F-3
    Consolidated Statements of Operations and Comprehensive Loss........... F-4
    Consolidated Statements of Shareholders' Equity (Deficit).............. F-5
    Consolidated Statements of Cash Flows.................................. F-7
    Notes to Consolidated Financial Statements............................. F-9
</TABLE>

   (b) Exhibit List

<TABLE>
<CAPTION>
 Exhibit
 Number
 -------
 <C>     <S>
 1(a)    Memorandum of Association of OpenTV Corp.

 2(a)    Articles of Association of OpenTV Corp.

 3(a)    Specimen Certificate for Class A Ordinary Shares of OpenTV Corp.

 4.1(e)  Form of Indemnification Agreement for directors and officers of OpenTV
         Corp.

 4.2(e)  OpenTV's Amended and Restated 1999 Employee Stock Purchase Plan.

 4.3(a)  OpenTV's Amended and Restated 1999 Share Option/Share Issuance Plan.

 4.4(a)  Shareholder's Agreement among OTV Holdings Limited, OpenTV Corp. and
         Sun TSI Subsidiary, Inc. dated October 23, 1999.

 4.5(a)  Trademark License Agreement between Sun Microsystems, Inc. and OpenTV,
         Inc., dated March 20, 1998.

 4.6(a)  Technology License and Distribution Agreement between Sun
         Microsystems, Inc. and OpenTV, Inc., dated March 20, 1998.

 4.7(a)  First Amendment to Technology License and Distribution Agreement
         between Sun Microsystems, Inc. and OpenTV, Inc., dated June 30, 1999.

 4.8(a)  Source Code License and Binary Distribution Agreement between Sun
         Microsystems, Inc. and OpenTV, Inc., effective April 1, 1998.

 4.9(a)  Source Code License and Binary Distribution Agreement between Sun
         Microsystems, Inc. and OpenTV, Inc., effective April 1, 1996.

 4.10(a) Convertible Preferred Stock Purchase Agreement between OpenTV Corp.
         and Sun TSI Subsidiary, Inc., dated October 23, 1999.

 4.11(a) 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.
</TABLE>

                                       65
<PAGE>

<TABLE>
<CAPTION>
  Exhibit
   Number
  -------

 <C>        <S>
   4.12(a)  Exchange Agreement between OpenTV Corp. OpenTV, Inc. and Sun TSI
            Subsidiary, Inc., dated October 23, 1999.

   4.13(a)  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.

   4.14(a)  Amended and Restated Shareholders' Agreement among OpenTV Corp.,
            OpenTV Inc., OTV Holdings Limited, Sun Microsystems, Inc. and Sun
            TSI Subsidiary, Inc., dated October 23, 1999.

   4.15(b)  Agreement and Plan of Merger and Reorganization by and among OpenTV
            Corp., Sonnet Acquisition Corp. and Spyglass, Inc. dated as of
            March 26, 2000.

   4.16(b)  Lease Agreement between Y.A. Tittle, R.G. Handley, et al, and
            OpenTV, Inc., dated January 15, 2000.

   4.17(c)  OpenTV's Amended and Restated 2000 Exchange Plan.

   4.18(d)  Agreement and Plan of Merger dated November 13, 2000 among OpenTV
            Corp., CableSoft Acquisition Company, CableSoft Corporation and the
            Selling Stockholders.

   4.19(d)  Registration Rights Agreement by and among OpenTV Corp., General
            Instrument Corporation and Cable Soft Communications, Inc. dated
            November 13, 2000.

   4.20(e)  Lease Agreement between Renault & Handley Employees Investment Co.
            and OpenTV Inc., dated January 15, 2001.

   4.21(e)  Lease Agreement between Middlefield Road Joint Venture and OpenTV,
            Inc., dated January 22, 2001.

   4.22(e)  Marketing Agreement dated as of January 22, 2001 by and between
            British Sky Broadcasting Limited and OpenTV, Inc.

   4.23(e)* Second Amendment to Technology License and Distribution Agreement
            between Sun Microsystems, Inc. and OpenTV, Inc., dated December 20,
            2000.

   8(f)     Subsidiaries of OpenTV.

  10(e)     Consent of PricewaterhouseCoopers LLP.
</TABLE>
--------
(a) Incorporated by reference to the exhibit bearing the same name filed with
    the Company's Registration Statement on Form F-1 as amended (Registration
    No. 333-89609), which the Securities and Exchange Commission declared
    effective on November 23, 1999.

(b) Incorporated by reference to the exhibit bearing the same name filed with
    the Company's Registration Statement on Form F-4 as amended (Registration
    No. 333-37018), which the Securities and Exchange Commission declared
    effective on June 13, 2000.

(c) Incorporated by reference from the exhibit bearing the same name filed
    with the Company's report on Form 6-K filed on August 30, 2000.

(d) Incorporated by reference from the exhibit bearing the same name filed
    with the Company's report on Form 6-K filed on December 1, 2000.

(e) Filed herewith.

(f) Incorporated by reference to the Chart in Item 4.C. of this annual report.

 *  Confidential treatment is requested for portions of this exhibit. These
    portions have been omitted from this filing and are being filed separately
    with the Securities and Exchange Commission.

                                      66
<PAGE>

                                  SIGNATURES

   Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant certifies that it meets all the requirements for
filing on Form 20-F and has duly caused this annual report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                          OPENTV CORP.

                                                    /s/ Scott H. Ray
                                          By:__________________________________
                                                  Chief Financial Officer

Date: April 18, 2001

                                      67
<PAGE>

                                  OPENTV CORP.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Report of Independent Accountants.......................................... F-2

Consolidated Balance Sheets................................................ F-3

Consolidated Statements of Operations and Comprehensive Loss............... F-4

Consolidated Statements of Shareholders' Equity (Deficit).................. F-5

Consolidated Statements of Cash Flows...................................... F-7

Notes to Consolidated Financial Statements................................. F-9
</TABLE>

                                      F-1
<PAGE>

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of OpenTV Corp.:

   In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and comprehensive loss, of
shareholders' equity (deficit), and of cash flows present fairly, in all
material respects, the financial position of OpenTV Corp. and its subsidiaries
at December 31, 1998, 1999 and 2000, and the results of their operations and
their cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
OpenTV Corp.'s management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in
the United States of America which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

San Jose, California
January 22, 2001

                                      F-2
<PAGE>

                                  OPENTV CORP.

                          CONSOLIDATED BALANCE SHEETS
   (amounts in thousands of U.S. dollars, except share and per share amounts)

<TABLE>
<CAPTION>
                                                        December 31,
                                                -------------------------------
                                                  1998      1999        2000
                                                --------  ---------  ----------
<S>                                             <C>       <C>        <C>
                    ASSETS
                    ------
Current assets:
 Cash and cash equivalents....................  $  3,324  $   6,307  $   94,003
 Short-term marketable debt securities........       --     180,228     115,367
 Marketable equity securities.................       --         --       22,275
 Accounts receivable, net.....................     2,218      6,234      13,762
 Related parties receivable...................       --         --        1,570
 Prepaid expenses and other current assets....       703      1,698       7,591
                                                --------  ---------  ----------
   Total current assets.......................     6,245    194,467     254,568
Long-term marketable debt securities..........       --         --       15,612
Property and equipment, net...................     3,381      5,025      15,671
Long-term private equity investments..........       --         --       25,010
Goodwill, net.................................       --         --    1,788,851
Other intangibles, net........................       --       6,678      72,275
Deferred tax asset............................       --         --        5,710
Other assets..................................       412        620       3,733
                                                --------  ---------  ----------
   Total assets...............................  $ 10,038  $ 206,790  $2,181,430
                                                ========  =========  ==========

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
----------------------------------------------

Current liabilities:
 Accounts payable.............................  $  1,978  $     798  $    3,954
 Accrued liabilities..........................     2,171      7,261      17,327
 Related parties payable......................       337        606         381
 Deferred revenue.............................     3,218      3,564       9,902
 Deferred income taxes........................       --         --        5,710
                                                --------  ---------  ----------
   Total current liabilities..................     7,704     12,229      37,274
Convertible notes payable to shareholders.....     7,000        --          --
                                                --------  ---------  ----------
   Total liabilities..........................    14,704     12,229      37,274
                                                --------  ---------  ----------
Commitments and contingencies (Note 10)
Minority interest.............................       --         --        1,966
                                                --------  ---------  ----------
Redeemable common shares, par value $0.001;
 111,581 issued and outstanding in 1998.......       117        --          --
                                                --------  ---------  ----------
Shareholders' equity:
 Class A Ordinary Shares, no par value,
  500,000,000 shares authorized; 33,183,658,
  14,523,859 and 34,829,632 shares issued and
  outstanding in 1998, 1999 and 2000,
  respectively................................    24,115    188,562   2,087,440
 Class B Ordinary Shares, no par value,
  200,000,000 shares authorized; 30,631,746
  shares issued and outstanding in 1999 and
  2000........................................       --      35,953      35,953
 Additional paid-in capital...................        49    162,794     438,202
 Receivable from shareholder..................       --          (1)         (1)
 Treasury stock, 41,218 shares in 2000........       --         --           (6)
 Deferred compensation........................       (36)   (42,224)    (16,711)
 Accumulated other comprehensive income
  (loss)......................................       (62)        33     (11,354)
 Accumulated deficit..........................   (28,849)  (150,556)   (391,333)
                                                --------  ---------  ----------
   Total shareholders' equity (deficit).......    (4,783)   194,561   2,142,190
                                                --------  ---------  ----------
   Total liabilities and shareholders' equity
    (deficit).................................  $ 10,038  $ 206,790  $2,181,430
                                                ========  =========  ==========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-3
<PAGE>

                                  OPENTV CORP.

          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
   (amounts in thousands of U.S. dollars, except share and per share amounts)

<TABLE>
<CAPTION>
                                               Year Ended December 31,
                                           ----------------------------------
                                              1998        1999        2000
                                           ----------  ----------  ----------
<S>                                        <C>         <C>         <C>
Revenues:
  Royalties............................... $    2,788  $   14,782  $   29,898
  License fees............................      1,578       2,964      13,444
  Services and other......................      5,102       8,205      19,805
                                           ----------  ----------  ----------
    Total revenue.........................      9,468      25,951      63,147
                                           ----------  ----------  ----------
Operating expenses:
  Cost of services and other revenues(1)..      4,736       5,949      15,454
  Research and development(2).............      7,514      13,172      34,062
  Sales and marketing(3)..................      7,418      11,415      26,381
  General and administrative(4)...........      3,982       5,971      14,160
  Amortization of goodwill................        --          --      169,284
  Amortization of intangibles.............        --        1,210       6,226
  Amortization of share-based
   compensation...........................         13      13,098      14,426
  Non-cash warrant expense................        --       68,569      24,908
                                           ----------  ----------  ----------
    Total operating expenses..............     23,663     119,384     304,901
                                           ----------  ----------  ----------
Loss from operations......................    (14,195)    (93,433)   (241,754)
Interest income...........................        --          898      12,232
Interest expense..........................        (75)        (73)        --
Other income (expense), net...............         68          (2)       (111)
Investment loss...........................        --          --      (11,687)
Minority interest.........................        --        2,153          34
                                           ----------  ----------  ----------
    Loss before income taxes..............    (14,202)    (90,457)   (241,286)
Income tax benefit........................        --          --          509
                                           ----------  ----------  ----------
    Net loss..............................    (14,202)    (90,457)   (240,777)
Preferred stock deemed dividend...........        --       31,250         --
                                           ----------  ----------  ----------
    Net loss attributable to ordinary
     shareholders......................... $  (14,202) $ (121,707) $ (240,777)
                                           ==========  ==========  ==========
Net loss per share attributable to
 ordinary shareholders, basic and
 diluted.................................. $    (0.43) $    (4.19) $    (4.61)
                                           ==========  ==========  ==========
Shares used in computing net loss per
 share attributable to ordinary
 shareholders, basic and diluted.......... 33,212,803  29,065,478  52,190,338
                                           ==========  ==========  ==========
Net loss.................................. $  (14,202) $  (90,457) $ (240,777)
Other comprehensive income (loss):
  Foreign currency translation............       (136)         95        (394)
  Unrealized loss on investments, net of
   income taxes...........................        --          --      (10,993)
                                           ----------  ----------  ----------
    Comprehensive loss.................... $  (14,338) $  (90,362) $ (252,164)
                                           ==========  ==========  ==========
</TABLE>
--------
(1) Exclusive of $53 and $2,603 share-based compensation for the years ended
    1999 and 2000.

(2) Exclusive of $662 and $1,538 share-based compensation for the years ended
    1999 and 2000.

(3) Exclusive of $556 and $2,100 share-based compensation for the years ended
    1999 and 2000.

(4) Exclusive of $13, $11,827 and $8,185 share-based compensation for the years
    ended 1998, 1999 and 2000.

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-4
<PAGE>

                                  OPENTV CORP.

           CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
          (amounts in thousands of U.S. dollars, except share amounts)

<TABLE>
<CAPTION>
                                                                  Series C-1
                     Class A Ordinary       Class B Ordinary      Convertible       Series C-2 Convertible
                          Shares                 Shares        Preference Shares       Preference Shares      Additional
                  -----------------------  ------------------ --------------------  -------------------------- Paid-In
                    Shares       Amount      Shares   Amount    Shares     Amount      Shares       Amount     Capital
                  -----------  ----------  ---------- ------- -----------  -------  -------------  ---------------------
<S>               <C>          <C>         <C>        <C>     <C>          <C>      <C>            <C>        <C>
Balances,
December 31,
1997............   33,183,658  $   24,115         --  $   --          --   $   --             --   $     --    $    --
Cash receipt
from
shareholder.....          --          --          --      --          --       --             --         --         --
Deferred
compensation
arising from
options issued..          --          --          --      --          --       --             --         --          49
Amortization of
deferred
compensation....          --          --          --      --          --       --             --         --         --
Foreign currency
translation
adjustment......          --          --          --      --          --       --             --         --         --
Net loss........          --          --          --      --          --       --             --         --         --
                  -----------  ----------  ---------- ------- -----------  -------  -------------  ---------   --------
Balances,
December 31,
1998............   33,183,658      24,115         --      --          --       --             --         --          49
Conversion of
notes payable to
Class A Ordinary
Shares..........    2,973,917       7,133         --      --          --       --             --         --         --
Conversion of
Class A Ordinary
Shares to Class
B Ordinary
Shares..........  (36,157,575)    (31,248) 36,157,575  31,248         --       --             --         --         --
Conversion of
related party
payable to Class
B Ordinary
Shares..........          --          --      862,069   2,500         --       --             --         --         --
Issuance of
Class B Ordinary
Shares..........          --          --    1,214,179   3,521         --       --             --         --         --
Capital
contribution
from
shareholder.....          --          --          --      --          --       --             --         --       7,640
Deferred
compensation
arising from
options issued..          --          --          --      --          --       --             --         --      22,473
Amortization of
deferred
compensation....          --          --          --      --          --       --             --         --         --
Issuance of
convertible
preference
shares..........          --          --          --      --   23,648,646   26,261      4,504,504      5,000        --
Conversion of
preference
shares to Class
A Ordinary
Shares..........    5,630,628      31,261         --      --  (23,648,646) (26,261)    (4,504,504)    (5,000)       --
Beneficial
conversion
feature on the
sale of
convertible
preference
shares..........          --          --          --      --          --       --             --         --      31,250
Issuance of
warrants in
conjunction with
the sale of
convertible
preference
shares..........          --          --          --      --          --       --             --         --      63,851
Initial public
offering of
Class A Ordinary
Shares..........    8,625,000     157,019         --      --          --       --             --         --         --
Issuance of
performance
warrants to non-
employees.......          --          --          --      --          --       --             --         --      37,531
Amortization of
performance
warrants
deferred
compensation....          --          --          --      --          --       --             --         --         --
Share options
exercised.......      268,231         282         --      --          --       --             --         --         --
Initial
capitalization
of OpenTV Corp.
(Note 1)........          --          --          --        1         --       --             --         --         --
<CAPTION>
                                                      Accumulated
                   Receivable                            Other
                      from     Treasury   Deferred   Comprehensive Accumulated
                  Shareholders  Stock   Compensation Income (Loss)   Deficit     Total
                  ------------ -------- ------------ ------------- ----------- -----------
<S>               <C>          <C>      <C>          <C>           <C>         <C>
Balances,
December 31,
1997............    $(9,700)     $ --     $   --        $    74     $(14,647)  $     (158)
Cash receipt
from
shareholder.....      9,700        --         --            --           --         9,700
Deferred
compensation
arising from
options issued..        --         --         (49)          --           --           --
Amortization of
deferred
compensation....        --         --          13           --           --            13
Foreign currency
translation
adjustment......        --         --         --           (136)         --          (136)
Net loss........        --         --         --            --       (14,202)     (14,202)
                  ------------ -------- ------------ ------------- ----------- -----------
Balances,
December 31,
1998............        --         --         (36)          (62)     (28,849)      (4,783)
Conversion of
notes payable to
Class A Ordinary
Shares..........        --         --         --            --           --         7,133
Conversion of
Class A Ordinary
Shares to Class
B Ordinary
Shares..........        --         --         --            --           --           --
Conversion of
related party
payable to Class
B Ordinary
Shares..........        --         --         --            --           --         2,500
Issuance of
Class B Ordinary
Shares..........        --         --         --            --           --         3,521
Capital
contribution
from
shareholder.....        --         --         --            --           --         7,640
Deferred
compensation
arising from
options issued..        --         --     (22,473)          --           --           --
Amortization of
deferred
compensation....        --         --      13,098           --           --        13,098
Issuance of
convertible
preference
shares..........        --         --         --            --           --        31,261
Conversion of
preference
shares to Class
A Ordinary
Shares..........        --         --         --            --           --           --
Beneficial
conversion
feature on the
sale of
convertible
preference
shares..........        --         --         --            --       (31,250)         --
Issuance of
warrants in
conjunction with
the sale of
convertible
preference
shares..........        --         --         --            --           --        63,851
Initial public
offering of
Class A Ordinary
Shares..........        --         --         --            --           --       157,019
Issuance of
performance
warrants to non-
employees.......        --         --     (37,531)          --           --           --
Amortization of
performance
warrants
deferred
compensation....        --         --       4,718           --           --         4,718
Share options
exercised.......        --        --          --            --           --           282
Initial
capitalization
of OpenTV Corp.
(Note 1)........         (1)      --          --            --           --           --
</TABLE>

                                      F-5
<PAGE>

                                 OPENTV CORP.

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)--(Continued)
         (amounts in thousands of U.S. dollars, except share amounts)

<TABLE>
<CAPTION>
                                                                    Series C-1         Series C-2
                      Class A Ordinary      Class B Ordinary       Convertible        Convertible
                           Shares                Shares         Preference Shares  Preference Shares  Additional  Receivable
                   ----------------------  -------------------  ------------------ ------------------  Paid-In       from
                     Shares      Amount      Shares    Amount     Shares    Amount   Shares   Amount   Capital   Shareholders
                   ----------- ----------  ----------  -------  ----------- ------ ---------- ------- ---------- ------------
<S>                <C>         <C>         <C>         <C>      <C>         <C>    <C>        <C>     <C>        <C>
Transfer to
minority
interest upon
reorganization
(Note 1)........           --  $      --   (7,602,077) $(1,317)         --  $  --         --  $   --   $    --     $   --
Foreign currency
translation
adjustment......           --         --          --       --           --     --         --      --        --         --
Net loss........           --         --          --       --           --     --         --      --        --         --
                   ----------- ----------  ----------  -------  ----------- ------ ---------- -------  --------    -------
Balances,
December 31,
1999............    14,523,859    188,562  30,631,746   35,953          --     --         --      --    162,794         (1)
Share options
exercised.......     1,416,289      4,975         --       --           --     --         --      --        --         --
Shares
issued for rights
for technology..     2,252,252     38,148         --       --           --     --         --      --        --         --
Shares issued
for Spyglass
acquisition.....    12,677,228  1,796,236         --       --           --     --         --      --    289,809        --
Shares issued
for CableSoft
acquisition.....     1,429,564     36,507         --       --           --     --         --      --      3,493        --
Shares issued
for patents.....       370,858      8,113         --       --           --     --         --      --        --         --
Warrants
exercised.......     1,674,293     14,020         --       --           --     --         --      --     (7,770)       --
Shares issued
through employee
stock purchase
plan............       100,186      1,359         --       --           --     --         --      --        --         --
Shares issued in
exchange for
OpenTV, Inc.
shares..........       385,103        --          --       --           --     --         --      --        --         --
Amortization of
deferred
compensation....           --         --          --       --           --     --         --      --      1,733        --
Reversal of
deferred
compensation due
to employee
terminations....           --         --          --       --           --     --         --      --     (6,153)       --
Amortization of
performance
warrants
deferred
compensation....           --         --          --       --           --     --         --      --     (7,904)       --
Expenses of
initial public
offering of
Class A Ordinary
Shares..........           --        (480)        --       --           --     --         --      --        --         --
Purchase of
treasury
shares..........           --         --          --       --           --     --         --      --        --         --
Employee
settlement......           --         --          --       --           --     --         --      --      1,450        --
Tax benefit of
stock options...           --         --          --       --           --     --         --      --        750        --
Unrealized loss
on investments..           --         --          --       --           --     --         --      --        --         --
Foreign currency
translation
adjustment......           --         --          --       --           --     --         --      --        --         --
Net loss........           --         --          --       --           --     --         --      --        --         --
                   ----------- ----------  ----------  -------  ----------- ------ ---------- -------  --------    -------
Balances,
December 31,
2000............    34,829,632 $2,087,440  30,631,746  $35,953          --  $  --         --  $   --   $438,202    $    (1)
                   =========== ==========  ==========  =======  =========== ====== ========== =======  ========    =======
<CAPTION>
                                          Accumulated
                                             Other
                   Treasury   Deferred   Comprehensive Accumulated
                    Stock   Compensation Income (Loss)   Deficit     Total
                   -------- ------------ ------------- ----------- -----------
<S>                <C>      <C>          <C>           <C>         <C>
Transfer to
minority
interest upon
reorganization
(Note 1)........    $ --      $    --      $    --      $     --   $   (1,317)
Foreign currency
translation
adjustment......      --           --            95           --           95
Net loss........      --           --           --        (90,457)    (90,457)
                   -------- ------------ ------------- ----------- -----------
Balances,
December 31,
1999............      --       (42,224)          33      (150,556)    194,561
Share options
exercised.......      --           --           --            --        4,975
Shares
issued for rights
for technology..      --           --           --            --       38,148
Shares issued
for Spyglass
acquisition.....      --       (24,696)         --            --    2,061,349
Shares issued
for CableSoft
acquisition.....      --           --           --            --       40,000
Shares issued
for patents.....      --           --           --            --        8,113
Warrants
exercised.......      --           --           --            --        6,250
Shares issued
through employee
stock purchase
plan............      --           --           --            --        1,359
Shares issued in
exchange for
OpenTV, Inc.
shares..........      --           --           --            --          --
Amortization of
deferred
compensation....      --        11,243          --            --       12,976
Reversal of
deferred
compensation due
to employee
terminations....      --         6,153          --            --          --
Amortization of
performance
warrants
deferred
compensation....      --        32,813          --            --       24,909
Expenses of
initial public
offering of
Class A Ordinary
Shares..........      --           --           --            --         (480)
Purchase of
treasury
shares..........       (6)         --           --            --           (6)
Employee
settlement......      --           --           --            --        1,450
Tax benefit of
stock options...      --           --           --            --          750
Unrealized loss
on investments..      --           --       (10,993)          --      (10,993)
Foreign currency
translation
adjustment......      --           --          (394)          --         (394)
Net loss........      --           --           --       (240,777)   (240,777)
                   -------- ------------ ------------- ----------- -----------
Balances,
December 31,
2000............    $  (6)    $(16,711)    $(11,354)    $(391,333) $2,142,190
                   ======== ============ ============= =========== ===========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-6
<PAGE>

                                  OPENTV CORP.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     (amounts in thousands of U.S. dollars)

<TABLE>
<CAPTION>
                                                 Year Ended December 31,
                                               ------------------------------
                                                 1998      1999       2000
                                               --------  ---------  ---------
<S>                                            <C>       <C>        <C>
Cash flows from operating activities:
Net loss...................................... $(14,202) $ (90,457) $(240,777)
Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation and amortization of property
   and equipment..............................      830        932      3,531
  Amortization of intangible assets and
   goodwill...................................      --       1,210    175,510
  Amortization of deferred compensation.......       13     13,098     14,426
  Provision for doubtful accounts.............       85        119        738
  Loss on write-off of equipment..............       96         61        --
  Interest on note payable converted to
   Ordinary Shares............................      --         133        --
  Non-cash warrant expense....................      --      68,569     24,909
  Investment losses...........................      --         --      11,687
  In-process research and development.........      --         --       1,000
  Minority interest...........................      --      (2,153)       (34)
  Changes in operating assets and liabilities:
    Accounts receivable.......................      (41)    (4,134)      (193)
    Related parties receivable................      --         --      (1,570)
    Prepaid expenses and other current
     assets...................................     (494)      (995)      (213)
    Accounts payable..........................    1,035     (1,180)      (121)
    Accrued liabilities.......................      373      5,747       (299)
    Related parties payable...................     (732)       269       (225)
    Deferred revenue..........................    1,992        346      5,373
    Deferred income taxes.....................      --         --      (1,178)
                                               --------  ---------  ---------
      Net cash used in operating activities...  (11,045)    (8,435)    (7,436)
                                               --------  ---------  ---------
Cash flows provided from (used in) investing
 activities:
Purchase of property and equipment............   (2,227)    (2,576)   (10,655)
Cash from acquired subsidiary.................      --         --      74,712
Sale of marketable equity securities..........      --         --       5,813
Sale of short-term marketable debt
 securities...................................      --         --      81,332
Purchase of short-term marketable debt
 securities...................................      --    (180,228)   (16,263)
Purchase of long-term private equity
 investments..................................      --         --     (35,010)
Purchase of long-term marketable debt
 securities...................................      --         --     (15,612)
Increase in other assets......................     (378)      (208)    (2,677)
Purchase of intangible assets.................      --        (248)       --
                                               --------  ---------  ---------
      Net cash provided from (used in)
       investing activities................... $ (2,605) $(183,260) $  81,640
                                               --------  ---------  ---------
</TABLE>


                                      F-7
<PAGE>

                                  OPENTV CORP.

               CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
                     (amounts in thousands of U.S. dollars)

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                                   ----------------------------
                                                    1998      1999      2000
                                                   -------  -------- ----------
<S>                                                <C>      <C>      <C>
Cash flows from financing activities:
Proceeds from issuance of Ordinary Shares........  $   --   $160,822 $   12,098
Proceeds from issuance of preference shares......      --     31,261        --
Proceeds from issuance of redeemable common
 shares..........................................      117       --         --
Proceeds from notes payable to shareholders......    7,000     2,500        --
Increase in minority interest....................      --        --       2,000
Payment on receivable from shareholder...........    9,700       --         --
                                                   -------  -------- ----------
Net cash provided by financing activities........   16,817   194,583     14,098
                                                   -------  -------- ----------
Effect of exchange rate changes on cash..........     (136)       95       (606)
                                                   -------  -------- ----------
Net increase in cash and cash equivalents........    3,031     2,983     87,696
Cash and cash equivalents, beginning of period...      293     3,324      6,307
                                                   -------  -------- ----------
Cash and cash equivalents, end of period.........  $ 3,324  $  6,307 $   94,003
                                                   =======  ======== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest...........................  $    60  $    --  $      --
                                                   =======  ======== ==========
Cash paid for income taxes.......................  $   --   $    --  $      990
                                                   =======  ======== ==========
Noncash investing and financing activities:
Value of shares issued in connection with
 acquisitions and establishment of companies and
 intangible assets...............................                    $1,879,004
                                                                     ==========
Value of shares issued for stock options of
 acquired companies..............................                    $  293,302
                                                                     ==========
Deferred compensation arising from issuances of
 options.........................................  $    49  $ 22,473 $   24,696
                                                   =======  ======== ==========
Conversion of notes payable, including accrued
 interest to Ordinary Shares.....................           $  7,133
                                                            ========
Intangible assets contributed by shareholder.....           $  7,640
                                                            ========
Conversion of related party payable to Class B
 Ordinary Shares.................................           $  2,500
                                                            ========
Preferred stock deemed dividend..................           $ 31,250
                                                            ========
Issuance of performance warrants.................           $ 37,531
                                                            ========
Conversion of preference shares to Class A
 Ordinary Shares.................................           $ 31,261
                                                            ========
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                      F-8
<PAGE>

                                 OPENTV CORP.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (amounts in thousands of U.S. dollars, except share and per share amounts)

Note 1. Formation and Business of OpenTV

   Pursuant to a reorganization that occurred in October 1999, MIH Limited,
the majority shareholder of OpenTV, Inc. exchanged its shares of common stock
in OpenTV, Inc. for Ordinary Shares in OpenTV Corp. The reorganization was
accounted for on the historical cost basis since there was no change in
ownership. As of December 31, 2000, OpenTV Corp. indirectly owns approximately
88% of the common stock of OpenTV, Inc.

   We design, develop, market and support software and related components to
enable digital interactive television worldwide.

Note 2. Summary of Significant Accounting Policies

 Principles of consolidation and basis of presentation

   The financial statements include the accounts of OpenTV Corp. and its
majority owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.

 Management estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.

 Cash and cash equivalents

   We consider all highly liquid investments with original or remaining
maturities of three months or less at the date of purchase to be cash
equivalents.

 Investments

   Debt securities with remaining maturities greater than one year are
classified as long-term marketable debt securities. Our policy is to minimize
risk by investing in investment grade fixed income investments which earn
returns based on current interest rates.

   We enter into certain equity investments for the promotion of business and
strategic objectives, and typically we do not attempt to reduce or eliminate
the inherent market risks on these investments. These investments are carried
at the lower of cost or market.

 Marketable debt and equity securities

   We classify all marketable debt and equity securities as available-for-sale
in accordance with Statement of Financial Accounting Standards ("SFAS") No.
115, "Accounting for Certain Investments in Debt and Equity Securities."
Accordingly, our marketable debt and equity securities are carried at fair
value as of the balance sheet date. Unrealized gains and losses are reported,
net of related taxes, as a separate component of shareholders' equity
(deficit). Additionally, the cost of securities sold is based upon the
specific identification method.

 Fair value of financial instruments

   The reported amounts of certain of our financial instruments, including
cash and cash equivalents, accounts receivable (net of the allowance for
doubtful accounts), accounts payable, accrued liabilities and notes payable,
approximate fair value due to their short maturities.

                                      F-9
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


 Concentration of credit risk

   Cash and cash equivalents are primarily invested in a diverse portfolio of
money market securities and money market funds in accordance with our
investment policy. With respect to accounts receivable, our customer base is
dispersed across many geographic areas and we generally do not require
collateral. We monitor customers' payment history and establish allowances for
doubtful accounts as necessary.

 Property and equipment

   Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of 3 to 7 years. Leasehold improvements are amortized on a
straight line basis over the life of the lease, or the estimated useful life
of the asset, whichever is shorter.

   Major additions and improvements are capitalized, while replacements,
maintenance, and repairs that do not improve or extend the life of the assets
are charged to expense. In the period assets are retired or otherwise disposed
of, the costs and related accumulated depreciation and amortization are
removed from the accounts, and any gain or loss on disposal is included in
results of operations.

 Long-term private equity investments

   We also invest in equity instruments of privately-held companies for
business and strategic purposes. These investments are included in long-term
private equity investments and are accounted for under the cost method as we
do not have the ability to exercise significant influence over operations. We
periodically evaluate the carrying value of these investments when events and
circumstances warrant such a review. When the carrying value of an investment
is considered impaired, a loss is recognized based on the amount by which the
carrying value exceeds the fair value of the asset.

 Goodwill and intangible assets

   Goodwill and intangible assets are stated at cost less accumulated
amortization. Amortization is computed on a straight-line basis over the
estimated benefit periods. The estimated benefit period of goodwill is 5 years
and the estimated benefit period of intangible assets ranges from 1.5 to 5
years.

   We also assess the impairment of enterprise level goodwill periodically in
accordance with the provision of Accounting Principles Board (APB) Opinion No.
17, Intangible Assets. An impairment review is performed whenever events or
changes in circumstances indicate that the carrying value may not be
recoverable. Factors we consider important which could trigger an impairment
review include, but are not limited to, significant underperformance relative
to expected historical or projected future operating results, significant
changes in the manner of use of the acquired assets or the strategy for our
overall business, significant negative industry or economic trends, a
significant decline in our stock price for a sustained period, and our market
capitalization relative to net book value. When we determine that the carrying
value of goodwill may not be recoverable based upon the existence of one or
more of the above indicators of impairment, we measure any impairment based on
a projected discounted cash flow method using a discount rate commensurate
with the risk inherent in our current business model.

 Long-lived assets

   We account for long-lived assets under SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which requires us to review for impairment of long-lived assets, whenever
events or changes in circumstances indicate that the carrying amount of an
asset might not be recoverable. When such an event occurs, we estimate the
future cash flows expected to result from the use of the asset and its
eventual disposition. If the undiscounted expected future cash flows is less
than the carrying amount of the asset, an impairment loss is recognized.

                                     F-10
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


 Revenue recognition

   We adopted the provisions of Statement of Position 97-2 ("SOP 97-2"),
Software Revenue Recognition, as amended by Statement of Position 98-4,
Deferral of the Effective Date of Certain Provisions of SOP 97-2, effective
January 1, 1998. SOP 97-2 delineates the accounting for software products,
products including software that is not incidental to the product, and
maintenance revenues. Under SOP 97-2, we recognize product license revenue
upon shipment if a signed contract exists, delivery has occurred, the fee is
fixed and determinable and collection of the resulting receivables is
probable. We recognize royalties upon notification from licensees of revenues
earned.

   For contracts with multiple obligations (e.g., maintenance and other
services), and for which vendor-specific objective evidence of fair value for
the undelivered elements exists, we recognize revenue for the delivered
elements based upon the residual contract value as prescribed by Statement of
Position No 98-9, "Modification of SOP No 97-2 with Respect to Certain
Transactions." Generally we have vendor-specific objective evidence of fair
value for the maintenance element of software arrangements based on the
renewal rates for maintenance in future years as specified in the contracts.
In such cases, we defer the maintenance revenue at the outset of the
arrangement and recognize it ratably over the period, during which the
maintenance is to be provided, which generally commences on the date the
software is delivered. Vendor-specific objective evidence of fair value for
the service element is determined based on the price charged when those
services are sold separately. We recognize revenue allocated to maintenance
and support fees, for ongoing customer support and product updates, ratably
over the period of the relevant contract. Payments for maintenance and support
fees are generally made in advance and are non-refundable. For revenue
allocated to consulting services and for consulting services sold separately,
we recognize revenue as the related services are performed. Maintenance and
consulting services revenues are included in services and other revenue.

   For product licenses sold with integration services, we recognize revenue
based on the completed contract method. Revenue from software development
contracts of less than six months duration is recognized based on the
completed contract method and for longer term contracts generally on the
percentage of completion method. Under the percentage of completion method the
extent of progress towards completion is measured based on actual costs
incurred to total estimated costs. Provisions for estimated losses on
uncompleted contracts are made in the period in which estimated losses are
determined. Revenue from integration services and software development
contracts are included in services and other revenue.

   Revenues from professional services agreements are recognized on the
percentage of completion method based on the hours incurred relative to total
estimated hours for fixed bid contracts or based on the hours incurred
multiplied by the hourly rate for time and material engagements. Related costs
are reported as cost of service revenues. Professional services revenues are
included in services and other revenue.

   We enter into arrangements with network operators whereby we license our
application software to network operators in exchange for a percentage of the
subscription revenue they earn from their customers. Where we have delivered
all of the software under the arrangement, we recognize the revenue as the
network operator reports to us our revenue share, which is done generally on a
quarterly basis. Under arrangements where we have committed to deliver
unspecified future applications, we recognize the revenue earned on the
delivered applications on a subscription basis over the term of the
arrangement.

   Revenue from the sale of hardware components and manuals are recognized
upon shipment and included in services and other revenue.

                                     F-11
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


 Research and development

   Research and development costs are charged to operations as incurred.
Software development costs are capitalized beginning when a product's
technological feasibility has been established and ending when a product is
available for general release to customers. Amounts that could have been
capitalized under Statement of Financial Accounting Standards No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," have been insignificant and therefore no costs have been
capitalized to date.

 Advertising

   Costs related to advertising and promotion of products are charged to sales
and marketing expense as incurred. Advertising expense for the years ended
December 31, 1998, 1999 and 2000 was $757, $820, and $1,423, respectively.

 Income taxes

   We were not subject to income taxes through March 3, 1998, since we
operated as a limited liability company and any taxes due were payable by our
members.

   We account for income taxes using an asset and liability approach which
requires the recognition of taxes payable or refundable for the current year
and deferred tax liabilities and assets for the future tax consequences of
events that have been recognized in our financial statements or tax returns.
The measurement of current and deferred tax liabilities and assets are based
on provisions of the enacted tax law. The measurement of deferred tax assets
is reduced, if necessary, by the amount of any tax benefits that, based on
available evidence, are not expected to be realized.

 Share-based compensation

   We account for share-based employee compensation arrangements in accordance
with the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and Financial Accounting Standard
Board Interpretation ("FIN") No. 28, "Accounting for Stock Appreciation Rights
and Other Variable Stock Option or Award Plans," and comply with the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation." Under APB No. 25, compensation expense is based on the
difference, if any, on the date of the grant, between the fair value of our
shares and the exercise price of the option. We account for equity instruments
issued to non-employees in accordance with the provisions of SFAS No. 123 and
Emerging Issues Task Force ("EITF") No. 96-18.

 Comprehensive income

   We adopted the provisions of SFAS No. 130, "Reporting Comprehensive
Income," ("SFAS No. 130"). This statement requires companies to classify items
of comprehensive income by their nature in the financial statements and
display the accumulated balance of comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of the
balance sheet. Accordingly, we reported foreign currency translation
adjustments and unrealized gain/loss on investments in comprehensive income.

 Foreign currency translation

   The functional currency of our foreign subsidiaries is the local currency.
Assets and liabilities are translated into U.S. dollars at the balance sheet
date exchange rate. Revenues and expenses are translated at the average
exchange rate prevailing during the period. The related gains and losses from
translation are recorded as a translation adjustment in a separate component
of shareholders' equity. Foreign currency transaction gains and losses are
included in results of operations.

                                     F-12
<PAGE>

                                  OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   (amounts in thousands of U.S. dollars, except share and per share amounts)


 Net loss per share

   Basic and diluted net loss per share are computed using the weighted-average
number of Ordinary Shares outstanding net of Ordinary Shares subject to
repurchase. The following items were not included in the computation of diluted
net loss per share because the effect would be antidilutive:

<TABLE>
<CAPTION>
                                                   1998      1999      2000
                                                 --------- --------- ---------
<S>                                              <C>       <C>       <C>
Stock options................................... 3,507,495 5,471,618 7,193,191
Warrants........................................       --  5,429,728 3,909,222
Shares issuable for shares of OpenTV Inc. Class
 A common stock.................................       --  1,470,957 1,118,872
Shares issuable for shares of OpenTV Inc. Class
 B common stock.................................       --  7,594,796 7,594,796
</TABLE>

 Share Split

   We completed a one-for-five reverse share split on November 15, 1999. All
share information has been adjusted to reflect this share split.

 Certain risks and uncertainties

   Our products and services are concentrated in the digital interactive
television software industry, which is characterized by rapid technological
advances, changes in customer requirements and evolving regulatory requirements
and industry standards. Any failure by us to anticipate or to respond
adequately to technological developments in our industry, changes in customer
requirements or changes in regulatory requirements or industry standards, or
any significant delays in the development or introduction of products or
services, could have a material adverse effect on our business and operating
results. Achieving and sustaining profitability will require widespread
adoption of the OpenTV system by multiple industry participants and the
television-viewing public.

 Recent accounting pronouncements

   In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. SFAS No.
133, as amended, is effective for all quarters of fiscal years beginning after
June 15, 2000. To date, we have not entered into any derivative financial
instrument contracts. Thus, we believe that SFAS No. 133 will not have a
material impact on our financial position or results of operations.

   In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements," which provides guidance on the recognition,
presentation, and disclosure of revenue in financial statements filed with the
SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue
and provides guidance for disclosures related to revenue recognition policies.
The adoption of SAB 101 did not have a material effect on our financial
position or results of operations.

Note 3.  Spyglass Acquisition

   On March 26, 2000, we signed a definitive merger agreement with Spyglass,
Inc. to acquire all of Spyglass' outstanding stock in a stock-for-stock
transaction. Spyglass shareholders received 0.7236 of our Class A Ordinary
Shares in exchange for each share of Spyglass common stock. The merger was
consummated on July 24, 2000. We issued 12,677,228 Class A Ordinary Shares with
a value of approximately $1,800,000. These shares were valued at $141.69, the
average market price per share of our Class A Ordinary Shares for the four
trading days before and four trading days after the merger announcement date.
We also reserved approximately 2.5 million additional Class A Ordinary Shares
for issuance upon the exercise of stock options and warrants of Spyglass

                                      F-13
<PAGE>

                                  OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   (amounts in thousands of U.S. dollars, except share and per share amounts)

which were assumed by us in the merger. The value of such options and warrants
was determined by estimating the fair value as of March 26, 2000 using the
Black-Scholes option pricing model. The total consideration paid including
acquisition-related expenses was approximately $2,100,000.

   Tangible assets acquired from Spyglass included cash and cash equivalents,
short-term investments, marketable securities, accounts receivable, fixed
assets and other assets. Liabilities assumed from Spyglass included accounts
payable, accrued liabilities, deferred revenue and deferred income taxes. The
purchase price allocations and annual amortization of the intangible assets and
goodwill acquired was as follows:

<TABLE>
<CAPTION>
                                           Amortization
                                              Period       Annual
                                            (in years)  Amortization
                                           ------------ ------------
   <S>                          <C>        <C>          <C>
   Tangible net assets
    acquired................... $  122,421      --        $    --
   Intangible net assets
    acquired:
     Developed technology......      5,600       3           1,867
     In-process research and
      development..............      1,000      --             --
     Assembled workforce.......     11,000       3           3,666
     Current contracts.........      3,500     1.5           2,334
     Customer base.............      1,000       3             333
     Deferred compensation.....     24,696     1-4             --
     Goodwill..................  1,922,269       5         384,454
                                ----------                --------
       Total................... $2,091,486                $392,654
                                ==========                ========
</TABLE>

   To determine the value of the developed technology, the expected future cash
flows attributable to all existing technology were discounted, taking into
account risks related to the characteristics and applications of the developed
technology, existing and future markets, and assessments of the stage of the
technology's life cycle. The analysis resulted in a valuation for developed
technology that had reached technological feasibility and therefore was
capitalizable.

   The value allocated to projects identified as in-process research and
development was charged to expense at the date of the acquisition. This write-
off was necessary because the acquired in-process research and development had
not yet reached technological feasibility and had no future alternative uses.
These products under development may not achieve commercial viability. The
nature of the efforts required to develop the purchased in-process research and
development into commercially viable products principally relate to the
completion of all planning, designing, prototyping, verification and testing
activities that are necessary to establish that the product can be produced to
meet its designed specifications, including functions, features and technical
performance requirements.

   The value of the purchased in-process research and development was
determined by estimating the projected net cash flows related to the products,
determined based upon our estimate of costs to complete the development of the
technology and the future revenue to be earned upon commercialization of the
products. The estimated stage of completion (expressed as a percentage of
completion) for each project was calculated and then the percentage was applied
to the expected net cash flows for each project. These cash flows were then
discounted back to their net present value. The projected net cash flows from
the projects were based on management's estimates of revenues and operating
profits related to the projects.

                                      F-14
<PAGE>

                                  OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   (amounts in thousands of U.S. dollars, except share and per share amounts)


   To determine the revenue attributable to the in-process technology,
consideration was also given to the contribution of the existing technology
which will be utilized in the development of the in-process technology,
referred to as "core technology." The value allocated to the core technology
was determined by assigning a leverage factor to the estimated projected net
cash flows related to the products under development after analysis of both the
effort and work completed as well as the expected value of the in-process
technology. The projected net cash flows from the products assigned to core
technology using the leverage factor were then discounted back to their net
present value.

   The value allocated to the assembled workforce is attributable to the
Spyglass workforce in place after the acquisition which eliminates the need to
hire new replacement employees. The value was determined by estimating the cost
involved in assembling a new workforce including costs of salaries, benefits,
training and recruiting.

   The present value of the future cash flows attributable to existing
contracts and customer base were allocated to current contracts and customer
base, respectively.

   The deferred compensation was calculated according to FIN 44, "Accounting
for Certain Transactions involving Stock Compensation." The deferred
compensation will be amortized over the remaining vesting period of the
Spyglass options exchanged in the merger for options of our Class A Ordinary
Shares, in accordance with Fin 28. Share-based compensation of $2,517, $465,
$1,199 and $2,771 was amortized to cost of services and other revenues,
research and development, sales and marketing, and general and administrative
expenses, respectively, for the year ended December 31, 2000. In addition,
deferred compensation was reduced by $4,676 and capital surplus was credited by
a similar amount due to the termination of Spyglass employees after the merger.
The amortization of existing recorded deferred compensation will be $9,685,
$2,878, $447 and $58 for the years ending December 31, 2001, 2002, 2003 and
2004, respectively.

   Goodwill was determined based on the residual difference between the amount
of consideration paid and the values assigned to identified net tangible and
intangible assets. As of December 31, 2000, accumulated amortization was $3,588
for intangibles and $168,367 for goodwill.

   If the acquisition had been consummated as of January 1, 1999, the effect on
revenues and net loss would have been as follows:

<TABLE>
<CAPTION>
                                                           1999        2000
                                                        ----------  ----------
   <S>                                                  <C>         <C>
   Net revenues........................................ $   58,000  $   82,500
   Net loss............................................ $ (473,000) $ (447,000)
   Net loss attributable to ordinary shareholders...... $ (505,000) $ (447,000)
   Net loss per share attributable to ordinary
    shareholders, basic and diluted.................... $   (12.09) $    (6.89)
   Shares used in computing net loss per share
    attributable to ordinary shareholders, basic and
    diluted............................................ 41,742,706  64,867,566
</TABLE>

                                      F-15
<PAGE>

                                  OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   (amounts in thousands of U.S. dollars, except share and per share amounts)


Note 4. Balance Sheet Components

<TABLE>
<CAPTION>
                                                        December 31,
                                                 ----------------------------
                                                  1998     1999       2000
                                                 -------  -------  ----------
   <S>                                           <C>      <C>      <C>
   Accounts receivable:
   Trade accounts receivable.................... $ 2,044  $ 6,120  $   15,085
   Amounts billed under long-term contracts.....     474      533         --
                                                 -------  -------  ----------
                                                   2,518    6,653      15,085
   Less allowance for doubtful accounts.........    (300)    (419)     (1,323)
                                                 -------  -------  ----------
                                                 $ 2,218  $ 6,234  $   13,762
                                                 =======  =======  ==========
   Prepaid expenses and other current assets:
   Interest receivable.......................... $   --   $   472  $    2,815
   Assets held for sale.........................     --       --          870
   Prepaid expenses and other...................     703    1,226       3,906
                                                 -------  -------  ----------
                                                 $   703  $ 1,698  $    7,591
                                                 =======  =======  ==========
   Property and equipment:
   Computers and equipment...................... $ 3,380  $ 4,863  $   10,013
   Software.....................................     230  $ 1,003       5,185
   Furniture and fixtures.......................     198      356       2,315
   Leasehold improvements.......................     631      793       3,552
                                                 -------  -------  ----------
                                                 $ 4,439  $ 7,015  $   21,065
   Less accumulated depreciation and
    amortization................................  (1,058)  (1,990)     (5,394)
                                                 -------  -------  ----------
                                                 $ 3,381  $ 5,025  $   15,671
                                                 =======  =======  ==========

   Goodwill .................................... $   --   $   --   $1,958,134
   Less accumulated amortization................     --       --     (169,283)
                                                 -------  -------  ----------
                                                 $   --   $   --   $1,788,851
                                                 =======  =======  ==========

   Other intangibles ........................... $   --   $ 7,888  $   79,711
   Less accumulated amortization................     --    (1,210)     (7,436)
                                                 -------  -------  ----------
                                                 $   --   $ 6,678  $   72,275
                                                 =======  =======  ==========
   Other assets:
   Deposits..................................... $   375  $   530  $    1,325
   Due from officer.............................     --       --        2,408
   Other........................................      37       90         --
                                                 -------  -------  ----------
                                                 $   412  $   620  $    3,733
                                                 =======  =======  ==========
   Accrued liabilities:
   Accrued payroll and related liabilities...... $ 1,107  $ 3,806  $    8,586
   Accrued professional fees....................     --     1,940         607
   Accrued liability to warrant holder..........     --       314       1,975
   Accrued acquisition costs....................     --       --        4,668
   Other accrued liabilities....................   1,064    1,201       1,491
                                                 -------  -------  ----------
                                                 $ 2,171  $ 7,261  $   17,327
                                                 =======  =======  ==========
</TABLE>

                                      F-16
<PAGE>

                                  OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
   (amounts in thousands of U.S. dollars, except share and per share amounts)


Note 5. Marketable Debt and Equity Securities

   The following is a summary of marketable debt and equity securities at
December 31, 1999 and 2000:

<TABLE>
<CAPTION>
                                                  December 31, 1999
                                       ----------------------------------------
                                                  Gross      Gross    Estimated
                                                Unrealized Unrealized   Fair
                                         Cost     Gains      Losses     Value
                                       -------- ---------- ---------- ---------
   <S>                                 <C>      <C>        <C>        <C>
   Money market fund.................  $148,206   $ --      $    --   $148,206
   Other debt securities.............    32,021       1          --     32,022
                                       --------   -----     --------  --------
     Total short-term investments....  $180,227   $   1     $    --   $180,228
                                       ========   =====     ========  ========
<CAPTION>
                                                  December 31, 2000
                                       ----------------------------------------
                                                  Gross      Gross    Estimated
                                                Unrealized Unrealized   Fair
                                         Cost     Gains      Losses     Value
                                       -------- ---------- ---------- ---------
   <S>                                 <C>      <C>        <C>        <C>
   Commercial paper..................  $ 26,298   $   1     $     (7) $ 26,292
   Corporate notes...................    50,560      35          (26)   50,569
   Certificates of deposit...........    16,273      17          --     16,290
   U.S. government securities........    18,976      34          --     19,010
   Other debt securities.............     3,208       2           (4)    3,206
                                       --------   -----     --------  --------
     Total marketable debt securities
      (due in one year or less)......   115,315      89          (37)  115,367
                                       ========   =====     ========  ========
   Marketable equity securities......    40,500      --      (18,225)   22,275
                                       ========   =====     ========  ========
   Corporate notes...................     7,043      72          --      7,115
   Other debt securities.............     8,497      --          --      8,497
                                       --------   -----     --------  --------
     Total long-term marketable debt
      securities (due after one
      year)..........................    15,540      72          --     15,612
                                       --------   -----     --------  --------
     Total marketable debt and equity
      securities.....................  $171,355   $ 161     $(18,262) $153,254
                                       ========   =====     ========  ========
</TABLE>

   Proceeds from sales of marketable equity and debt securities were $87,145 in
2000.

   The estimated fair value may not be representative of actual values of the
financial instruments that could have been realized as of year-end or that will
be realized in the future.

Note 6. Shareholders' Equity

 Authorized share capital

  .  500,000,000 Class A Ordinary Shares

  .  200,000,000 Class B Ordinary Shares

  .  500,000,000 preference shares

 Voting

   The holders of Class A Ordinary Shares and Class B Ordinary Shares are
generally entitled to vote as a single class on all matters upon which holders
of Ordinary Shares have a right to vote, subject to the requirements

                                      F-17
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)

of any applicable laws. Each Class A Ordinary Share entitles its holder to one
vote, and each Class B Ordinary Share entitles its holder to ten votes. Unless
otherwise required by law, and so long as their rights are not adversely
affected, the holders of Class A Ordinary Shares and Class B Ordinary Shares
are not entitled to vote on any amendment to our Articles of Association and
Memorandum of Association of Association that relates solely to the terms of
one or more outstanding series of preference shares.

 Dividends and Other Distributions

   Subject to the preferential and other dividend rights of any outstanding
series of preference shares, the holders of Class A Ordinary Shares and Class
B Ordinary Shares are entitled to equal dividends per share when, as and if
declared by our board of directors, except that all dividends payable in
Ordinary Shares will be paid in the form of Class A Ordinary Shares to holders
of Class A Ordinary Shares and in the form of Class B Ordinary Shares to
holders of Class B Ordinary Shares. Neither Class A Ordinary Shares nor Class
B Ordinary Shares may be split, divided or combined unless the other class is
proportionally split, divided or combined.

   In the event we are liquidated or wound up, the holders of our Class A
Ordinary Shares and Class B Ordinary Shares will be treated equally on a per
share basis and will be entitled to receive all of our remaining assets
following distribution of the preferential and/or other amounts to be
distributed to the holders of our preference shares.

 Merger

   In the event of a merger, the holders of Class A Ordinary Shares and Class
B Ordinary Shares will be entitled to receive the same per share
consideration, if any, except that if such consideration includes voting
securities (or the right to acquire voting securities or securities
exchangeable for or convertible into voting securities), we may (but are not
required to) provide for the holders of Class B Ordinary Shares to receive
voting securities (or rights to acquire voting securities) entitling them to
ten times the number of votes per share as the voting securities (or rights to
acquire voting securities) being received by holders of Class A Ordinary
Shares.

 Conversion of Class B Ordinary Shares

   Each Class B Ordinary Share is convertible, at the option of the holder
thereof, into Class A Ordinary Shares on a share-for-share basis and will
automatically convert on a share-for-share basis upon the occurrence of any of
the following:

  .  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);

  .  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

                                     F-18
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)

     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.

   In the event of a transaction where Class A Ordinary Shares are converted
into or exchanged for one or more other securities, cash or other property (a
"Class A Conversion Event"), a holder of Class B Ordinary Shares thereafter
will be entitled to receive, upon the conversion of such Class B Ordinary
Shares, the amount of such securities, cash and other property that such
holder would have received if the conversion of such Class B Ordinary Shares
had occurred immediately prior to the record date or effective date, as the
case may be, of the Class A Conversion Event.

 Exchangeable Share Arrangements

   We have entered into or adopted arrangements that afford the minority
shareholders of OpenTV, Inc. the ability to exchange their shares of OpenTV,
Inc. for shares of OpenTV Corp., generally on a one for one basis. The
minority shareholders of OpenTV, Inc. are at all times treated as if they were
shareholders of OpenTV Corp. As the shares are exchanged, they will be
accounted for at historical cost. As the minority shareholders are not
responsible to fund the losses of OpenTV, Inc., we have recorded 100% of the
loss in excess of the cost basis of the minority shareholders.

 Shares Reserved

   As of December 31, 2000, the following Class A Ordinary Shares were
reserved:

<TABLE>
   <S>                                                               <C>
   Issuable upon exchange of shares (including shares issuable upon
    exercise of outstanding options) of OpenTV, Inc. common stock...  1,277,872
   Stock options outstanding........................................  7,193,191
   Stock options reserved for future grant..........................  2,291,450
   Employee stock purchase plan.....................................    500,000
   Warrants from October 1999 private placement.....................  2,702,702
   Performance warrant..............................................    700,000
   Warrants from Spyglass acquisition...............................    506,520
                                                                     ----------
     Total.......................................................... 15,171,735
</TABLE>

   In addition, 7,594,796 Class B Ordinary Shares were reserved for issuance
upon exchange of shares of OpenTV, Inc. Class B common stock.

 Private Placement of Series C Preference Shares

   In October 1999, we completed a private placement of 4,729,728 Series C-1
Convertible Preference Shares at $5.55 per share, 900,900 Series C-2
Convertible Preference Shares at $5.55 per share, and warrants to purchase
4,729,728 Class A Ordinary Shares (expiring in October 2001) at $5.55 per
share to America Online, Inc., General Instrument Corporation and subsidiaries
of Liberty Digital, Inc., News Corporation, Time Warner, Inc. and Sun
Microsystems, Inc. for net proceeds of $31,261. The Series C-1 Convertible
Preference Shares and Series C-2 Convertible Preference shares converted into
5,630,628 Class A Ordinary Shares at the time of our public offering. The
convertible preference shares have an embedded beneficial conversion feature
which under EITF 98-5 resulted in a preferred stock dividend of $31,250 in the
quarter ended December 31, 1999. The fair value attributable to the warrants
to purchase Class A Ordinary Shares of $63,851 was recorded in operating
expenses as a non-cash warrant expense in the quarter ended December 31, 1999.
The warrants were valued

                                     F-19
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)

using the Black Scholes option pricing model. In connection with the
investments, we entered into strategic agreements with America Online Inc.,
General Instrument Corporation, News Corporation and Time Warner, Inc.

   In October 2000, we received $6,250 from the exercise of warrants to
purchase 1,126,126 Class A Ordinary Shares. In December 2000, we issued
548,167 Class A Ordinary Shares in exchange for the cashless exercise of
warrants to purchase 900,900 Class A Ordinary Shares.

   At December 31, 1998, 1999, and 2000 we had no preference shares
outstanding.

 Performance Warrant

   In December 1999, we issued warrants to purchase 700,000 Class A Ordinary
Shares (expiring in December 2002) at $5.55 per share to General Instrument
Corporation, a subsidiary of Motorola, Inc. The warrants are exercisable based
on General Instrument meeting certain performance milestones. The fair value
attributable to the performance warrants of $37,531 was recorded in the year
ended December 31, 1999. The fair value of the warrants was calculated at each
reporting date using the Black Scholes option pricing model. As a result, the
warrant expense fluctuated as the fair market value of our Class A Ordinary
Shares fluctuated. A total of $4,718 and $24,909 was amortized as non-cash
warrant expense for the years ended December 31, 1999 and 2000, respectively.
The unamortized balance of $7,904 was credited to additional paid in capital
in 2000 due to the change in the value of the shares.

 Warrants from Spyglass Acquisition

   In October 1998, General Instrument acquired warrants to purchase shares of
Spyglass. These warrants were assumed by OpenTV in connection with the
acquisition of Spyglass and now represent warrants (expiring in December 2003)
to purchase 506,520 Class A Ordinary Shares. The exercise prices are $18.24 to
$20.43 (subject to adjustment in certain circumstances) and become exercisable
on varying dates over a five-year period.

 Agreements with General Instrument and Motorola

   In November 2000, we entered into a series of definitive agreements with
General Instrument Corporation and its parent Motorola, Inc. dedicated to
accelerating interactive television deployments worldwide. One of the
agreements provided for the establishment of a co-owned venture that will
provide integration and testing services for cable and satellite operators. We
contributed 370,858 of our Class A Ordinary Shares to this venture and these
shares were then transferred by the venture to General Instrument in exchange
for a three-year license of certain General Instrument patents on a royalty-
free, worldwide, non-exclusive basis. The value of the shares was $8,113 and
this amount was included in Intangible Assets in the consolidated balance
sheet. The accumulated amortization as of December 31, 2000, was $338. At
December 31, 2000, the value of Motorola's minority interest in the venture of
$1,966 was shown as a separate line in the consolidated balance sheet.

   General Instrument also entered into a 7-year services agreement whereby it
guaranteed the venture a certain amount of revenue from work to be performed
for General Instrument or other companies referred by General Instrument.
General Instrument also entered into a software license agreement for our
Device Mosaic browser technology which resulted in revenue in 2000.

   In addition, General Instrument agreed to purchase all of our stock in the
Acadia Solution Center that was acquired in the Spyglass acquisition. As of
December 31, 2000, these assets were included in Other Current Assets in the
consolidated balance sheet. The gain from the sale will be reflected as a
reduction of the Spyglass goodwill in the first quarter of 2001.

                                     F-20
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


 CableSoft Acquisition

   We agreed on November 13, 2000 to acquire CableSoft Corporation in a stock-
for-stock transaction in exchange for 1,429,564 of our Class A Ordinary
Shares. CableSoft is a leading provider of "on-demand information" software
solutions for broadband network operators. General Instrument was one of
CableSoft's primary shareholders and a party to the acquisition agreement. The
value of these shares at the acquisition date of November 13, 2000 was
$36,507. In addition, we assumed certain CableSoft options in connection with
the transaction which increased the purchase price to a total of $40,000. The
purchase price, including expenses, has been allocated to intangible assets
($4,456) and goodwill ($35,865) based upon an appraisal. The accumulated
amortization as of December 31, 2000, was $119 for intangibles and $897 for
goodwill.

 EchoStar Joint Venture

   On February 22, 2000, we entered into an agreement with EchoStar
Communications Corporation ("ECC"), EchoStar Satellite Corporation and
EchoStar Technologies Corporation (collectively "EchoStar") to develop a low-
cost, hard-drive set-top box for the mass TV-viewing market in the United
States. EchoStar contributed to a newly formed subsidiary of ECC ("OpenStar")
a non-exclusive, perpetual, royalty-free worldwide license to all of
EchoStar's existing intellectual property which enables hard drive
functionality in a satellite receiver. Immediately following the formation of
OpenStar, we purchased 50% of the OpenStar shares from ECC, in exchange for
2,252,252 of our Class A Ordinary Shares and contribution of a non-exclusive,
perpetual, royalty-free, worldwide license to certain OpenTV intellectual
property to OpenStar. Those shares were released from escrow in December 2000,
when EchoStar had met certain milestones relating to the deployment of OpenTV-
enabled set-top boxes. The value recorded for those shares was the market
price of the Class A Ordinary Shares on the date the shares were released from
escrow and was allocated to technology rights.

 Employee Settlement

   On August 24, 2000, we settled a wrongful dismissal case with a former
employee for a cash payment of $150,000 and options to purchase 41,875 shares
of the Class A Common Stock of OpenTV, Inc. at an exercise price of $1.05 per
share. The total cost of this settlement of $1,600 was charged to expense with
an corresponding credit of $1,450 to additional paid-in capital.

Note 7. Employee Option Plans and Share Purchase Plan

 Option Plans

   Options are currently outstanding under the following plans: (i) the
Amended and Restated OpenTV Corp. 1999 Share Option/Share Issuance Plan (the
"1999 Plan"), (ii) the Amended and Restated OpenTV, Inc. 1998 Option/Stock
Issuance Plan (the "1998 Plan"), (iii) four option plans assumed in connection
with our Spyglass merger (collectively, the "Assumed Spyglass Plan"),
consisting of (a) the Spyglass, Inc. 1995 Stock Incentive Plan, (b) the
Spyglass, Inc. 1995 Director Stock Option Plan, (c) the AllPen Software 1997
Stock Option Plan, and (d) the Navitel Communications 1997 Stock Option Plan,
and two option plans assumed in connection with our CableSoft merger (the
"Assumed CableSoft Plans"), consisting of (a) the CSS Acquisition Corporation
2000 Special Stock Incentive Plan, and (b) the CSS Acquisition Corporation
2000 Stock Plan.

   At present we issue options only from the 1999 Plan. The compensation
committee of our board of directors administers the 1999 Plan. The committee
has complete discretion to make all decisions relating to the interpretation,
operation and amendment of the 1999 Plan. The committee has discretion to
determine grant recipients, vesting requirements, exercise prices and other
terms and conditions of award eligibility. Consistent

                                     F-21
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)

with the foregoing, options are generally granted at an exercise price equal
to the fair market value on the date of grant and vest 25% after 12 months of
continuous service with OpenTV and 1/48th over each of the next 36 months. The
term of the options generally is 10 years from the date of grant. Unexercised
options generally expire three months after termination of employment with
OpenTV. 8,980,000 Class A Ordinary Shares have been reserved for issuance
under the 1999 Plan since its inception, and as of December 31, 2000, options
to purchase 5,430,912 Class A Ordinary Shares were outstanding under the 1999
Plan.

   Effective as of October 23, 1999, options (the "Assumed Options") to
purchase 5,141,114 shares of Class A Common Stock of OpenTV, Inc. under the
1998 Plan were assigned to and assumed by OpenTV Corp. and the Assumed Options
thereafter represented the right to purchase under the 1999 Plan an identical
number of Class A Ordinary Shares of OpenTV. The remainder of the options then
outstanding under the 1998 Plan were not assigned to and assumed by OpenTV
Corp. The 1998 Plan will remain in existence for the sole purpose of governing
those remaining options until such time as such options have been exercised
and the underlying shares have become transferable by the holders. Options or
shares awarded under the 1998 Plan that are forfeited or cancelled will no
longer be available for issuance under the 1998 Plan. As of December 31, 2000,
options to purchase 159,000 shares of OpenTV, Inc.'s Class A Common Stock were
outstanding under the 1998 Plan.

   All of the options to purchase Spyglass common stock outstanding under the
Assumed Spyglass Plans were converted in the Spyglass merger, and all of the
options to purchase CableSoft common stock outstanding under the Assumed
CableSoft Plans were converted in the CableSoft merger, into options to
purchase our Class A Ordinary Shares. As of December 31, 2000, options to
purchase 1,614,248 and 148,031 of our Class A Ordinary Shares were outstanding
under the Assumed Spyglass Plans and the Assumed CableSoft Plans
(collectively, the "Assumed Plans"). The Assumed Plans will remain in
existence for the sole purpose of governing these remaining options, until
such time as such options have been exercised and the underlying shares have
become transferable by the holders. Options awarded under the Assumed Plans
that are forfeited or cancelled will no longer be available for issuance under
Assumed Plans, and no new options will be granted to employees under the
Assumed Plans.

                                     F-22
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


   Activity under the Plans is as follows:

<TABLE>
<CAPTION>
                            Shares                                              Weighted
                          Available     Number of     Exercise    Aggregate     Average
                          for Grant       Shares        Price       Price    Exercise Price
                          ----------    ----------  ------------- ---------  --------------
<S>                       <C>           <C>         <C>           <C>        <C>
Balances, December 31,
 1997...................     587,300     3,012,700                $ 10,770       $ 3.58
Options cancelled at
 inception of 1998
 Plan...................    (587,300)   (3,012,700)        $ 3.58  (10,770)      $ 3.58
Options reserved at
 inception of 1998
 Plan...................   5,800,000           --                      --
Options granted.........  (4,353,348)*   4,483,348         $ 1.05    4,708       $ 1.05
Options exercised.......         --       (111,580)        $ 1.05     (117)      $ 1.05
Options cancelled.......     864,273      (864,273)        $ 1.05     (908)      $ 1.05
                          ----------    ----------                --------
Balances, December 31,
 1998...................   2,310,925     3,507,495                   3,683       $ 1.05
Additional options
 reserved under 1998
 Plan...................     960,000           --                      --
Options cancelled under
 1998 Plan..............    (198,048)   (5,141,114) $ 1.05-$ 6.00  (12,863)      $ 2.14
Options reserved at
 inception of 1999
 Plan...................   7,200,000           --
Options assumed under
 1999 Plan..............  (5,141,114)    5,141,114  $ 1.05-$ 6.00   12,863       $ 2.14
Options granted.........  (3,799,200)**  3,960,200  $ 1.05-$88.00   22,141       $ 5.59
Options exercised.......         --     (1,629,321)        $ 1.05   (1,711)      $ 1.05
Options cancelled.......     280,088      (280,088) $ 1.05-$19.00     (707)      $ 2.52
                          ----------    ----------                --------
Balances, December 31,
 1999...................   1,612,651     5,558,286                  23,406       $ 4.21
Additional options
 reserved under 1999
 Plan...................   1,780,000           --
Options related to
 Spyglass acquisition...         --      2,023,219  $ 0.21-$83.96   47,252       $23.35
Options related to
 CableSoft acquisition..         --        148,031         $ 1.95      288       $ 1.95
Options granted.........  (1,784,203)    1,784,203  $17.63-$94.56   95,921       $53.76
Options exercised.......         --     (1,442,497) $ 0.21-$48.89   (4,692)      $ 3.25
Options cancelled.......     683,002      (878,051) $ 1.05-$94.56  (17,714)      $20.17
                          ----------    ----------                --------
Balances, December 31,
 2000...................   2,291,450     7,193,191                $144,461       $20.08
                          ==========    ==========                ========       ======
</TABLE>
--------
*  Does not include 130,000 shares OpenTV, Inc. common stock underlying
   options granted in 1998 that were not assumed under the 1999 Plan.

** Does not include 161,000 shares OpenTV, Inc. common stock underlying
   options granted in 1999 that were not assumed under the 1999 Plan.

                                     F-23
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


   The following table summarizes information with respect to options
outstanding at December 31, 2000:

<TABLE>
<CAPTION>
                                                             Options Currently
                                 Options Outstanding            Exercisable
                           -------------------------------- --------------------
                                        Weighted
                                         Average   Weighted             Weighted
                                        Remaining  Average              Average
                             Number    Contractual Exercise   Number    Exercise
   Exercise Price          Outstanding    Life      Price   Exercisable  Price
   --------------          ----------- ----------- -------- ----------- --------
   <S>                     <C>         <C>         <C>      <C>         <C>
   $0-$10................   3,689,095     7.54      $ 4.51   2,010,256   $ 4.51
   $11-$20...............   1,366,804     7.92      $14.55     793,147   $14.55
   $21-$30...............     106,213     9.12      $26.22      54,429   $26.22
   $31-$40...............     383,602      9.5      $36.64       2,000   $36.64
   $41-$50...............     767,477      9.4      $47.19      29,139   $47.19
   $51-$60...............     454,204     9.26      $53.41      15,654   $53.41
   $81-$100..............     425,796     9.14      $85.35      41,018   $85.35
                            ---------                        ---------
                            7,193,191                        2,945,643
                            =========                        =========
</TABLE>

   At December 31, 1998, 1999, and 2000 vested options to purchase 3,507,495,
1,190,693 and 2,945,643 Ordinary Shares respectively, were unexercised.

 Fair value disclosures

   Had compensation cost for our share-based compensation plan been determined
based on the fair value at the grant dates for the awards under a method
prescribed by SFAS No. 123, our net loss would have been increased to the pro
forma amounts indicated below:
<TABLE>
<CAPTION>
                                                  Year Ended December 31,
                                                ------------------------------
                                                  1998      1999       2000
                                                --------  ---------  ---------
   <S>                                          <C>       <C>        <C>
   Net loss attributable to ordinary
    shareholders:
    As reported...............................  $(14,202) $(121,707) $(240,777)
    Pro forma.................................  $(14,474) $ (93,449) $(272,392)
   Net loss per share attributable to ordinary
    shareholders, basic and diluted:
    As reported...............................  $  (0.43) $   (4.19) $   (4.61)
    Pro forma.................................  $  (0.44) $   (4.29) $   (5.22)
</TABLE>

   We calculated the fair value of each option grant on the date of grant
using the Black-Scholes pricing method with the following assumptions for
fiscal 1998, 1999 and 2000: dividend yield at 0% for all periods; volatility
at 0% for 1998, 184% for 1999 and 135% for 2000; weighted average expected
option term of six years for 1998, and five years for 1999 and 2000; risk free
interest rate of 4.95% to 5.70%, 4.75% to 6.00% and 5.46% to 6.81%,
respectively. The weighted average fair value of options granted during 1998,
1999 and 2000 was $0.15, $8.78 and $53.37, respectively.

   These pro forma amounts may not be representative of the effects on
reported net loss for future years as options vest over several years and
additional awards are generally made each year.

 Share-based compensation

   We recorded non-cash deferred share compensation of $49, $22,473 and
$24,696 for the years ended December 31, 1998, and 1999 and 2000,
respectively, representing the difference between the exercise price and

                                     F-24
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)

deemed fair market value for options to purchase shares granted to employees
and the fair value attributable to options granted to non-employees. These
amounts are being amortized in accordance with FIN No. 28 over the vesting
period of the option life, which is generally four years. As of December 31,
2000 we had unamortized deferred share compensation of $16,711 which is
expected to be fully amortized over the next three years. During the year
ended December 31, 2000, deferred compensation was reduced by $1,475 and
capital surplus was credited by a similar amount due to the termination of
certain employees.

 Share Purchase Plan

   In November 1999, our shareholders approved the 1999 Employee Stock
Purchase Plan. 500,000 Class A Ordinary Shares are currently reserved for
issuance pursuant to the purchase rights granted under the purchase plan in
the calendar year 2001. The first offering under the purchase plan began on
November 23, 1999. In the year ended December 31, 2000, 100,186 shares were
issued to employees under the plan for total proceeds of $1,359.

Note 8. Employee Benefit Plan

   Our employees participate in a 401(k) Plan which provides retirement
benefits through tax deferred salary deductions for all eligible employees
meeting certain age and service requirements. Participating employees may
contribute an amount up to 15% of their eligible compensation, subject to an
annual limit. We, at the discretion of our board of directors, may make
discretionary matching contributions on behalf of employees. We made
contributions to the Plan in the amounts of $115, $125, and $432 for the years
ended December 31, 1998, 1999 and 2000, respectively.

Note 9.  Income Taxes

   The components of loss before taxes are as follows:

<TABLE>
<CAPTION>
                                                    Year Ended December 31,
                                                  -----------------------------
                                                    1998      1999      2000
                                                  --------  --------  ---------
     <S>                                          <C>       <C>       <C>
     United States............................... $(13,645) $(23,423) $(211,774)
     International...............................     (557)  (67,034)   (29,512)
                                                  --------  --------  ---------
                                                  $(14,202) $(90,457) $(241,286)
                                                  ========  ========  =========
</TABLE>

   We operated as a limited liability company taxed as a partnership and were
not subject to income taxes prior to March 3, 1998. We did not provide any
current or deferred income taxes prior to January 1, 2000 since we incurred
operating losses in all jurisdictions.

                                     F-25
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


   The provision (benefit) for income taxes is comprised of the following:

<TABLE>
<CAPTION>
                                                   Year Ended December 31,
                                                  ---------------------------
                                                   1998      1999      2000
                                                  -------  --------  --------
     <S>                                          <C>      <C>       <C>
     Current
       United States............................. $   --   $    --   $    125
       International.............................     --        --        820
       State.....................................     --        --        200
                                                  -------  --------  --------
                                                  $   --   $    --   $  1,145
                                                  -------  --------  --------
     Deferred
       United States............................. $   --   $    --   $ (1,654)
                                                  -------  --------  --------
         Provision (benefit)..................... $   --   $    --   $   (509)
                                                  =======  ========  ========

   The provision (benefit) for income taxes differs from the amount computed
by applying the statutory United States Federal income tax rate to income
(loss) before taxes as follows:

<CAPTION>
                                                   Year Ended December 31,
                                                  ---------------------------
                                                   1998      1999      2000
                                                  -------  --------  --------
     <S>                                          <C>      <C>       <C>
     Income tax (benefit) at the Federal
      statutory rate of 35%...................... $(4,971) $(31,660) $(84,450)
     Amortization of goodwill....................     --        --     59,249
     Amortization of share-based compensation....       5     2,185     4,541
     International losses........................     195    23,314    10,329
     Change in valuation allowance...............   4,975     8,277    12,142
     Other.......................................    (204)   (2,116)   (2,320)
                                                  -------  --------  --------
                                                  $   --   $    --   $   (509)
                                                  =======  ========  ========

   The components of the net deferred tax assets and liabilities as of
December 31, 1998, 1999 and 2000 are as follows:

<CAPTION>
                                                   Year Ended December 31,
                                                  ---------------------------
                                                   1998      1999      2000
                                                  -------  --------  --------
     <S>                                          <C>      <C>       <C>
     Deferred tax liability, net:
       Deferred revenue.......................... $   430  $    720  $  2,258
       Accrued liabilities and reserves..........     357       330     1,497
       Unrealized investment gains...............     --        --     (8,006)
       Valuation allowance.......................    (787)   (1,050)   (1,459)
                                                  -------  --------  --------
                                                  $   --   $    --   $ (5,710)
                                                  =======  ========  ========
     Deferred tax asset, net:
       Equity compensation....................... $   --   $  2,794  $  2,674
       Depreciation and amortization.............     --        242       177
       Acquired intangibles......................     --        --     (8,752)
       Net operating loss carryforwards..........   4,053     8,446    33,996
       Credit carryforwards......................     135       720     1,550
       Valuation allowance.......................  (4,188)  (12,202)  (23,935)
                                                  -------  --------  --------
                                                  $   --   $    --   $  5,710
                                                  =======  ========  ========
</TABLE>

                                     F-26
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


   We provided a full valuation allowance on deferred tax assets in excess of
deferred tax liabilities because of our limited operating history and
uncertainty regarding realizability of the deferred tax assets.

   At December 31, 2000 we had approximately $87,000 and $46,000,
respectively, of Federal and state net operating losses to reduce future
taxable income. These carryforwards expire between 2010 and 2020 for Federal
tax purposes and between 2003 and 2010 for state income tax purposes, if not
utilized.

   For Federal and state income tax purposes, a portion of our net operating
loss carryforwards may be subject to certain limitations on utilization in the
event of certain changes in ownership as defined by Federal and state tax law.

Note 10. Commitments and Contingencies

   We have agreed to issue ordinary shares in exchange for shares of OpenTV,
Inc. held by minority shareholders, generally on a one-for-one basis, pursuant
to an exchange agreement and a plan of exchange. The exchange of shares will
represent the acquisition of a minority interest and will be accounted for
under the purchase method of accounting.

   We sublease our facilities from third parties under operating lease
agreements in the United States, Europe and Asia. These leases expire between
February 2001 and November 2005, respectively. Total rent expense, net of
sublease amounts, for the years ended December 31, 1998, 1999 and 2000 was
$1,819, $1,743 and $4,242, respectively.

   Future minimum payments under noncancelable operating leases as of December
31, 2000 are as follows:

<TABLE>
<CAPTION>
                                                              Minimum   Sublease
                                                            Commitments  Income
                                                            ----------- --------
     <S>                                                    <C>         <C>
     2001..................................................   $ 4,578     $497
     2002..................................................     3,563      155
     2003..................................................     3,065      --
     2004..................................................     2,297      --
     2005..................................................       785      --
                                                              -------     ----
                                                              $14,288     $652
                                                              =======     ====
</TABLE>

   As of December 31, 2000, we have a standby letter of credit with a bank of
approximately $1,000.

                                     F-27
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


Note 11. Related Party Transactions

   Related party transactions are as follows:

<TABLE>
<CAPTION>
                                                                                   Year Ended
                                                                                  December 31,
                                                                               -------------------
        Related Party                     Nature of Transaction                 1998  1999   2000
        -------------                     ---------------------                ------ ----- ------
   <S>                      <C>                                                <C>    <C>   <C>
   Sun Microsystems........ Consulting expense                                 $   15 $ --  $  --
                            Software technology license and equipment purchase    477   723    333
                            Interest expense on notes payable                       7     8    --
   Thomson Consumer
    Electronics, Inc. ..... Royalties, license fees and service revenue           205   465    950
                            Interest expense on notes payable                      26    33    --
   MIH Limited............. Consulting expense                                    278   --     --
                            Royalties, license fees and service revenue           --    --   1,631
                            Interest expense on notes payable                      26    33    --
   WOW TV, Inc............. Professional services revenue                         --    --      60

   Related party balances are as follows:

   Related parties receivable
   MIH Limited................................................................ $  --  $ 396 $1,570

   Related parties payable
   MIH Limited................................................................ $  304 $ 606 $  381
   Thomson Consumer Electronics, Inc. ........................................     26   --     --
   Sun Microsystems...........................................................      7   --     --
                                                                               ------ ----- ------
                                                                               $  337 $ 606 $  381
                                                                               ====== ===== ======
   Converted notes payable to shareholders
   MIH Limited................................................................ $3,114 $ --  $  --
   Thomson Consumer Electronics, Inc. ........................................  3,114   --     --
   Sun Microsystems...........................................................    772   --     --
                                                                               ------ ----- ------
                                                                               $7,000 $ --  $  --
                                                                               ====== ===== ======
</TABLE>

   The convertible notes bore interest at 5% per annum. In March 1999, the
notes and accrued interest were converted into 2,973,917 Class A Ordinary
Shares at $2.40 per share.

   On March 18, 1999, MIH Limited ("MIH") agreed to pay Thomson Consumer
Electronics, Inc. ("Thomson") $7,640 for certain intellectual property which
Thomson contributed to OpenTV and $38,566 for Thomson's 16,084,852 shares of
OpenTV's common stock. MIH issued a promissory note to Thomson for the total
amount. Thomson exchanged the promissory note for shares in MIH, a publicly
traded company, in April 1999. Sun exercised its right to acquire from MIH its
pro rata share of common stock of OpenTV which was acquired by MIH from
Thomson. As a result of these transactions, a new Stockholders' Agreement was
adopted on March 18, 1999 among OpenTV, MIH and Sun.

                                     F-28
<PAGE>

                                 OPENTV CORP.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
  (amounts in thousands of U.S. dollars, except share and per share amounts)


Note 12. Segment Information

   We currently have only one segment because there is only one measurement of
profitability for our operations.

<TABLE>
<CAPTION>
                                                      Year Ended December 31,
                                                      -------------------------
                                                       1998     1999     2000
                                                      -------  -------  -------
     <S>                                              <C>      <C>      <C>
     Revenue by country:
     France.......................................... $ 2,915  $ 2,853  $ 4,936
     Italy...........................................     483    1,473    2,817
     South Africa....................................     660    1,321    2,950
     Spain...........................................      66    1,994    1,306
     Taiwan..........................................     606    1,920    2,308
     United Kingdom..................................   2,333   10,476   19,394
     United States...................................   1,039    1,714   18,477
     Other foreign offices...........................   1,366    4,200   10,959
                                                      -------  -------  -------
                                                      $ 9,468  $25,951  $63,147
                                                      =======  =======  =======

   Revenues are attributed to countries based on the location of customers.

   Property and equipment by locations are as follows:

<CAPTION>
                                                           December 31,
                                                      -------------------------
                                                       1998     1999     2000
                                                      -------  -------  -------
     <S>                                              <C>      <C>      <C>
     Property and equipment, net:
     United States................................... $ 3,131  $ 4,548  $14,268
     Other foreign countries.........................     250      477    1,403
                                                      -------  -------  -------
                                                      $ 3,381  $ 5,025  $15,671
                                                      =======  =======  =======

   Several customers from whom we receive royalties sell set-top boxes to
British Sky Broadcasting. These customers accounted for 34% and 26% of revenue
for the years ended December 31, 1999 and 2000, respectively. Major individual
customers, as a percentage of revenue, are as follows:

<CAPTION>
                                                      Year Ended December 31,
                                                      -------------------------
                                                       1998     1999     2000
                                                      -------  -------  -------
     <S>                                              <C>      <C>      <C>
     Customer:
     A...............................................      16%       7%       5%
     B...............................................      14%       3%       0%
     C...............................................       0%      12%       8%
     D (Motorola)....................................       0%       0%      14%
</TABLE>

   As of December 31, 1998, 1999 and 2000 one customer accounted for 16% of
accounts receivable, two customers accounted for 20% of accounts receivable,
and two customers accounted for 26% of accounts receivable, respectively.

                                     F-29
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
 Number                           Document Description
 -------                          --------------------
 <C>     <S>
 1(a)    Memorandum of Association of OpenTV Corp.

 2(a)    Articles of Association of OpenTV Corp.

 3(a)    Specimen Certificate for Class A Ordinary Shares of OpenTV Corp.

 4.1(e)  Form of Indemnification Agreement for directors and officers of OpenTV
         Corp.

 4.2(e)  OpenTV's Amended and Restated 1999 Employee Stock Purchase Plan.

 4.3(a)  OpenTV's Amended and Restated 1999 Share Option/Share Issuance Plan.

 4.4(a)  Shareholder's Agreement among OTV Holdings Limited, OpenTV Corp. and
         Sun TSI Subsidiary, Inc. dated October 23, 1999.

 4.5(a)  Trademark License Agreement between Sun Microsystems, Inc. and OpenTV,
         Inc., dated March 20, 1998.

 4.6(a)  Technology License and Distribution Agreement between Sun
         Microsystems, Inc. and OpenTV, Inc., dated March 20, 1998.

 4.7(a)  First Amendment to Technology License and Distribution Agreement
         between Sun Microsystems, Inc. and OpenTV, Inc., dated June 30, 1999.

 4.8(a)  Source Code License and Binary Distribution Agreement between Sun
         Microsystems, Inc. and OpenTV, Inc., effective April 1, 1998.

 4.9(a)  Source Code License and Binary Distribution Agreement between Sun
         Microsystems, Inc. and OpenTV, Inc., effective April 1, 1996.

 4.10(a) Convertible Preferred Stock Purchase Agreement between OpenTV Corp.
         and Sun TSI Subsidiary, Inc., dated October 23, 1999.

 4.11(a) 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.

 4.12(a) Exchange Agreement between OpenTV Corp. OpenTV, Inc. and Sun TSI
         Subsidiary, Inc., dated October 23, 1999.

 4.13(a) 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.

 4.14(a) Amended and Restated Shareholders' Agreement among OpenTV Corp.,
         OpenTV Inc., OTV Holdings Limited, Sun Microsystems, Inc. and Sun TSI
         Subsidiary, Inc., dated October 23, 1999.

 4.15(b) Agreement and Plan of Merger and Reorganization by and among OpenTV
         Corp., Sonnet Acquisition Corp. and Spyglass, Inc. dated as of March
         26, 2000.

 4.16(b) Lease Agreement between Y.A. Tittle, R.G. Handley, et al, and OpenTV,
         Inc., dated January 15, 2000.

 4.17(c) OpenTV's Amended and Restated 2000 Exchange Plan.

 4.18(d) Agreement and Plan of Merger dated November 13, 2000 among OpenTV
         Corp., CableSoft Acquisition Company, CableSoft Corporation and the
         Selling Stockholders.

 4.19(d) Registration Rights Agreement by and among OpenTV Corp., General
         Instrument Corporation and Cable Soft Communications, Inc. dated
         November 13, 2000.

 4.20(e) Lease Agreement between Renault & Handley Employees Investment Co. and
         OpenTV Inc., dated January 15, 2001.
</TABLE>
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
 Exhibit
  Number                          Document Description
 -------                          --------------------
 <C>      <S>
 4.21(e)  Lease Agreement between Middlefield Road Joint Venture and OpenTV,
          Inc., dated January 22, 2001.

 4.22(e)  Marketing Agreement dated as of January 22, 2001 by and between
          British Sky Broadcasting Limited and OpenTV, Inc.

 4.23(e)* Second Amendment to Technology License and Distribution Agreement
          between Sun Microsystems, Inc. and OpenTV, Inc., dated December 20,
          2000.

 8(f)     Subsidiaries of OpenTV.

 10(e)    Consent of PricewaterhouseCoopers LLP.
</TABLE>
--------
(a) Incorporated by reference to the exhibit bearing the same name filed with
    the Company's Registration Statement on Form F-1 as amended (Registration
    No. 333-89609), which the Securities and Exchange Commission declared
    effective on November 23, 1999.

(b) Incorporated by reference to the exhibit bearing the same name filed with
    the Company's Registration Statement on Form F-4 as amended (Registration
    No. 333-37018), which the Securities and Exchange Commission declared
    effective on June 13, 2000.

(c) Incorporated by reference from the exhibit bearing the same name filed
    with the Company's report on Form 6-K filed on August 30, 2000.

(d) Incorporated by reference from the exhibit bearing the same name filed
    with the Company's report on Form 6-K filed on December 1, 2000.

(e) Filed herewith.

(f) Incorporated by reference to the Chart in Item 4.C. of this annual report.

 *  Confidential treatment is requested for portions of this exhibit. These
    portions have been omitted from this filing and are being filed separately
    with the Securities and Exchange Commission.