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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-Q





(Mark One)

|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2009

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period
from            to

Commission File Number: 001-15473





OPENTV CORP.

(Exact name of registrant as specified in its charter)







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

(415) 962-5000

(Registrants telephone number, including area code)





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 whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See the
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                |  |                           |  |  
|----------------------- |  | ---------------------------------------------- |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                              |  | Accelerated filer         |  | x
|                        |  |                                                | 
|Non-accelerated filer   |  |  ̈  (Do not check if smaller reporting company) |  | Smaller Reporting Company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x

As of September 30, 2009, the Registrant had outstanding:

107,891,190 Class A ordinary shares, no par value; and

30,206,154
Class B ordinary shares, no par value









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Table of Contents



|                              |  |          |  |                                                                                       |  |     
|----------------------------- |  | -------- |  | ------------------------------------------------------------------------------------- |  | ----
|                              |  |          |  |                                                                                       |  | Page
|Part I. Financial Information |  | 3       
|                              |  | Item 1.  |  | Financial Statements                                                                  |  | 3   
|                              |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 24  
|                              |  | Item 3.  |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 43  
|                              |  | Item 4.  |  | Controls and Procedures                                                               |  | 44  
|                              | 
|Part II. Other Information    |  | 44      
|                              |  | Item 1.  |  | Legal Proceedings                                                                     |  | 44  
|                              |  | Item 1A. |  | Risk Factors                                                                          |  | 46  
|                              |  | Item 6.  |  | Exhibits                                                                              |  | 46  
|                              | 
|Exhibit Index                 |  | 48      
|                              |  | EX-31.1: |  | CERTIFICATION                                                                         |  |     
|                              |  | EX-31.2: |  | CERTIFICATION                                                                         |  |     
|                              |  | EX-32:   |  | CERTIFICATIONS                                                                        |  |     

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



2



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Part I. Financial Information



|Item 1. | Financial Statements
|------- | --------------------

OPENTV CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)



|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ------------------ | - | ---------- | -
|                                                                                                                                                                                                                      |  | September 30,2009 |            |   | December 31,2008 * |  
|ASSETS                                                                                                                                                                                                                |  |                   |            |   |                    |   |            |  
|Current assets:                                                                                                                                                                                                       |  |                   |            |   |                    |   |            |  
|Cash and cash equivalents                                                                                                                                                                                             |  | $                 | 78,016     |   |                    | $ | 93,887     |  
|Short-term marketable debt securities                                                                                                                                                                                 |  |                   | 30,833     |   |                    |   | 7,768      |  
|Accounts receivable, net of allowance for doubtful accounts of $926 and $1,076 at September 30, 2009 and December 31,
2008, respectively                                                                              |  |                   | 30,289     |   |                    |   | 27,275     |  
|Prepaid expenses and other current assets                                                                                                                                                                             |  |                   | 5,530      |   |                    |   | 4,628      |  
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|Total current assets                                                                                                                                                                                                  |  |                   | 144,668    |   |                    |   | 133,558    |  
|Long-term marketable debt securities                                                                                                                                                                                  |  |                   | 4,995      |   |                    |   | 1,178      |  
|Property and equipment, net                                                                                                                                                                                           |  |                   | 7,824      |   |                    |   | 7,974      |  
|Goodwill                                                                                                                                                                                                              |  |                   | 95,443     |   |                    |   | 95,250     |  
|Intangible assets, net                                                                                                                                                                                                |  |                   | 7,505      |   |                    |   | 8,519      |  
|Other assets                                                                                                                                                                                                          |  |                   | 2,761      |   |                    |   | 2,471      |  
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|Total assets                                                                                                                                                                                                          |  | $                 | 263,196    |   |                    | $ | 248,950    |  
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|                                                                                                                                                                                                                      |  |                  
|LIABILITIES AND EQUITY                                                                                                                                                                                                |  |                   |            |   |                    |   |            |  
|Current liabilities:                                                                                                                                                                                                  |  |                   |            |   |                    |   |            |  
|Accounts payable                                                                                                                                                                                                      |  | $                 | 2,649      |   |                    | $ | 2,287      |  
|Accrued liabilities                                                                                                                                                                                                   |  |                   | 18,639     |   |                    |   | 17,602     |  
|Accrued restructuring                                                                                                                                                                                                 |  |                   | 325        |   |                    |   | 238        |  
|Deferred revenue                                                                                                                                                                                                      |  |                   | 23,315     |   |                    |   | 16,130     |  
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|Total current liabilities                                                                                                                                                                                             |  |                   | 44,928     |   |                    |   | 36,257     |  
|Accrued liabilities, net of current portion                                                                                                                                                                           |  |                   | 986        |   |                    |   | 1,160      |  
|Accrued restructuring, net of current portion                                                                                                                                                                         |  |                   | 1,091      |   |                    |   | 1,146      |  
|Deferred revenue, net of current portion                                                                                                                                                                              |  |                   | 15,738     |   |                    |   | 17,092     |  
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|Total liabilities                                                                                                                                                                                                     |  |                   | 62,743     |   |                    |   | 55,655     |  
|Commitments and contingencies (Note 13)                                                                                                                                                                               |  |                   |            |   |                    |   |            |  
|OpenTV Shareholders equity:                                                                                                                                                                                          |  |                   |            |   |                    |   |            |  
|Preference shares, no par value, 500,000,000 shares authorized; none issued and outstanding                                                                                                                           |  |                   |           |   |                    |   |           |  
|Class A ordinary shares, no par value, 500,000,000 shares authorized; 107,891,190 and 108,385,176 shares issued and
outstanding, including treasury shares, at September 30, 2009 and December 31, 2008, respectively |  |                   | 2,234,287  |   |                    |   | 2,234,687  |  
|Class B ordinary shares, no par value, 200,000,000 shares authorized; 30,206,154 shares issued and outstanding at
September 30, 2009 and December 31, 2008                                                            |  |                   | 35,953     |   |                    |   | 35,953     |  
|Additional paid-in capital                                                                                                                                                                                            |  |                   | 516,304    |   |                    |   | 515,506    |  
|Treasury shares at cost, zero and 523,647 shares at September 30, 2009 and December 31, 2008,
respectively                                                                                                            |  |                   |           |   |                    |   | (623       | )
|Accumulated other comprehensive loss                                                                                                                                                                                  |  |                   | (1,521     | ) |                    |   | (2,163     | )
|Accumulated deficit                                                                                                                                                                                                   |  |                   | (2,584,996 | ) |                    |   | (2,590,496 | )
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|Total OpenTV shareholders equity                                                                                                                                                                                     |  |                   | 200,027    |   |                    |   | 192,864    |  
|Noncontrolling interest                                                                                                                                                                                               |  |                   | 426        |   |                    |   | 431        |  
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|Total equity                                                                                                                                                                                                          |  |                   | 200,453    |   |                    |   | 193,295    |  
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  
|Total liabilities and equity                                                                                                                                                                                          |  | $                 | 263,196    |   |                    | $ | 248,950    |  
|                                                                                                                                                                                                                      |  |                   |            |   |                    |   |            |  



|* | The condensed consolidated balance sheet at December 31, 2008 has been derived from the companys audited consolidated financial statements at that date.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

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



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OPENTV CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)



|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|------------------------------------------------------------ |  | -------------------------------- | ----------- | ---- | ------------------------------- | ----------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                                             |  | Three Months Ended September 30, |             |      | Nine Months Ended September 30, |            
|                                                             |  | 2009                             |             | 2008 |                                 |             | 2009 |  |   | 2008        |  
|Revenues:                                                    |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Royalties and licenses                                       |  | $                                | 20,711      |      | $                               | 16,494      |      |  | $ | 61,865      |   |  | $ | 56,911      |  
|Services and other                                           |  |                                  | 11,071      |      |                                 | 10,427      |      |  |   | 26,930      |   |  |   | 30,638      |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Total revenues                                               |  |                                  | 31,782      |      |                                 | 26,921      |      |  |   | 88,795      |   |  |   | 87,549      |  
|Cost of revenues:                                            |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Royalties and licenses                                       |  |                                  | 868         |      |                                 | 1,202       |      |  |   | 2,801       |   |  |   | 3,960       |  
|Services and other                                           |  |                                  | 10,945      |      |                                 | 9,106       |      |  |   | 31,115      |   |  |   | 29,185      |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Total cost of revenues                                       |  |                                  | 11,813      |      |                                 | 10,308      |      |  |   | 33,916      |   |  |   | 33,145      |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Gross profit                                                 |  |                                  | 19,969      |      |                                 | 16,613      |      |  |   | 54,879      |   |  |   | 54,404      |  
|Operating expenses:                                          |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Research and development                                     |  |                                  | 8,731       |      |                                 | 8,031       |      |  |   | 25,900      |   |  |   | 25,769      |  
|Sales and marketing                                          |  |                                  | 2,407       |      |                                 | 2,818       |      |  |   | 6,125       |   |  |   | 7,503       |  
|General and administrative                                   |  |                                  | 6,052       |      |                                 | 4,121       |      |  |   | 15,559      |   |  |   | 15,030      |  
|Restructuring and impairment                                 |  |                                  | 157         |      |                                 | (7          | )    |  |   | 149         |   |  |   | 575         |  
|Amortization of intangible assets                            |  |                                  | 62          |      |                                 | 181         |      |  |   | 200         |   |  |   | 551         |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Total operating expenses                                     |  |                                  | 17,409      |      |                                 | 15,144      |      |  |   | 47,933      |   |  |   | 49,428      |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Profit from operations                                       |  |                                  | 2,560       |      |                                 | 1,469       |      |  |   | 6,946       |   |  |   | 4,976       |  
|Interest income                                              |  |                                  | 96          |      |                                 | 514         |      |  |   | 286         |   |  |   | 1,866       |  
|Other income (expense)                                       |  |                                  | 168         |      |                                 | (1,471      | )    |  |   | (789        | ) |  |   | 776         |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Profit before income taxes                                   |  |                                  | 2,824       |      |                                 | 512         |      |  |   | 6,443       |   |  |   | 7,618       |  
|Income tax expense (benefit)                                 |  |                                  | 213         |      |                                 | (445        | )    |  |   | 943         |   |  |   | 325         |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Net income                                                   |  |                                  | 2,611       |      |                                 | 957         |      |  |   | 5,500       |   |  |   | 7,293       |  
|Less: Net income attributable to the noncontrolling interest |  |                                  |            |      |                                 | (2          | )    |  |   | (5          | ) |  |   | (18         | )
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Net income attributable to OpenTV                            |  | $                                | 2,611       |      | $                               | 955         |      |  | $ | 5,495       |   |  | $ | 7,275       |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Net income attributable to OpenTV per share, basic           |  | $                                | 0.02        |      | $                               | 0.01        |      |  | $ | 0.04        |   |  | $ | 0.05        |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Net income attributable to OpenTV per share, diluted         |  | $                                | 0.02        |      | $                               | 0.01        |      |  | $ | 0.04        |   |  | $ | 0.05        |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Shares used in per share calculation, basic                  |  |                                  | 138,107,816 |      |                                 | 139,465,910 |      |  |   | 138,098,719 |   |  |   | 139,629,135 |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Shares used in per share calculation, diluted                |  |                                  | 138,798,654 |      |                                 | 140,197,701 |      |  |   | 138,818,274 |   |  |   | 140,347,942 |  
|                                                             |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  

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



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OPENTV CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                  |  |                                 |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Nine Months Ended September 30, |        
|                                                                                  |  | 2009                            |         |   | 2008 |  
|Cash flows from operating activities:                                             |  |                                 |         |   |      |   |         |  
|Net income                                                                        |  | $                               | 5,500   |   |      | $ | 7,293   |  
|Less: Net income attributable to the noncontrolling interest                      |  |                                 | (5      | ) |      |   | (18     | )
|                                                                                  |  |                                 |         |   |      |   |         |  
|Net income attributable to OpenTV                                                 |  |                                 | 5,495   |   |      |   | 7,275   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |         |   |      |   |         |  
|Depreciation and amortization of property and equipment                           |  |                                 | 3,320   |   |      |   | 3,120   |  
|Amortization of intangible assets                                                 |  |                                 | 1,013   |   |      |   | 2,848   |  
|Share-based compensation                                                          |  |                                 | 1,088   |   |      |   | 2,205   |  
|Non-cash employee compensation                                                    |  |                                 | 2       |   |      |   | 8       |  
|Non-cash restructuring costs                                                      |  |                                 | 19      |   |      |   |        |  
|Provision for doubtful accounts                                                   |  |                                 | 621     |   |      |   | (23     | )
|Gain on sale of cost investment                                                   |  |                                 | (120    | ) |      |   | (143    | )
|Loss on disposal of fixed assets                                                  |  |                                 | 23      |   |      |   | 1       |  
|Changes in operating assets and liabilities:                                      |  |                                 |         |   |      |   |         |  
|Accounts receivable                                                               |  |                                 | (4,255  | ) |      |   | (10,707 | )
|Prepaid expenses and other current assets                                         |  |                                 | (902    | ) |      |   | (269    | )
|Other assets                                                                      |  |                                 | (291    | ) |      |   | (716    | )
|Accounts payable                                                                  |  |                                 | 590     |   |      |   | (1,021  | )
|Accrued liabilities                                                               |  |                                 | 727     |   |      |   | (2,799  | )
|Accrued restructuring                                                             |  |                                 | 32      |   |      |   | (677    | )
|Deferred revenue                                                                  |  |                                 | 6,451   |   |      |   | 6,333   |  
|                                                                                  |  |                                 |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                                 | 13,813  |   |      |   | 5,435   |  
|Cash flows from investing activities:                                             |  |                                 |         |   |      |   |         |  
|Purchase of property and equipment                                                |  |                                 | (3,098  | ) |      |   | (3,514  | )
|Cash used in acquisition, net of cash acquired (Note 5)                           |  |                                 |        |   |      |   | (96     | )
|Proceeds from sale of cost investment                                             |  |                                 | 120     |   |      |   | 1,882   |  
|Proceeds from disposal of property and equipment                                  |  |                                 | 2       |   |      |   |        |  
|Proceeds from sale of marketable debt securities                                  |  |                                 | 6,044   |   |      |   | 18,105  |  
|Purchase of marketable debt securities                                            |  |                                 | (33,123 | ) |      |   | (5,137  | )
|                                                                                  |  |                                 |         |   |      |   |         |  
|Net cash provided by (used in) investing activities of continuing operations      |  |                                 | (30,055 | ) |      |   | 11,240  |  
|Net cash provided by investing activities of discontinued operations              |  |                                 |        |   |      |   | 225     |  
|                                                                                  |  |                                 |         |   |      |   |         |  
|Net cash provided by (used in) investing activities                               |  |                                 | (30,055 | ) |      |   | 11,465  |  
|Cash flows from financing activities:                                             |  |                                 |         |   |      |   |         |  
|Repurchase of restricted shares                                                   |  |                                 | (127    | ) |      |   | (454    | )
|Repurchase of treasury shares                                                     |  |                                 | (228    | ) |      |   |        |  
|Capital contribution from the former controlling shareholder                      |  |                                 |        |   |      |   | 14,333  |  
|Proceeds from issuance of ordinary shares                                         |  |                                 | 21      |   |      |   | 17      |  
|                                                                                  |  |                                 |         |   |      |   |         |  
|Net cash provided by (used in) financing activities                               |  |                                 | (334    | ) |      |   | 13,896  |  
|Effect of exchange rate changes on cash and cash equivalents                      |  |                                 | 705     |   |      |   | (674    | )
|                                                                                  |  |                                 |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                              |  |                                 | (15,871 | ) |      |   | 30,122  |  
|Cash and cash equivalents, beginning of period                                    |  |                                 | 93,887  |   |      |   | 58,599  |  
|                                                                                  |  |                                 |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                          |  | $                               | 78,016  |   |      | $ | 88,721  |  
|                                                                                  |  |                                 |         |   |      |   |         |  
|Supplemental disclosure of cash flow information:                                 |  |                                 |         |   |      |   |         |  
|Cash paid for income taxes                                                        |  | $                               | (516    | ) |      | $ | (1,412  | )
|                                                                                  |  |                                 |         |   |      |   |         |  
|Non-cash investing and financing activities:                                      |  |                                 |         |   |      |   |         |  
|Conversion of exchangeable shares                                                 |  | $                               | 18      |   |      | $ | 2       |  
|                                                                                  |  |                                 |         |   |      |   |         |  
|Retirement of treasury shares                                                     |  | $                               | 623     |   |      | $ |        |  
|                                                                                  |  |                                 |         |   |      |   |         |  

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



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##### Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

In the opinion of management, these unaudited condensed consolidated interim financial statements (interim financial statements) have been prepared on the same basis as our December 31, 2008 audited consolidated financial statements
and include all adjustments, consisting of only normal closing adjustments, necessary to fairly state the information set forth within. Certain information and footnote disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim period financial statements.
These interim financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2008.

Management has evaluated subsequent events through the date the interim financial statements were issued, which was November 4, 2009.

Principles of Consolidation

The accompanying interim financial statements include the accounts of OpenTV Corp., sometimes referred to herein as OpenTV, together with its wholly-owned and majority-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated. Certain prior period amounts have been reclassified to conform to the 2009 presentation, primarily to account for a noncontrolling interest.

Use of Estimates

The preparation of the accompanying interim financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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 materially from these estimates. Significant estimates and assumptions include
matters related to revenue recognition, valuation allowances, impairments, restructuring costs and share-based compensation.

Note 2.
Summary of Significant Accounting Policies

Business Combinations

In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141(Revised
2007), Business Combinations (SFAS 141(R)) as codified under FASB Accounting Standards Codification Topic 805 Business Combinations (ASC 805). Under ASC 805, an acquiring entity is required to recognize all of
the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. ASC 805 significantly changes the accounting for business combinations. ASC 805 also includes a substantial number of new
disclosure requirements. ASC 805 applies prospectively to business combinations for which the acquisition date is on or after commencement of the first annual reporting period beginning on or after December 15, 2008.

In April 2009, the FASB issued FASB Staff Position (FSP) FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies (FSP FAS 141R-1) as codified under ASC 805. FSP FAS 141R-1 amends the guidance in SFAS 141(R) to address application issues associated with initial recognition and measurement, subsequent
measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. ASC 805 is effective for assets or liabilities arising from contingencies in business combinations for which the acquisition
date is on or after commencement of the first annual reporting period beginning on or after December 15, 2008.

The adoption
of ASC 805 as of January 1, 2009 did not have a material impact on our financial statements. However, the adoption of ASC 805 may cause any future business combinations into which we enter to have a significant impact on our financial statements as
compared to our prior acquisitions which were accounted for according to the prior rules under GAAP.



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Intangible Assets

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets, as codified under
FASB Accounting Standards Codification Subtopic 350-30 Intangibles - Goodwill and Other: General Intangibles Other than Goodwill (ASC 350-30). ASC 350-30 amends the factors that should be considered in developing renewal or
extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, as codified under FASB ASC Topic 350 Intangibles Goodwill and Other (ASC 350). The intent of ASC 350-30 is to improve the
consistency between the useful life of a recognized intangible asset under ASC 350 and the period of expected cash flows used to measure the fair value of the asset under ASC 805 and other related rules under GAAP. ASC 350-30 is effective for
financial statements issued for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. The adoption of ASC 350-30 as of January 1, 2009 did not have a material impact on our financial statements.

Noncontrolling Interest

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements-An Amendment of ARB No. 51 as codified under FASB Accounting Standards Codification Topic 810
Consolidation (ASC 810). ASC 810 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. ASC 810 is effective for fiscal years beginning on or
after December 15, 2008 and interim periods within those fiscal years. The adoption of ASC 810 as of January 1, 2009 did not have a material impact on our financial statements. Upon adoption of ASC 810, we reclassified a noncontrolling interest as a
separate component of equity and noncontrolling interest income to net income attributable to noncontrolling interest in our financial statements. In addition, we disclosed the noncontrolling interest component in the comprehensive income footnote
as required by ASC 810.

Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles - A Replacement of FASB Statement No. 162 (the Codification) which established the Codification as the official single source of authoritative GAAP to be applied by nongovernmental entities. Rules and interpretive
releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009.
On the effective date of the Codification, all existing non-SEC accounting and reporting standards were superseded by the Codification and any accounting literature not included in the Codification is no longer authoritative. Following the
Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issue Task Force abstracts. Instead, it will issue accounting standard updates which will serve to update the Codification, provide
background information about guidance and provide the basis for conclusion on the changes to the Codification. Therefore, beginning with the quarter ending September 30, 2009, all references made to GAAP in the Companys notes to condensed
consolidated financial statements use the new Codification numbering system. The Codification does not change or alter existing GAAP and, therefore, did not have an impact on our financial statements.

In April 2009, the FASB issued SFAS No. 165, Subsequent Events as codified under FASB Accounting Standards Codification
Topic 855 Subsequent Events (ASC 855). ASC 855 establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued.
ASC 855 is effective for financial statements issued for interim and annual periods ending after June 15, 2009. The adoption of ASC 855 did not have a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly as codified under FASB Accounting Standards Codification Subtopic 820-10, Fair Value Measurements and Disclosures (ASC 820-10). ASC 820-10
provides additional guidance on factors to consider in estimating fair value when there has been a significant decrease in market activity for a financial asset. ASC 820-10 applies prospectively; retrospective application is not permitted. ASC
820-10 is effective for interim and annual periods ending after June 15, 2009. The adoption of ASC 820-10 did not have a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, both which were codified under FASB Accounting Standards
Codification Topic 320 Investments in Debt and Equity Securities (ASC 320). ASC 320 changes the method for determining whether an other-than-temporary impairment exists for debt securities and the requirements for measurement and
presentation of such impairment. ASC 320 is effective for interim and annual periods ending after June 15, 2009. The adoption of ASC 320 did not have a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments,
both which were codified under FASB Accounting Standards Codification Subtopic 825-10, Fair Value Measurements and Disclosures (ASC 825-10). ASC 825-10 require an entity to provide disclosures about the fair value of its financial
instruments in interim reporting periods and annual reporting periods. ASC 825-10 is effective for interim and annual periods ending after June 15, 2009. The adoption of ASC 825-10 did not have a material impact on our financial statements.



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Note 3. Net Income Per Share

Basic net income per share is computed using the weighted average number of ordinary shares outstanding during the periods presented. Diluted
net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consists of incremental ordinary shares issuable upon the exercise
of stock options (using the treasury stock method) and ordinary shares issuable in exchange for shares of common stock (using the if-converted method) of OpenTV, Inc., our subsidiary.

The following table sets forth the computation of basic and diluted net income per share (in thousands, except for share and

per-share amounts):



|                                                                                                                     |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|-------------------------------------------------------------------------------------------------------------------- |  | -------------------------------- | ----------- | ---- | ------------------------------- | ----------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                                                                                                     |  | Three Months Ended September 30, |             |      | Nine Months Ended September 30, |            
|                                                                                                                     |  | 2009                             |             | 2008 |                                 |             | 2009 |  |   | 2008        |  
|Numerator:                                                                                                           |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Net income                                                                                                           |  | $                                | 2,611       |      | $                               | 957         |      |  | $ | 5,500       |   |  | $ | 7,293       |  
|Less: Net income attributable to the noncontrolling interest                                                         |  |                                  |            |      |                                 | (2          | )    |  |   | (5          | ) |  |   | (18         | )
|                                                                                                                     |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Net income attributable to OpenTV                                                                                    |  | $                                | 2,611       |      | $                               | 955         |      |  | $ | 5,495       |   |  | $ | 7,275       |  
|                                                                                                                     |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Denominator - basic:                                                                                                 |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Basic weighted average shares                                                                                        |  |                                  | 138,107,816 |      |                                 | 139,465,910 |      |  |   | 138,098,719 |   |  |   | 139,629,135 |  
|                                                                                                                     |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Denominator - diluted:                                                                                               |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Weighted average shares                                                                                              |  |                                  | 138,107,816 |      |                                 | 139,465,910 |      |  |   | 138,098,719 |   |  |   | 139,629,135 |  
|Effect of dilutive securities:                                                                                       |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Class A ordinary shares issuable upon exercise of stock options                                                      |  |                                  | 79,035      |      |                                 | 78,225      |      |  |   | 85,373      |   |  |   | 63,662      |  
|Class A ordinary shares issuable for shares of OpenTV, Inc.                                                          |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Class A common stock (including shares of OpenTV, Inc. Class A common stock issuable upon exercise of stock options) |  |                                  | 611,803     |      |                                 | 653,566     |      |  |   | 634,182     |   |  |   | 655,145     |  
|                                                                                                                     |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Diluted weighted average shares                                                                                      |  |                                  | 138,798,654 |      |                                 | 140,197,701 |      |  |   | 138,818,274 |   |  |   | 140,347,942 |  
|                                                                                                                     |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Net income attributable to OpenTV per share, basic                                                                   |  | $                                | 0.02        |      | $                               | 0.01        |      |  | $ | 0.04        |   |  | $ | 0.05        |  
|                                                                                                                     |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  
|Net income attributable to OpenTV per share, diluted                                                                 |  | $                                | 0.02        |      | $                               | 0.01        |      |  | $ | 0.04        |   |  | $ | 0.05        |  
|                                                                                                                     |  |                                  |             |      |                                 |             |      |  |   |             |   |  |   |             |  

The following weighted average items as of September 30, 2009 and 2008 were not
included in the computation of diluted net income per share because the effect would be anti-dilutive:



|                                                                |  |                                  |  |                                 |  |           |  |          
|--------------------------------------------------------------- |  | -------------------------------- |  | ------------------------------- |  | --------- |  | ---------
|                                                                |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|                                                                |  | 2009                             |  | 2008                            |  | 2009      |  | 2008     
|Class A ordinary shares issuable upon exercise of stock options |  | 4,744,510                        |  | 5,165,526                       |  | 4,804,050 |  | 5,445,289



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Note 4. Balance Sheet Components (in thousands)



|                                                |  |                   |         |   |                  |   |         |  
|----------------------------------------------- |  | ----------------- | ------- | - | ---------------- | - | ------- | -
|                                                |  | September 30,2009 |         |   | December 31,2008 |  
|Prepaid expenses and other current assets:      |  |                   |         |   |                  |   |         |  
|Value added tax                                 |  | $                 | 538     |   |                  | $ | 555     |  
|Current deferred tax asset                      |  |                   | 361     |   |                  |   | 312     |  
|Prepaid rent                                    |  |                   | 524     |   |                  |   | 572     |  
|Deferred contract costs                         |  |                   | 1,965   |   |                  |   | 719     |  
|Other                                           |  |                   | 2,142   |   |                  |   | 2,470   |  
|                                                |  |                   |         |   |                  |   |         |  
|                                                |  | $                 | 5,530   |   |                  | $ | 4,628   |  
|                                                |  |                   |         |   |                  |   |         |  
|Property and equipment:                         |  |                   |         |   |                  |   |         |  
|Computers and equipment                         |  | $                 | 16,946  |   |                  | $ | 15,383  |  
|Software                                        |  |                   | 3,787   |   |                  |   | 2,845   |  
|Furniture and fixtures                          |  |                   | 1,882   |   |                  |   | 1,768   |  
|Leasehold improvements                          |  |                   | 3,515   |   |                  |   | 2,969   |  
|                                                |  |                   |         |   |                  |   |         |  
|                                                |  |                   | 26,130  |   |                  |   | 22,965  |  
|Less: Accumulated depreciation and amortization |  |                   | (18,306 | ) |                  |   | (15,228 | )
|Add: Construction in progress                   |  |                   |        |   |                  |   | 237     |  
|                                                |  |                   |         |   |                  |   |         |  
|                                                |  | $                 | 7,824   |   |                  | $ | 7,974   |  
|                                                |  |                   |         |   |                  |   |         |  
|Other assets:                                   |  |                   |         |   |                  |   |         |  
|Deposits                                        |  | $                 | 2,131   |   |                  | $ | 1,240   |  
|Deferred contract costs                         |  |                   | 354     |   |                  |   | 958     |  
|Long-term deferred tax asset                    |  |                   | 258     |   |                  |   | 258     |  
|Other                                           |  |                   | 18      |   |                  |   | 15      |  
|                                                |  |                   |         |   |                  |   |         |  
|                                                |  | $                 | 2,761   |   |                  | $ | 2,471   |  
|                                                |  |                   |         |   |                  |   |         |  
|Accrued liabilities (current and non-current):  |  |                   |         |   |                  |   |         |  
|Accrued payroll and related liabilities         |  | $                 | 9,757   |   |                  | $ | 11,251  |  
|Accrued professional fees                       |  |                   | 817     |   |                  |   | 1,286   |  
|Accrued income taxes                            |  |                   | 2,075   |   |                  |   | 1,799   |  
|Deferred rent                                   |  |                   | 580     |   |                  |   | 1,043   |  
|Other                                           |  |                   | 6,396   |   |                  |   | 3,383   |  
|                                                |  |                   |         |   |                  |   |         |  
|                                                |  | $                 | 19,625  |   |                  | $ | 18,762  |  
|                                                |  |                   |         |   |                  |   |         |  

As of September 30, 2009 and December 31, 2008, accounts receivable
included approximately $2.5 million and $0.3 million, respectively, of unbilled receivables.

Note 5. Goodwill

As of September 30, 2009, our goodwill balance related to (i) our acquisitions of Wink Communications, Inc., ACTV Inc.,
BettingCorp, substantially all of the assets of CAM Systems, LLC, and Ruzz TV Pty Ltd, and (ii) our acquisition of noncontrolling interests upon the exchange of OpenTV, Inc. shares for shares of OpenTV Corp.

We acquired Ruzz TV in September 2008 for an up-front cash payment of $0.2 million. In June 2009, we recorded approximately $0.2
million of additional goodwill related to contingent consideration earned by Ruzz TV upon achievement of a specified revenue target. Payment of the contingent consideration was made in September 2009.



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Minority stockholders of OpenTV, Inc., which is a subsidiary of ours that is not publicly
traded, have the ability, under certain arrangements, to exchange their shares of OpenTV, Inc. for our Class A ordinary shares, generally on a one-for-one basis. As the shares are exchanged, they are accounted for at fair value. This accounting
effectively provides that at each exchange date, the exchange is accounted for as a purchase by us of a noncontrolling interest in OpenTV, Inc., valued at the number of our Class A ordinary shares issued to effect the exchange multiplied by the
market price of a Class A ordinary share on that date, as such price is reported on The NASDAQ Stock Market.

Note 6. Intangible
Assets

The components of intangible assets, net, excluding goodwill, were as follows (in thousands):



|                            |  |                    |  |                     |        |                         |   |        |                   |  |                    |       |  |   |      
|--------------------------- |  | ------------------ |  | ------------------- | ------ | ----------------------- | - | ------ | ----------------- |  | ------------------ | ----- |  | - | -----
|                            |  |                    |  | September 30,2009   |        | December 31,2008       
|                            |  | UsefulLife inYears |  | GrossCarryingAmount |        | AccumulatedAmortization |   |        | NetCarryingAmount |  | Net CarryingAmount
|Intangible assets:          |  |                    |  |                     |        |                         |   |        |                   |  |                    |       |  |   |      
|Patents                     |  | 13                 |  | $                   | 14,102 |                         | $ | (6,781 | )                 |  | $                  | 7,321 |  | $ | 8,136
|Contracts and relationships |  | 5                  |  |                     | 1,000  |                         |   | (816   | )                 |  |                    | 184   |  |   | 333  
|Trademarks                  |  | 4                  |  |                     | 300    |                         |   | (300   | )                 |  |                    |      |  |   | 50   
|                            |  |                    |  |                     |        |                         |   |        |                   |  |                    |       |  |   |      
|                            |  |                    |  | $                   | 15,402 |                         | $ | (7,897 | )                 |  | $                  | 7,505 |  | $ | 8,519
|                            |  |                    |  |                     |        |                         |   |        |                   |  |                    |       |  |   |      

The intangible assets are being amortized on a straight-line basis over their
estimated useful lives. Aggregate amortization of intangible assets was $0.3 million and $0.8 million for the three months ended September 30, 2009 and 2008, respectively, and $1.0 million and $2.8 million for the nine months ended
September 30, 2009 and 2008, respectively. Of the aggregate amount, $0.3 million and $0.6 million were reported in cost of revenues (royalties and licenses) in the statement of operations for the three months ended September 30,
2009 and 2008, respectively, and $0.8 million and $2.2 million for the nine months ended September 30, 2009 and 2008, respectively.

The future annual amortization expense is expected to be as follows (in thousands):



|                              |  |                     |      
|----------------------------- |  | ------------------- | -----
|Year Ending December 31,      |  | AmortizationExpense
|2009 (remaining three months) |  | $                   | 321  
|2010                          |  |                     | 1,218
|2011                          |  |                     | 1,085
|2012                          |  |                     | 1,085
|2013                          |  |                     | 1,085
|2014                          |  |                     | 1,085
|Thereafter                    |  |                     | 1,626
|                              |  |                     |      
|                              |  | $                   | 7,505
|                              |  |                     |      

Note 7. Restructuring and Impairment Costs

We continuously monitor our organizational structure and associated operating expenses. Depending upon events and circumstances, actions may
be taken to restructure the business. Restructuring activities could include terminating employees, abandoning excess leased space and incurring other exit costs. Restructuring costs are recorded in accordance with SFAS No. 146, Accounting
for Costs Associated with Exit or Disposal Activities as codified under FASB Accounting Standards Codification Topic 420 Exit or Disposal Cost Obligations (ASC 420). ASC 420 requires that a liability for the cost
associated with an exit or disposal activity be recognized when the liability is incurred. Any resulting restructuring costs depend on numerous estimates made by us based on our knowledge of the activity being affected, the cost to exit existing
commitments and fair value estimates. These estimates could differ from actual results. We monitor the initial estimates periodically and record an adjustment for any significant changes in estimates. During the three months ended September 30,
2009, the restructuring charge included approximately $19,000 of impairment costs for fixed assets that were directly associated with the exit activities recorded during the quarter.



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The following sets forth the restructuring activity during the three and nine months ended
September 30, 2009 (in thousands):



|                            |  |                               |     |   |                  |   |       |       |  |   |       |  
|--------------------------- |  | ----------------------------- | --- | - | ---------------- | - | ----- | ----- |  | - | ----- | -
|                            |  | EmployeeSeveranceand Benefits |     |   | ExcessFacilities |   |       | Total | 
|Balance, December 31, 2008  |  | $                             | 14  |   |                  | $ | 1,370 |       |  | $ | 1,384 |  
|Reversal                    |  |                               | (7  | ) |                  |   |      |       |  |   | (7    | )
|Cash payments               |  |                               | (7  | ) |                  |   | (12   | )     |  |   | (19   | )
|                            |  |                               |     |   |                  |   |       |       |  |   |       |  
|Balance, March 31, 2009     |  |                               |    |   |                  |   | 1,358 |       |  |   | 1,358 |  
|Cash payments               |  |                               |    |   |                  |   | (4    | )     |  |   | (4    | )
|                            |  |                               |     |   |                  |   |       |       |  |   |       |  
|Balance, June 30, 2009      |  |                               |    |   |                  |   | 1,354 |       |  |   | 1,354 |  
|Provision                   |  |                               | 137 |   |                  |   |      |       |  |   | 137   |  
|Cash payments               |  |                               | (25 | ) |                  |   | (50   | )     |  |   | (75   | )
|                            |  |                               |     |   |                  |   |       |       |  |   |       |  
|Balance, September 30, 2009 |  | $                             | 112 |   |                  | $ | 1,304 |       |  | $ | 1,416 |  
|                            |  |                               |     |   |                  |   |       |       |  |   |       |  

The outstanding accrual for excess facilities relates to operating lease obligations
that expire in 2016.

Note 8. Comprehensive Income

The components of comprehensive income, net of tax, were as follows (in thousands):



|                                                                         |  |                                  |       |      |                                 |     |      |  |   |       |   |  |   |       |  
|------------------------------------------------------------------------ |  | -------------------------------- | ----- | ---- | ------------------------------- | --- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                         |  | Three Months Ended September 30, |       |      | Nine Months Ended September 30, |    
|                                                                         |  | 2009                             |       | 2008 |                                 |     | 2009 |  |   | 2008  |  
|Reported net income                                                      |  | $                                | 2,611 |      | $                               | 957 |      |  | $ | 5,500 |   |  | $ | 7,293 |  
|Other comprehensive income (loss):                                       |  |                                  |       |      |                                 |     |      |  |   |       |   |  |   |       |  
|Foreign currency translation gains (losses)                              |  |                                  | 258   |      |                                 | (85 | )    |  |   | 839   |   |  |   | (347  | )
|Unrealized losses on available-for-sale investments, net of income taxes |  |                                  | 24    |      |                                 | (95 | )    |  |   | (197  | ) |  |   | (227  | )
|                                                                         |  |                                  |       |      |                                 |     |      |  |   |       |   |  |   |       |  
|Comprehensive income                                                     |  |                                  | 2,893 |      |                                 | 777 |      |  |   | 6,142 |   |  |   | 6,719 |  
|Comprehensive income attributable to the noncontrolling interest         |  |                                  |      |      |                                 | (2  | )    |  |   | (5    | ) |  |   | (18   | )
|                                                                         |  |                                  |       |      |                                 |     |      |  |   |       |   |  |   |       |  
|Comprehensive income attributable to OpenTV                              |  | $                                | 2,893 |      | $                               | 775 |      |  | $ | 6,137 |   |  | $ | 6,701 |  
|                                                                         |  |                                  |       |      |                                 |     |      |  |   |       |   |  |   |       |  

Note 9. Share-based Compensation Plans

Employee Stock Purchase Plan

We have an Amended and Restated 1999 Employee Stock Purchase Plan, or ESPP. Our board of directors suspended the ESPP in 2003, and no options or purchase rights are currently outstanding under the ESPP. The ESPP terminates on
December 31, 2009.

Option Plans

Options are currently outstanding under the following plans: (i) the Amended and Restated OpenTV Corp. 1999 Share Option/Share Issuance Plan (1999 Plan); (ii) the Amended and Restated OpenTV,
Inc. 1998 Option/Stock Issuance Plan (1998 Plan); (iii) the OpenTV Corp. 2001 Nonstatutory Stock Option Plan (2001 Plan); (iv) the OpenTV Corp. 2003 Incentive Plan (2003 Plan); (v) the OpenTV Corp. 2005 Incentive Plan (2005 Plan);
(vi) option plans relating to outstanding options assumed in connection with the Spyglass merger (collectively, the Assumed Spyglass Plan); and (vii) option plans relating to outstanding options assumed in connection with the ACTV merger
(collectively, the Assumed ACTV Plan).



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As a result of our shareholders approval of the 2005 Plan on November 10, 2005,
no further awards will be granted under the 1999 Plan, 2001 Plan or 2003 Plan. The 1999 Plan, 2001 Plan and 2003 Plan remain in existence for the sole purpose of governing outstanding options issued thereunder until such time as such options expire
or have been exercised or cancelled. Options issued under the 1999 Plan, 2001 Plan and 2003 Plan that are forfeited or cancelled are no longer available for future issuance.

2005 Plan. We currently issue options and restricted share awards under the 2005 Plan. The compensation and nominating committee of
our board of directors administers the 2005 Plan. The compensation and nominating committee has the discretion to determine grant recipients, the number and exercise price of stock options, and the number of stock appreciation rights, share awards
or share units issued under the 2005 Plan. The options may be incentive stock options or nonstatutory stock options. Options under the 2005 Plan are granted at an exercise price equal to the fair market value of the underlying shares on the date of
grant and typically vest 25% after one year from the date of grant 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 90 days after
termination of employment and are then returned to the pool available for reissuance. A total of 7,955,896 Class A ordinary shares have been reserved for issuance under the 2005 Plan since its inception. As of September 30, 2009, options
to purchase 2,359,707 Class A ordinary shares were outstanding under the 2005 Plan, and 2,263,932 shares were available for future grant.

2003 Plan. Options that were issued under the 2003 Plan were generally granted at an exercise price equal to the fair market value of the underlying shares on the date of grant and, for grants made
through the end of 2004, vested 25% after two years from the date of grant and 25% yearly thereafter for the following three years. In 2005, we revised the vesting schedule to be consistent with the schedule generally applicable under the 1999 and
2001 Plans. The term of the options generally was 10 years from the date of grant. Unexercised options generally expire 90 days after termination of employment. A total of 5,000,000 Class A ordinary shares were reserved for issuance under
the 2003 Plan. As of September 30, 2009, options to purchase 1,072,087 Class A ordinary shares were outstanding under the 2003 Plan.

2001 Plan. Options that were issued under the 2001 Plan were generally granted at an exercise price equal to the fair market value of the underlying shares on the date of grant and vested 25% after
one year from the date of grant and 1/48th over each of the next 36 months. The term of the options generally was 10 years from the date of grant. Unexercised options generally expire 90 days after termination of employment with us. A
total of 500,000 Class A ordinary shares were reserved for issuance under the 2001 Plan. As of September 30, 2009, options to purchase 134,784 Class A ordinary shares were outstanding under the 2001 Plan.

1999 Plan. Options that were issued under the 1999 Plan were generally granted at an exercise price equal to the fair market value of
the underlying shares on the date of grant and vested 25% after one year from the date of grant and 1/48th over each of the next 36 months. The term of the options generally was 10 years from the date of grant. Unexercised options
generally expire three months after termination of employment. A total of 8,980,000 Class A ordinary shares were reserved for issuance under the 1999 Plan. As of September 30, 2009, options to purchase 1,162,560 Class A ordinary
shares were outstanding under the 1999 Plan.

1998 Plan. Effective as of October 23, 1999, 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 us, and these options thereafter represented the right to purchase under the 1999 Plan an identical number of our Class A ordinary
shares. The remainder of the options then outstanding under the 1998 Plan were not assigned to and assumed by us. OpenTV, Inc. no longer issues options from the 1998 Plan. The 1998 Plan remains in existence for the sole purpose of governing those
remaining outstanding options until such time as such options expire or have been exercised or cancelled 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. As of September 30, 2009, options to purchase 29,751 shares of OpenTV, Inc.s Class A common stock were outstanding under the 1998 Plan.

Assumed Plans. Options outstanding under the Assumed Spyglass Plan were converted as a result of the Spyglass acquisition into
options to purchase our Class A ordinary shares. As of September 30, 2009, options to purchase 35,280 Class A ordinary shares were outstanding under the Assumed Spyglass Plan.

Options outstanding under the Assumed ACTV Plan were converted as a result of the ACTV acquisition into options to purchase our Class A
ordinary shares. As of September 30, 2009, options to purchase 1,060 Class A ordinary shares were outstanding under the Assumed ACTV Plan.



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Options outstanding under the Assumed Spyglass Plan and Assumed ACTV Plan that are forfeited
or cancelled will no longer be available for reissuance. No new options will be granted under either the Assumed Spyglass Plan or the Assumed ACTV Plan.

Restricted Shares Issued to Employees

In December 2007, we
issued 1,211,250 restricted Class A ordinary shares under our 2005 Plan to employees in lieu of an annual stock option grant (2007 Restricted Shares). The 2007 Restricted Shares are restricted from sale or transfer and subject to forfeiture for
a period of time that is equivalent to the normal vesting schedule applied to stock options granted under the 2005 Plan. In the event that an employee holding 2007 Restricted Shares is terminated, whether voluntarily or otherwise, then any 2007
Restricted Shares that have not vested as of the termination date will be forfeited and cancelled, except that our Chief Executive Officer has the right, in certain cases as set forth in his employment agreement (such as his termination without
cause or resignation for good reason), to accelerated lapsing of restrictions on a portion of his 2007 Restricted Shares.

As
of September 30, 2009, an aggregate of 195,566 of such 2007 Restricted Shares had been forfeited and cancelled as a result of employee terminations. In accordance with the 2005 Plan, such cancelled shares were returned to the pool available for
reissuance.

Restrictions on the sale or transfer of the 2007 Restricted Shares lapsed as to 25% of such shares in December
2008, and thereafter lapse as to 1/48th of such shares over each of the remaining 36 months. As of September 30, 2009, restrictions as to an aggregate of 450,951 of the 2007 Restricted Shares had lapsed and we had withheld an aggregate of
151,728 of such shares to satisfy applicable withholding tax liabilities. As of September 30, 2009, 564,777 of the 2007 Restricted Shares were outstanding and subject to restrictions.

In March 2008, we issued 100,000 restricted Class A ordinary shares under our 2005 Plan to our Executive Chairman. Such shares are
restricted as to sale or transfer for a period of four years from the date of grant.

In November 2008, we issued 100,000
restricted Class A ordinary shares under our 2005 Plan to our Chief Executive Officer pursuant to the terms of his employment agreement. The restrictions as to sale or transfer of such shares lapse with respect to one-third of the restricted
shares on each of March 5, 2009, 2010 and 2011. As of September 30, 2009, restrictions as to 33,333 of such shares had lapsed and we withheld 12,864 of such shares to satisfy applicable withholding tax liabilities.

In March 2009, we issued 100,000 restricted Class A ordinary shares under our 2005 Plan to our Chief Executive Officer pursuant to the
terms of his employment agreement. The restrictions as to sale or transfer of such shares lapse with respect to one-third of the restricted shares on each of January 1, 2010, 2011 and 2012.

2007 Management Bonus and Equity Issuance Plan (2007 Plan)

In August 2007, our board of directors approved the adoption of the 2007 Plan, which was a special bonus plan designed both to better align management with certain profitability targets established by our
board of directors and as a management retention mechanism following the change in control of our company in January 2007. The profitability targets were based on cumulative net income of the company, as measured over any four consecutive fiscal
quarters during the period commencing April 1, 2007 and ending December 31, 2009, with cumulative net income being based on net income as publicly reported in the financial statements of the company, subject to certain exclusions. The plan
provided for bonus awards, comprised of a combination of a cash amount and a grant of restricted Class A ordinary shares pursuant to our 2005 Incentive Plan. The 2007 Plan provided for the vesting of the restricted shares and the right to
receive the cash component, in each case on a pro rata basis, in accordance with the following schedule: (i) 62.5% upon our achievement of cumulative net income equal to or greater than zero, (ii) 12.5% upon our achievement of cumulative
net income equal to or greater than $4,000,000, and (iii) 25% upon our achievement of cumulative net income equal to or greater than $6,000,000.

As defined by SFAS No. 123 (revised 2004),Share-based Payment, and codified under FASB Accounting Standards Codification Topic 718 Compensation  Stock
Compensation (ASC 718), the 2007 Plan allows for both performance and service elements. Accordingly, once vesting is considered probable, we recognize expense on a straight-line basis over the remaining requisite service period. Final
compensation cost is recognized only for awards that ultimately vest. As part of the 2007 Plan, 1,020,232 Class A ordinary shares were issued in August 2007 as 2007 Management Restricted Shares.



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All of the profitability targets under the 2007 Plan were achieved in May 2008. At such
time, restrictions as to an aggregate of 929,767 of the 2007 Management Restricted Shares lapsed. We withheld an aggregate of 332,258 shares to satisfy applicable withholding tax liabilities.

We recorded an insignificant amount and approximately $0.9 million during the three and nine months ended September 30, 2008,
respectively, of share-based compensation expense related to achievement of performance targets under our 2007 plan.

Share-based
Compensation Expense

The impact on our results of operations of recording share-based compensation for the three and
nine months ended September 30, 2009 and 2008 was as follows (in thousands):



|                                      |  |                                  |     |                                 |   |      |  |      |       |  |   |      
|------------------------------------- |  | -------------------------------- | --- | ------------------------------- | - | ---- |  | ---- | ----- |  | - | -----
|                                      |  | Three Months Ended September 30, |     | Nine Months Ended September 30,
|                                      |  | 2009                             |     | 2008                            |   | 2009 |  | 2008
|Cost of revenues - services and other |  | $                                | 53  |                                 | $ | 73   |  | $    | 205   |  | $ | 402  
|Research and development              |  |                                  | 102 |                                 |   | 137  |  |      | 416   |  |   | 773  
|Sales and marketing                   |  |                                  | 30  |                                 |   | 45   |  |      | 151   |  |   | 254  
|General and administrative            |  |                                  | 84  |                                 |   | 109  |  |      | 316   |  |   | 776  
|                                      |  |                                  |     |                                 |   |      |  |      |       |  |   |      
|                                      |  | $                                | 269 |                                 | $ | 364  |  | $    | 1,088 |  | $ | 2,205
|                                      |  |                                  |     |                                 |   |      |  |      |       |  |   |      

No options were exercised during the three months ended September 30, 2009. Cash
received from option exercises under all share-based compensation plans was not significant for the nine months ended September 30, 2009. Cash received from option exercises under all share-based compensation plans was not significant for the
three and nine months ended September 30, 2008. No income tax benefit was recognized in the statement of operations for share-based compensation costs for the three and nine months ended September 30, 2009 and 2008. No share-based
compensation costs were capitalized for the three and nine months ended September 30, 2009 and 2008.

Valuation Assumptions

We calculated the fair value of each stock option award on the date of grant using the Black-Scholes valuation model.
The assumptions used for our calculations were as follows:



|                                |  |                                  |  |                                 |  |               |  |              
|------------------------------- |  | -------------------------------- |  | ------------------------------- |  | ------------- |  | -------------
|                                |  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|                                |  | 2009                             |  | 2008                            |  | 2009          |  | 2008         
|Risk-free interest rates        |  | 2.45% - 2.56%                    |  | 2.64% - 3.16%                   |  | 1.38% - 2.78% |  | 2.64% - 3.76%
|Average expected lives (months) |  | 61                               |  | 63                              |  | 61            |  | 63           
|Dividend yield                  |  |                                 |  |                                |  |              |  |             
|Expected volatility             |  | 71%                              |  | 62%                             |  | 71%           |  | 62%          

Our computations of expected volatility for the three and nine months ended
September 30, 2009 and 2008 were based on historical volatility of our share price. Our computations of expected life for the three and nine months ended September 30, 2009 and 2008 were determined based on historical experience of similar
awards, giving consideration to the contractual terms of the share-based awards, vesting schedules and expectations of future employee behavior. The interest rates for periods within the contractual life of the awards are based on the similar United
States Treasury yield curve in effect at the time of grant. While we believe that these assumptions are reasonable, actual experience may differ materially from these assumptions.

We calculated the fair value of restricted shares based on the closing price of our Class A ordinary shares on the date of grant, as
such price was quoted on The NASDAQ Stock Market.



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Option Award Activity

The following table summarizes stock option activity under our equity incentive plans during the three and nine months ended
September 30, 2009:



|                            |  |                             |   |  |                |  |                               |     
|--------------------------- |  | --------------------------- | - |  | -------------- |  | ----------------------------- | ----
|                            |  | Number ofOptionsOutstanding |   |  | Exercise Price |  | WeightedAverageExercise Price
|Balance, December 31, 2008  |  | 5,185,075                   |   |  |                |  | $                             | 4.84
|Options granted             |  | 77,200                      |   |  | $1.09 - $1.34  |  | $                             | 1.19
|Options exercised           |  | (20,100                     | ) |  | $1.05          |  | $                             | 1.05
|Options forfeited           |  | (119,471                    | ) |  | $1.03 - $3.16  |  | $                             | 2.19
|Options expired             |  | (147,250                    | ) |  | $1.05 - $9.90  |  | $                             | 1.79
|                            |  |                             |   |  |                |  |                               |     
|Balance, March 31, 2009     |  | 4,975,454                   |   |  |                |  | $                             | 4.95
|Options granted             |  | 74,400                      |   |  | $1.30 - $1.53  |  | $                             | 1.45
|Options forfeited           |  | (31,126                     | ) |  | $1.07 - $2.99  |  | $                             | 1.72
|Options expired             |  | (77,579                     | ) |  | $0.33 - $13.87 |  | $                             | 3.14
|                            |  |                             |   |  |                |  |                               |     
|Balance, June 30, 2009      |  | 4,941,149                   |   |  |                |  | $                             | 4.94
|Options granted             |  | 118,400                     |   |  | $1.27 - $1.35  |  | $                             | 1.32
|Options forfeited           |  | (28,593                     | ) |  | $1.05 - $3.41  |  | $                             | 1.43
|Options expired             |  | (235,727                    | ) |  | $1.46 - $54.25 |  | $                             | 7.54
|                            |  |                             |   |  |                |  |                               |     
|Balance, September 30, 2009 |  | 4,795,229                   |   |  |                |  | $                             | 4.75
|                            |  |                             |   |  |                |  |                               |     

The following table summarizes information with respect to options outstanding at
September 30, 2009:



|                |  |                     |  |                                           |  |                               |       |                   |           |                               |   |      
|--------------- |  | ------------------- |  | ----------------------------------------- |  | ----------------------------- | ----- | ----------------- | --------- | ----------------------------- | - | -----
|                |  | Options Outstanding |  | Options Currently Exercisable            
|Exercise Price  |  | NumberOutstanding   |  | Weighted AverageRemainingContractual Life |  | WeightedAverageExercise Price |       | NumberExercisable |           | WeightedAverageExercise Price
|$0.33 - $1.32   |  | 485,392             |  | 8.55                                      |  | $                             | 1.16  |                   | 96,018    |                               | $ | 1.13 
|$1.33 - $1.53   |  | 492,991             |  | 8.72                                      |  | $                             | 1.46  |                   | 121,516   |                               | $ | 1.48 
|$1.60 - $2.69   |  | 474,344             |  | 5.35                                      |  | $                             | 2.25  |                   | 374,246   |                               | $ | 2.24 
|$2.70 - $2.70   |  | 847,200             |  | 5.33                                      |  | $                             | 2.70  |                   | 847,200   |                               | $ | 2.70 
|$2.73 - $2.82   |  | 251,400             |  | 4.46                                      |  | $                             | 2.78  |                   | 247,671   |                               | $ | 2.78 
|$2.84 - $2.84   |  | 996,207             |  | 6.20                                      |  | $                             | 2.84  |                   | 889,758   |                               | $ | 2.84 
|$2.85 - $3.23   |  | 524,108             |  | 4.72                                      |  | $                             | 3.01  |                   | 476,946   |                               | $ | 3.01 
|$3.35 - $10.00  |  | 481,263             |  | 3.10                                      |  | $                             | 6.94  |                   | 461,848   |                               | $ | 7.08 
|$10.19 - $82.06 |  | 241,324             |  | 0.75                                      |  | $                             | 39.75 |                   | 241,324   |                               | $ | 39.75
|$88.00 - $88.00 |  | 1,000               |  | 0.17                                      |  | $                             | 88.00 |                   | 1,000     |                               | $ | 88.00
|                |  |                     |  |                                           |  |                               |       |                   |           |                               |   |      
|                |  | 4,795,229           |  | 5.62                                      |  | $                             | 4.75  |                   | 3,757,527 |                               | $ | 5.59 
|                |  |                     |  |                                           |  |                               |       |                   |           |                               |   |      

Intrinsic Value

The aggregate intrinsic value of an option is calculated as the excess, if any, of the closing price of our Class A ordinary shares over
the exercise price of the option. Aggregate intrinsic value is not equivalent to the value determined by the Black-Scholes valuation model.

Options Exercised. The aggregate intrinsic value of options exercised under our stock option plans, determined as of the date of option exercise, was not significant for the nine months ended
September 30, 2009. The aggregate intrinsic value of options exercised under our stock option plans, determined as of the date of option exercise, was not significant for the three and nine months ended September 30, 2009 and 2008.

Vested and Unvested Options. The aggregate intrinsic value of all vested and unvested options outstanding as of
September 30, 2009 was approximately $0.1 million, based on the closing price of our Class A ordinary shares on September 30, 2009, which was $1.38.

Exercisable Options. The aggregate intrinsic value of options currently exercisable as of September 30, 2009 was not significant, based on the closing price of our Class A ordinary shares
on September 30, 2009, which was $1.38. The weighted average remaining contractual life of currently exercisable options, calculated at September 30, 2009, was 4.91 years.



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##### Table of Contents

Vested and Expected-to-Vest Options. The number of options vested and
expected-to-vest as of September 30, 2009 was 4,544,809, the weighted-average exercise price of which was $4.93. The aggregate intrinsic value of options vested and expected-to-vest as of September 30, 2009 was approximately
$0.1 million, based on the closing price of our Class A ordinary shares on September 30, 2009, which was $1.38. The weighted average remaining contractual life of options vested and expected-to-vest as of September 30, 2009 was
5.46 years.

Weighted Average Grant-date Fair Value. The weighted average grant-date fair value of options granted
was $0.80 and $0.85 per share for grants in the three months ended September 30, 2009 and 2008, respectively. The weighted average grant-date fair value of options granted was $0.79 and $0.78 per share for grants in the nine months ended
September 30, 2009 and 2008, respectively.

Restricted Shares Activity

The following table summarizes activity relating to restricted shares during the three and nine months ended September 30, 2009:



|                                                   |  |                 |   |  |                                      |     
|-------------------------------------------------- |  | --------------- | - |  | ------------------------------------ | ----
|                                                   |  | Number ofShares |   |  | Weighted AverageGrant DateFair Value
|Unvested shares balance, December 31, 2008         |  | 980,347         |   |  | $                                    | 1.07
|Unvested restricted shares granted                 |  | 100,000         |   |  | $                                    | 1.34
|Unvested restricted shares forfeited and cancelled |  | (17,957         | ) |  | $                                    | 1.04
|Restricted shares vested                           |  | (97,307         | ) |  | $                                    | 1.08
|                                                   |  |                 |   |  |                                      |     
|Unvested shares balance, March 31, 2009            |  | 965,083         |   |  | $                                    | 1.09
|Unvested restricted shares forfeited and cancelled |  | (3,334          | ) |  | $                                    | 1.04
|Restricted shares vested                           |  | (63,295         | ) |  | $                                    | 1.04
|                                                   |  |                 |   |  |                                      |     
|Unvested shares balance, June 30, 2009             |  | 898,454         |   |  | $                                    | 1.10
|Unvested restricted shares forfeited and cancelled |  | (3,907          | ) |  | $                                    | 1.04
|Restricted shares vested                           |  | (63,102         | ) |  | $                                    | 1.04
|                                                   |  |                 |   |  |                                      |     
|Unvested shares balance, September 30, 2009        |  | 831,445         |   |  | $                                    | 1.10
|                                                   |  |                 |   |  |                                      |     

Unrecognized Compensation Expense

As of September 30, 2009, there was approximately $0.7 million of unrecognized compensation cost, net of estimated forfeitures, related
to unvested share-based compensation arrangements granted under our option plans. That cost is expected to be recognized over a weighted-average period of 2.47 years.

As of September 30, 2009, there was approximately $0.5 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested restricted shares granted. That cost is
expected to be recognized over a weighted-average period of 2.16 years.

Note 10. Employee Bonus

During April and May 2009, we paid approximately $6.4 million in cash to our employees as a bonus for achievement of company and individual
performance objectives in 2008. The amount of the bonus awards was fully accrued as of December 31, 2008.

In August
2007, our board of directors approved the adoption of the 2007 Plan, which was comprised of a combination of a cash amount and a grant of restricted Class A ordinary shares, subject to achievement of specified profitability targets. We recorded
an insignificant amount and approximately $1.6 million of bonus expense for the cash component of the 2007 Plan related to achievement of performance targets during the three and nine months ended September 30, 2008, respectively, and an
insignificant amount and approximately $0.9 million of share-based compensation expense for the restricted Class A ordinary shares component of the 2007 Plan related to achievement of performance targets during the three and nine months ended
September 30, 2008, respectively. All of the profitability targets under the 2007 Plan were achieved in May 2008.



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##### Table of Contents

Note 11. Income Taxes

We are subject to U.S. federal income tax as well as income tax of multiple foreign and state jurisdictions. We have substantially concluded all U.S. federal income tax matters for years through 1998. We
have substantially concluded all material state, local and foreign income tax matters for years through 1999.

We have
significant net operating loss carryforwards that are subject to certain Section 382 limitations as a result of past changes in ownership as defined by federal and state law. Certain of these attributes will never be utilized, and we have
therefore removed them from our disclosures and our deferred tax assets.

We classify interest and penalties associated with
our uncertain tax positions as a component of income tax expense. For the three and nine months ended September 30, 2009 and 2008, the interest and penalties that we recognized as part of income tax expense were not material.

California enacted a new tax law during the first quarter of 2009 that gives corporations subject to California income tax the option,
beginning in 2011, to elect single factor apportionment and assign corporate income to California based solely on sales made within the state as opposed to a combination of sales, payroll and property. We currently anticipate that we will elect
single factor apportionment but have determined that the resulting change in our tax rate will not impact our deferred tax assets since we maintain a full valuation allowance on our U.S. deferred tax assets.

Note 12. Fair Value Measurement

We adopted SFAS No. 157, Fair Value Measures as codified under FASB Accounting Standards Codification Topic 820 Fair Value Measurements and Disclosures (ASC 820) as of January 1, 2008, with
the exception of the application of the statement to non-recurring nonfinancial assets and nonfinancial liabilities. Non-recurring nonfinancial assets and nonfinancial liabilities for which we have not applied the provisions of ASC 820 include those
measured at fair value in goodwill impairment testing, indefinite-lived intangible assets measured at fair value for impairment testing, and those initially measured at fair value in a business combination.

Valuation Hierarchy

ASC 820 establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in
active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market
corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial assets or liabilitys
classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2009 (in thousands):



|                                                         |  |                                     |        |                                                     |   |                                             |  |                                         |        |  |   |  
|-------------------------------------------------------- |  | ----------------------------------- | ------ | --------------------------------------------------- | - | ------------------------------------------- |  | --------------------------------------- | ------ |  | - | -
|                                                         |  |                                     |        | Fair Value Measurements at September 30, 2009 Using
|                                                         |  | CarryingAmount atSeptember 30, 2009 |        | Quoted prices inactive
markets(Level 1)             |   | Significant otherobservable inputs(Level 2) |  | Significantunobservable inputs(Level 3)
|Available for sale short-term marketable debt securities |  | $                                   | 30,833 |                                                     | $ |                                            |  | $                                       | 30,833 |  | $ | 
|Available for sale long-term marketable debt securities  |  |                                     | 4,995  |                                                     |   |                                            |  |                                         | 4,995  |  |   | 
|                                                         |  |                                     |        |                                                     |   |                                             |  |                                         |        |  |   |  
|                                                         |  | $                                   | 35,828 |                                                     | $ |                                            |  | $                                       | 35,828 |  | $ | 
|                                                         |  |                                     |        |                                                     |   |                                             |  |                                         |        |  |   |  

Valuation Techniques

Available for sale marketable debt securities are measured at fair value using Level 2 inputs that are observable for the asset or liability,
either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.



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Note 13. Commitments and Contingencies

Operating Leases

We lease our facilities from third parties under
operating lease agreements or sublease agreements in the United States, Europe and Asia Pacific. As of September 30, 2009, the terms of these leases were set to expire between October 2009 and March 2015. Total rent expense was approximately
$1.3 million and $1.2 million for the three months ended September 30, 2009 and 2008, respectively. Total rent expense was approximately $3.8 million and $4.0 million for the nine months ended September 30, 2009 and 2008,
respectively. Sublease income was approximately $0.2 million and $0.1 million for the three months ended September 30, 2009 and 2008, respectively and $0.5 million and $0.1 million for the nine months ended September 30, 2009 and 2008,
respectively.

Future minimum payments, net of future minimum sublease income, under non-cancelable operating leases as of
September 30, 2009 were as follows (in thousands):



|                              |  |                    |       
|----------------------------- |  | ------------------ | ------
|Year ending December 31,      |  | MinimumCommitments
|2009 (remaining three months) |  | $                  | 1,153 
|2010                          |  |                    | 5,115 
|2011                          |  |                    | 5,228 
|2012                          |  |                    | 3,719 
|2013                          |  |                    | 2,880 
|Thereafter                    |  |                    | 2,937 
|                              |  |                    |       
|                              |  | $                  | 21,032
|                              |  |                    |       

Other Commitments

In the ordinary course of business we enter into various arrangements with vendors and other business partners for marketing and other
services. Future minimum commitments under these arrangements as of September 30, 2009 were $0.2 million for the remaining three months of 2009 and insignificant for the years ending December 31, 2010 and 2011. In addition, we also have
arrangements with certain parties that provide for revenue sharing payments.

As of September 30, 2009, we had three
standby letters of credit aggregating approximately $1.2 million, two of which were issued to landlords of our leased properties, and one of which was issued to a sublessee at our New York facility, which we vacated in the second quarter of 2005. As
of September 30, 2009, we have pledged a deposit account containing approximately $1.2 million as collateral for these letters of credit.

Contingencies

Initial Public Offering Securities Litigation.In July 2001, the first of a series
of putative securities class actions was filed in the United States District Court for the Southern District of New York against certain investment banks which acted as underwriters for our initial public offering, us and various of our officers and
directors. In November 2001, a similar securities class action was filed in the United States District Court for the Southern District of New York against Wink Communications and two of its officers and directors and certain investment banks which
acted as underwriters for Wink Communications initial public offering. We acquired Wink Communications in October 2002. The complaints allege undisclosed and improper practices concerning the allocation of initial public offering shares, in
violation of the federal securities laws, and seek unspecified damages on behalf of persons who purchased our Class A ordinary shares during the period from November 23, 1999 through December 6, 2000 and Wink Communications
common stock during the period from August 19, 1999 through December 6, 2000. Other actions have been filed making similar allegations regarding the initial public offerings of more than 300 other companies. All of these lawsuits have been
coordinated for pretrial purposes as In re Initial Public Offering Securities Litigation, 21 MC 92 (SAS). Defendants in these cases filed an omnibus motion to dismiss on common pleading issues. All claims against our officers and directors have been
dismissed without prejudice in this litigation pursuant to the parties stipulation approved by the Court on October 9, 2002. On February 19, 2003, the Court denied in part and granted in part the omnibus motion to dismiss filed on
behalf of defendants, including us and Wink Communications. The Courts order dismissed all claims against us and Wink Communications except for a claim brought under Section 11 of the Securities Act of 1933.



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In 2007, a settlement that had been pending with the Court since 2004 was terminated by
stipulation of the parties, after a ruling by the Second Circuit Court of Appeals in six focus cases in the IPO litigation (neither OpenTV nor Wink Communications is a focus case) made it unlikely that the settlement would receive final
Court approval. Plaintiffs filed amended master allegations and amended complaints in the six focus cases. In 2008, the Court largely denied the defendants motion to dismiss the amended complaints.

Earlier this year, the parties reached a global settlement of the litigation under which insurance will pay the full amount of settlement
share allocated to us and to Wink Communications, and we will bear no financial liability. In October 2009, the Court issued an order granting final approval of the settlement. Shortly thereafter, a group of objectors filed a petition with the
United States Court of Appeals for the Second Circuit requesting permission to appeal the Courts order certifying a class for the settlement; that petition is currently pending. If for any reason the settlement does not become effective, we
believe we have meritorious defenses and intend to defend ourselves vigorously. No provision has been made in our consolidated financial statements for this matter. We are unable to predict the likelihood of an unfavorable outcome or estimate our
potential liability, if any.

Broadcast Innovation Matter. On November 30, 2001, a suit was filed in the United
States District Court for the District of Colorado by Broadcast Innovation, L.L.C., or BI, alleging that DIRECTV, Inc., EchoStar Communications Corporation, Hughes Electronics Corporation, Thomson Multimedia, Inc., Dotcast, Inc. and Pegasus
Satellite Television, Inc. are infringing certain claims of United States patent no. 6,076,094, assigned to or licensed by BI. DIRECTV and certain other defendants settled with BI on July 17, 2003. We are unaware of the specific terms of that
settlement. Though we are not currently a defendant in the suit, BI may allege that certain of our products, possibly in combination with the products provided by some of the defendants, infringe BIs patent. The agreement between OpenTV, Inc.
and EchoStar includes indemnification obligations that may be triggered by the litigation. If liability is found against EchoStar in this matter, and if such a decision implicates our technology or products, EchoStar has notified OpenTV, Inc. of its
expectation of indemnification, in which case our business performance, financial position, results of operations or cash flows may be adversely affected. Likewise, if OpenTV, Inc. were to be named as a defendant and it is determined that the
products of OpenTV, Inc. infringe any of the asserted claims, and/or it is determined that OpenTV, Inc. is obligated to defend EchoStar in this matter, our business performance, financial position, results of operations or cash flows may be
adversely affected. On November 7, 2003, BI filed suit against Charter Communications, Inc. and Comcast Corporation in United States District Court for the District of Colorado, alleging that Charter and Comcast also infringe the 094
patent. The agreements between Wink Communications and Charter Communications include indemnification obligations of Wink Communications that may be triggered by the litigation. While reserving all of our rights in respect of this matter, we have
conditionally reimbursed Charter for certain reasonable legal expenses that it incurred in connection with this litigation. On August 4, 2004, the District Court found the 094 patent invalid. After various procedural matters, including
interim appeals, in November 2005, the United States Court of Appeals for the Federal Circuit remanded the case back to the District Court for disposition. On March 8, 2006, the defendants filed a writ of certiorari in this matter with the
Supreme Court of the United States to review the decision of the United States Court of Appeals for the Federal Circuit, which had overturned the District Courts order for summary judgment in favor of the defendants. That writ of certiorari
was denied. Charter filed a request with the United States Patent and Trademark Office on June 8, 2006 to re-examine the patent based on prior art references. On July 11, 2006, the District Court ordered a stay of the proceedings pending
notice as to whether the re-examination request is accepted by the United States Patent and Trademark Office. On June 21, 2006, Charter filed a motion to stay the litigation pending completion of the Patent Offices reexamination of the
094 patent. On July 11, 2006, the Court granted Charters motion and entered an order staying the case. On August 5, 2006, the United States Patent and Trademark Office ordered a re-examination of all of the patents
claims. The case remains stayed. Based on the information available to us, we have established a reserve for costs and fees that may be incurred in connection with this matter. That reserve is an estimate only and actual costs may be materially
different.

Giordano Matter.On October 23, 2009, Salvatore L. Giordano, on behalf of himself and all others
similarly situated, filed a putative class action complaint in the United States District Court for the Northern District of California against us, each of our current directors, Kudelski SA and Kudelski Interactive Cayman, Ltd. The complaint
alleges breach of fiduciary duties and aiding and abetting breach of fiduciary duties in connection with the offer by Kudelski Interactive Cayman, Ltd., a wholly-owned subsidiary of Kudelski SA, to purchase for $1.55 per



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share all of our outstanding Class A ordinary shares not owned by Kudelski or its affiliates. Although we have not yet been served with the complaint, we believe we have meritorious defenses
and intend to defend ourselves vigorously. No provision has been made in our consolidated financial statements for this matter, and we are unable to predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

Berman Matter. On June 10, 2009, a complaint was filed by John Berman in the Superior Court of California, County
of San Mateo against OpenTV Corp., Liberty Media Corporation and Wink Communications, Inc. The complaint alleges, among other things, that we breached the terms of a settlement and license agreement between Berman and Wink dated July 25, 2000
by making use of certain patents allegedly held by Berman beyond the scope of the license granted in such settlement and license agreement. We acquired Wink in October 2002 from an affiliate of Liberty. On September 2, 2009, we filed a notice
of removal to the United States District Court for the Northern District of California. On September 10, 2009, we filed an answer denying the material allegations of the complaint. The case is currently pending before the District Court, though
no substantive proceedings have taken place. We believe we have meritorious defenses and intend to defend ourselves vigorously. No provision has been made in our consolidated financial statements for this matter. We are unable to predict the
likelihood of an unfavorable outcome or estimate our potential liability, if any.

Indemnification

In the ordinary course of our business, we provide indemnification to customers, subject to limitations, against claims of intellectual
property infringement made by third parties arising from the use of our products. Historically, costs related to these indemnification provisions have not been significant. We are not, however, able to estimate the maximum potential impact of these
indemnification provisions on our future results of operations since the liabilities associated with those types of claims are dependent on various factors that are not known until an action is commenced.

As permitted under the laws of the British Virgin Islands, we have agreed to indemnify our officers and directors for certain events or
occurrences while the officer or director is, or was, serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have
director and officer insurance coverage that limits our exposure and enables us to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is
not material.

Note 14. Related Party Transactions

On January 16, 2007, Kudelski SA completed a stock purchase transaction with Liberty Media Corporation (Liberty Media), pursuant to which Kudelski acquired substantially all of our Class A and
Class B ordinary shares owned by Liberty Media. As of September 30, 2009, Kudelskis total ownership represented approximately 32.3% of the economic interest and approximately 77.2% of the voting interest of our ordinary shares on an
undiluted basis. We were not a direct party to that transaction. However, we received a total of approximately $19.7 million in cash from Liberty Media in connection with that transaction, which represents the total capital contribution due to us
pursuant to an agreement we previously entered into with Liberty Media in February 2006 that provided for us to receive a portion of any premium received by Liberty Media in any sale of its stake in OpenTV. We also received approximately $0.1
million during the nine months ended September 30, 2008, in interest income related to the capital contribution. No further amounts are due to us under the terms of the agreement between us and Liberty Media.

We offer products and services that are complementary to some of the products and services offered by Kudelski, our controlling shareholder,
and some of its affiliates, including Nagravision S.A. and its subsidiaries. As a result, we have many of the same customers as Kudelski and its other affiliates. Historically, even prior to Kudelski becoming our controlling shareholder, we sold
products and professional services to Nagravision in support of its efforts to sell conditional access products to network operator customers who had deployed or wished to deploy OpenTVs middleware products.

In February 2008, we signed a multi-year license and distribution agreement with Nagravision, a subsidiary of Kudelski, which enables
Nagravision to market and sublicense our middleware products, services and maintenance and support programs to cable, satellite and telecommunications network operators around the world. The agreement specifies the applicable license, support
and professional services fees that are payable by Nagravision to us in



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connection with the license and distribution of our middleware products under the agreement. The terms and conditions set forth in the agreement, including the fees payable by Nagravision, are
generally consistent with the terms and conditions we offer to other distributors, including other conditional access providers. The total amount of license, support and services fees payable to us under this agreement is dependent upon the number
of network operator customers sublicensed by Nagravision, the number of set-top boxes containing our middleware deployed by such customers and the amount of professional services requested by Nagravision. As of September 30, 2009, Nagravision
has sublicensed our products under the terms of this agreement to Reliance Communications in India, Portugal Telecom and TV Cabo in Portugal and Canal Digitaal in the Netherlands. In March 2008, we signed a master services agreement with
Nagravision, which includes the specific terms and conditions that apply to professional services we may provide to Nagravision from time to time. Unless otherwise agreed, professional services we perform will be billed on a time and materials basis
at a daily rate that is competitive with the rates we charge our other customers.

During the three months ended
September 30, 2009, we recognized $1.3 million of royalties and licenses revenues under these arrangements with Nagravision.

During the nine months ended September 30, 2009, we recognized $4.3 million of royalties and licenses revenues and $0.2 million of services and other revenues from Nagravision, and $1.2 million and $0.1 million of royalties and
licenses revenues from Nagra Trading S.A. and Nagra France SAS, respectively, both of which are subsidiaries of Nagravision.

During the three and nine months ended September 30, 2008, we recognized an aggregate of $0.2 million and $4.8 million, respectively, of royalties and licenses and services and other revenues under these arrangements with Nagravision.

As of September 30, 2009, our accounts receivable included $1.5 million from Nagravision and $0.4 million from Nagra
Trading S.A.

As of December 31, 2008, our accounts receivable included $3.2 million from Nagravision, $0.7 million from
Nagra Trading S.A. and $0.1 million from Nagra France SAS.

On February 27, 2009, we received a non-binding proposal from
Kudelski SA to acquire all of our Class A ordinary shares that were not owned by Kudelski or its affiliates for $1.35 per share in cash. On March 4, 2009, our board of directors appointed a special committee consisting of three independent
directors to review the proposal. On June 2, 2009, the special committee issued a press release announcing its rejection of the proposal from Kudelski SA. The special committee was subsequently dissolved by our board of directors.

On October 5, 2009, a subsidiary of Kudelski SA launched an unsolicited tender offer to purchase all of our outstanding Class A
ordinary shares not owned by Kudelski SA or any of its affiliates for $1.55 per share. On October 20, 2009, we filed a Schedule 14D-9 Solicitation/Recommendation Statement with the SEC in response to the unsolicited tender offer in which our
board of directors expressed no opinion as to whether our shareholders should tender their shares and indicated it is remaining neutral as to the tender offer.

Note 15. Segment Information

In March 2008, Nigel (Ben) Bennett was
appointed as Chief Executive Officer after having served as Chief Operating Officer and Acting Chief Executive Officer since August 2007. Accordingly, Mr. Bennett is our chief operating decision maker, or CODM. Our CODM currently assesses our
results and financial performance and reviews our internal budgeting reports on the basis of two segments: middleware solutions and advertising solutions. We have prepared this segment analysis in accordance with SFAS 131,Disclosure about
Segments of an Enterprise and Related Informationas codified under FASB Accounting Standards Codification Topic 280 Segment Reporting (ASC 280).

Middleware solutions is composed of set-top box middleware and embedded browser technologies, such as OpenTV Spyglass, as well as software
components that are deployed at the network operators headend.

Advertising solutions includes our OpenTV
EclipsePlus, Eclipse and Participate products.



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Our management reviews and assesses the contribution margin of each of these
segments, which is not a financial measure calculated in accordance with GAAP. We define contribution margin for these purposes as segment revenues less related direct or indirect allocable costs, including personnel and personnel-related support
costs, communications, facilities, maintenance and support, consulting and subcontractor costs, travel, marketing and network infrastructure and bandwidth costs. There are significant judgments management makes with respect to the direct and
indirect allocation of costs that may affect the calculation of contribution margins. While management believes these and other related judgments are reasonable and appropriate, others could assess such matters differently.

Contribution margin is a non-GAAP financial measure that excludes unallocated corporate support, interest, taxes, depreciation and
amortization, amortization of intangible assets, share-based compensation, impairment of goodwill, impairment of intangibles, other income, noncontrolling interest, restructuring provisions, and unusual items such as contract amendments that
mitigate potential loss positions. These exclusions reflect costs not considered directly allocable to individual business segments and result in a definition of contribution margin that does not take into account some of the substantial costs of
doing business. Management believes that segment contribution margin is a helpful measure in evaluating the performance of our business segments. While our management may consider contribution margin to be an important measure of comparative
operating performance, this measure should be considered in addition to, but not as a substitute for, profit from operations, net income, cash flow and other measures of financial performance prepared in accordance with GAAP that are presented in
our financial statements. In addition, our calculation of contribution margin may be different from, and not comparable to, the calculation used by other companies.

Because these segments reflect the manner in which management reviews our business, they necessarily involve judgments that management believes are reasonable in light of the circumstances under which
they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified to reflect technologies and applications that are newly created, or that change over time, or
other business conditions that evolve, each of which may result in reassessing specific segments and the elements included within each of those segments. Recent events may affect the manner in which we present segments in the future.



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Summarized information by segment was as follows (in thousands):



|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------ |  | -------------------------------- | ------ | - | ------------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                             |  | Three Months Ended September 30, |        |   | Nine Months Ended September 30, |  
|                                                             |  | 2009                             |        |   | 2008                            |   |        | 2009 |  |   | 2008    |  
|Revenues:                                                    |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Middleware solutions                                         |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Royalties and licenses                                       |  | $                                | 20,064 |   |                                 | $ | 15,135 |      |  | $ | 59,956  |   |  | $ | 52,345  |  
|Services and other                                           |  |                                  | 8,812  |   |                                 |   | 8,792  |      |  |   | 20,721  |   |  |   | 25,187  |  
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Subtotal - Middleware solutions                              |  |                                  | 28,876 |   |                                 |   | 23,927 |      |  |   | 80,677  |   |  |   | 77,532  |  
|Advertising solutions                                        |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Royalties and licenses                                       |  |                                  | 647    |   |                                 |   | 1,359  |      |  |   | 1,909   |   |  |   | 4,567   |  
|Services and other                                           |  |                                  | 2,259  |   |                                 |   | 1,635  |      |  |   | 6,209   |   |  |   | 5,450   |  
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Subtotal - Advertising solutions                             |  |                                  | 2,906  |   |                                 |   | 2,994  |      |  |   | 8,118   |   |  |   | 10,017  |  
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Total revenues                                               |  | $                                | 31,782 |   |                                 | $ | 26,921 |      |  | $ | 88,795  |   |  | $ | 87,549  |  
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|                                                             |  |                                  |        |  
|Contribution margin (loss):                                  |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Middleware solutions                                         |  | $                                | 11,639 |   |                                 | $ | 9,324  |      |  | $ | 30,985  |   |  | $ | 30,932  |  
|Advertising solutions                                        |  |                                  | 213    |   |                                 |   | (117   | )    |  |   | 155     |   |  |   | 802     |  
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Total contribution margin                                    |  |                                  | 11,852 |   |                                 |   | 9,207  |      |  |   | 31,140  |   |  |   | 31,734  |  
|Unallocated corporate support                                |  |                                  | (7,427 | ) |                                 |   | (5,539 | )    |  |   | (18,624 | ) |  |   | (18,002 | )
|Restructuring and impairment                                 |  |                                  | (157   | ) |                                 |   | 7      |      |  |   | (149    | ) |  |   | (575    | )
|Depreciation and amortization                                |  |                                  | (1,106 | ) |                                 |   | (1,044 | )    |  |   | (3,320  | ) |  |   | (3,120  | )
|Amortization of intangible assets                            |  |                                  | (333   | ) |                                 |   | (798   | )    |  |   | (1,013  | ) |  |   | (2,848  | )
|Share-based and non-cash compensation                        |  |                                  | (269   | ) |                                 |   | (364   | )    |  |   | (1,088  | ) |  |   | (2,213  | )
|Interest income                                              |  |                                  | 96     |   |                                 |   | 514    |      |  |   | 286     |   |  |   | 1,866   |  
|Other income (expense)                                       |  |                                  | 168    |   |                                 |   | (1,471 | )    |  |   | (789    | ) |  |   | 776     |  
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Profit before income taxes                                   |  |                                  | 2,824  |   |                                 |   | 512    |      |  |   | 6,443   |   |  |   | 7,618   |  
|Income tax expense (benefit)                                 |  |                                  | 213    |   |                                 |   | (445   | )    |  |   | 943     |   |  |   | 325     |  
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Net income                                                   |  |                                  | 2,611  |   |                                 |   | 957    |      |  |   | 5,500   |   |  |   | 7,293   |  
|Less: Net income attributable to the noncontrolling interest |  |                                  |       |   |                                 |   | (2     | )    |  |   | (5      | ) |  |   | (18     | )
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  
|Net income attributable to OpenTV                            |  | $                                | 2,611  |   |                                 | $ | 955    |      |  | $ | 5,495   |   |  | $ | 7,275   |  
|                                                             |  |                                  |        |   |                                 |   |        |      |  |   |         |   |  |   |         |  

Our revenues by geographic area, based on the location of network operators who are
deploying our products, were as follows (in thousands):



|                               |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  
|------------------------------ |  | -------------------------------- | ------ | - | ------------------------------- | - | ---- | - | ------ |  | --- | ---- |  | - | ------ |  | ---- | - | - | - | ------ |  | --- | -
|                               |  | Three Months Ended September 30, |        |   | Nine Months Ended September 30, |  
|                               |  | 2009                             |        | % |                                 |   | 2008 |   | %      |  |     | 2009 |  | % |        |  | 2008 |   | % |  
|Europe, Africa and Middle East |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  
|United Kingdom                 |  | $                                | 3,439  |   | 11                              | % |      | $ | 4,155  |  | 15  | %    |  | $ | 14,068 |  | 16   | % |   | $ | 15,372 |  | 18  | %
|Netherlands                    |  |                                  | 2,545  |   | 8                               | % |      |   | 2,412  |  | 9   | %    |  |   | 4,425  |  | 5    | % |   |   | 4,663  |  | 5   | %
|South Africa                   |  |                                  | 4,905  |   | 15                              | % |      |   | 2,475  |  | 9   | %    |  |   | 9,701  |  | 11   | % |   |   | 7,418  |  | 8   | %
|Italy                          |  |                                  | 2,142  |   | 7                               | % |      |   | 1,809  |  | 7   | %    |  |   | 5,453  |  | 6    | % |   |   | 4,950  |  | 6   | %
|Other countries                |  |                                  | 5,105  |   | 16                              | % |      |   | 3,236  |  | 12  | %    |  |   | 14,472 |  | 16   | % |   |   | 10,018 |  | 11  | %
|                               |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  
|Subtotal                       |  |                                  | 18,136 |   | 57                              | % |      |   | 14,087 |  | 52  | %    |  |   | 48,119 |  | 54   | % |   |   | 42,421 |  | 48  | %
|Americas                       |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  
|United States                  |  |                                  | 4,740  |   | 15                              | % |      |   | 4,867  |  | 18  | %    |  |   | 14,470 |  | 16   | % |   |   | 16,711 |  | 19  | %
|Brazil                         |  |                                  | 2,131  |   | 7                               | % |      |   |       |  | 0   | %    |  |   | 5,561  |  | 6    | % |   |   |       |  | 0   | %
|Other countries                |  |                                  | 588    |   | 2                               | % |      |   | 2,067  |  | 8   | %    |  |   | 2,139  |  | 3    | % |   |   | 6,642  |  | 8   | %
|                               |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  
|Subtotal                       |  |                                  | 7,459  |   | 23                              | % |      |   | 6,934  |  | 26  | %    |  |   | 22,170 |  | 25   | % |   |   | 23,353 |  | 27  | %
|Asia Pacific                   |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  
|India                          |  |                                  | 415    |   | 1                               | % |      |   | 108    |  | 1   | %    |  |   | 2,454  |  | 3    | % |   |   | 4,193  |  | 5   | %
|Australia                      |  |                                  | 2,571  |   | 8                               | % |      |   | 1,661  |  | 6   | %    |  |   | 6,295  |  | 7    | % |   |   | 7,680  |  | 9   | %
|Japan                          |  |                                  | 1,772  |   | 6                               | % |      |   | 2,247  |  | 8   | %    |  |   | 5,444  |  | 6    | % |   |   | 5,631  |  | 6   | %
|Other countries                |  |                                  | 1,429  |   | 4                               | % |      |   | 1,884  |  | 7   | %    |  |   | 4,313  |  | 5    | % |   |   | 4,271  |  | 5   | %
|                               |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  
|Subtotal                       |  |                                  | 6,187  |   | 19                              | % |      |   | 5,900  |  | 22  | %    |  |   | 18,506 |  | 21   | % |   |   | 21,775 |  | 25  | %
|                               |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  
|                               |  | $                                | 31,782 |   | 100                             | % |      | $ | 26,921 |  | 100 | %    |  | $ | 88,795 |  | 100  | % |   | $ | 87,549 |  | 100 | %
|                               |  |                                  |        |   |                                 |   |      |   |        |  |     |      |  |   |        |  |      |   |   |   |        |  |     |  



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Two major customers accounted for the following percentages of revenues:



|        |  |                                  |   |  |                                 |   |  |      |   |  |      |  
|------- |  | -------------------------------- | - |  | ------------------------------- | - |  | ---- | - |  | ---- | -
|        |  | Three Months Ended September 30, |   |  | Nine Months Ended September 30, |  
|        |  | 2009                             |   |  | 2008                            |   |  | 2009 |   |  | 2008 |  
|UGC     |  | 12                               | % |  | 11                              | % |  | 9    | % |  | 6    | %
|Thomson |  | 5                                | % |  | 9                               | % |  | 7    | % |  | 10   | %
|        |  |                                  |   |  |                                 |   |  |      |   |  |      |  
|        |  | 17                               | % |  | 20                              | % |  | 16   | % |  | 16   | %
|        |  |                                  |   |  |                                 |   |  |      |   |  |      |  

Another major customer, British Sky Broadcasting, or BSkyB, directly and indirectly
accounted for 10% and 14% of total revenues for the three months ended September 30, 2009 and 2008, respectively, and 15% and 17% of total revenues for the nine months ended September 30, 2009 and 2008, respectively taking into account the
royalties which are paid by four manufacturers who sell set-top boxes to BSkyB, including Thomson.

Three customers accounted
for 16%, 9% and 9% of net accounts receivable as of September 30, 2009. Three customers accounted for 18%, 14% and 11% of net accounts receivable as of December 31, 2008.

Capital expenditures by geographic area were as follows (in thousands):



|                |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|--------------- |  | -------------------------------- | ----- | ------------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                |  | Three Months Ended September 30, |       | Nine Months Ended September 30,
|                |  | 2009                             |       | 2008                            |   | 2009  |  | 2008
|United States   |  | $                                | 410   |                                 | $ | 559   |  | $    | 1,232 |  | $ | 2,450
|Other countries |  |                                  | 1,243 |                                 |   | 925   |  |      | 1,866 |  |   | 1,064
|                |  |                                  |       |                                 |   |       |  |      |       |  |   |      
|                |  | $                                | 1,653 |                                 | $ | 1,484 |  | $    | 3,098 |  | $ | 3,514
|                |  |                                  |       |                                 |   |       |  |      |       |  |   |      

Long-lived assets by geographic area were as follows (in thousands):



|                        |  |                   |       |                  |   |      
|----------------------- |  | ----------------- | ----- | ---------------- | - | -----
|                        |  | September 30,2009 |       | December 31,2008
|Property and equipment: |  |                   |       |                  |   |      
|United States           |  | $                 | 3,878 |                  | $ | 4,494
|Other countries         |  |                   | 3,946 |                  |   | 3,480
|                        |  |                   |       |                  |   |      
|                        |  | $                 | 7,824 |                  | $ | 7,974
|                        |  |                   |       |                  |   |      
|Other assets:           |  |                   |       |                  |   |      
|United States           |  | $                 | 425   |                  | $ | 1,034
|Other countries         |  |                   | 2,336 |                  |   | 1,437
|                        |  |                   |       |                  |   |      
|                        |  | $                 | 2,761 |                  | $ | 2,471
|                        |  |                   |       |                  |   |      



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, as well as assumptions
that, if they never materialize or prove incorrect, could cause the results of OpenTV Corp. and its consolidated subsidiaries to differ materially from those expressed or implied by such forward-looking statements. All statements other than
statements of historical fact are statements that could be deemed forward-looking statements, including any projections of revenue, expenses, earnings or losses from operations; any statements of the plans, strategies and objectives of management
for future operations; any statements concerning developments, performance or market conditions relating to products or services; any statements regarding future economic conditions or performance; any statements of expectation or belief; and any
statements of assumptions underlying any of the foregoing. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. These forward-looking statements are
based on information available to us at this time, and we assume no obligation to update any of these statements. Actual results could differ materially from those projected in these forward-looking statements as a result of many factors, including
those identified in the section titled Risk Factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as such section may be updated in our subsequent Quarterly Reports on
Form 10-Q and elsewhere. We urge you to review and consider the various disclosures made by us from time to time in our filings with the Securities and Exchange Commission that attempt to advise you of the risks and factors that may affect our
future results.

The following discussion should be read together with the unaudited condensed consolidated financial
statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements, the notes thereto and the section titled Managements Discussion and Analysis of Financial Condition
and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission.

Overview of Our Business

We are one of the worlds leading providers of advanced digital television solutions dedicated to creating and delivering compelling viewing experiences to consumers of digital content worldwide. Our software enables cable, satellite,
telecommunications and digital terrestrial operators, which we refer to as network operators, to offer enhanced television experiences to their viewers.

The majority of our revenue typically comes from one-time royalty fees paid by network operators or manufacturers of set-top boxes once a set-top box, which incorporates our software, has been shipped to
or activated by the network operator. We also derive revenue from the licensing of related software and interactive content and applications associated with the delivery of digital and interactive television, as well as from licensing products that
enable advanced advertising solutions. In addition, we receive professional services fees from consulting, systems integration and training engagements, fees for the maintenance and support of our products, and fees from revenue sharing arrangements
related to the use of our interactive content and applications.

Our revenue model may change over time. For example, we have
signed subscription-based licensing agreements under which we receive monthly payments for each set-top box that includes our software that our customers deploy, for so long as those set-top boxes remain active. In addition, our technology and
services are provided indirectly through distribution arrangements with key partners other than network operators and set-top box manufacturers, such as conditional access vendors, and we expect revenues generated from such distribution arrangements
to increase over time.

Kudelski SA, directly and indirectly through its subsidiaries, beneficially owns Class A and
Class B ordinary shares of our company collectively representing approximately 32.3% of the economic interest and approximately 77.2% of the voting interest in our company, based on the number of our ordinary shares outstanding as of
September 30, 2009.

Recent Events

On October 5, 2009, a subsidiary of Kudelski SA launched an unsolicited tender offer to purchase all of our outstanding Class A ordinary shares not owned by Kudelski SA or any of its affiliates
for $1.55 per share. On October 20, 2009, we filed a Schedule 14D-9 Solicitation/Recommendation Statement with the SEC in response to the unsolicited tender offer in which our board of directors expressed no opinion as to whether our
shareholders should tender their shares and indicated it is remaining neutral as to the tender offer.

On October 7,
2009, Eric J. Tveter resigned as a member of our board of directors, and as a result, we no longer comply with NASDAQ Listing Rule 5605(c)(2)(A), which requires listed companies to maintain an audit committee comprised of at least three members, all
of whom must be independent. On October 13, 2009, we received written notification from The NASDAQ Stock Market that we no longer comply with such listing rule. NASDAQ has provided us with a cure period in order to regain compliance within the
following timeframe:



| |  |  | until the earlier of our next annual shareholders meeting or October 7, 2010; or
| | - |  | ---------------------------------------------------------------------------------



| |  |  | if the next annual shareholders meeting is held before April 5, 2010, then we must evidence compliance no later than April 5, 2010.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



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Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our interim financial statements, which have
been prepared in accordance with accounting principles generally accepted in the United States, which we refer to as GAAP, as applicable to financial statements for interim reporting periods. The preparation of these interim financial statements
requires us to make estimates and judgments that affect the reported amounts of assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. In preparing these interim
financial statements, we made our best estimates and judgments, which are normally based on knowledge and experience with regard to past and current events and assumptions about future events, giving due consideration to materiality. Actual results
could differ materially from these estimates under different assumptions or conditions.

We believe the following critical
accounting policies and estimates have the greatest potential impact on our interim financial statements: revenue recognition, valuation allowances (specifically the allowance for doubtful accounts and deferred tax assets), impairment of goodwill
and long-lived assets, restructuring costs, share-based compensation and fair value measurements. All of these accounting policies and estimates, together with their underlying assumptions, and their impact on our financial statements, have been
discussed with the audit committee of our board of directors.

As discussed below and in Note 2 to the interim financial
statements, we adopted Statement of Financial Accounting Standards (SFAS) No. 141(Revised 2007), Business Combinations, and FASB Staff Position (FSP) FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in
a Business Combination That Arise from Contingencies, both which were codified under FASB Accounting Standards Codification Topic 805 Business Combinations (ASC 805), as of January 1, 2009. The adoption of ASC 805 did
not have a material impact on our financial statements.

We adopted FSP FAS 142-3, Determination of the Useful Life
of Intangible Assets, as codified under FASB Accounting Standards Codification Subtopic 350-30 Intangibles  Goodwill and Other: General Intangibles Other than Goodwill (ASC 350-30) as of January 1, 2009 without a
material impact on our financial statements.

We adopted SFAS No. 160, Noncontrolling Interests in Consolidated
Financial StatementsAn Amendment of ARB No. 51 as codified under FASB Accounting Standards Codification Topic 810 Consolidation (ASC 810) as of January 1, 2009 without a material impact on our financial statements.

Other than the above changes, there have been no significant changes in our critical accounting policies and estimates during
the three and nine months ended September 30, 2009 as compared to the critical accounting policies and estimates disclosed in the section entitled Managements Discussion and Analysis of Financial Condition and Results of
Operations included in our Annual Report on Form 10-K for the year ended December 31, 2008.

Recent Accounting
Pronouncements

In June 2009, the FASB issued SFAS No. 168,The FASB Accounting Standards
CodificationTMand the Hierarchy of Generally Accepted Accounting Principles - A Replacement of FASB Statement No. 162 (the Codification) which established the Codification as the official single source of
authoritative GAAP to be applied by nongovernmental entities. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This Codification is effective for
financial statements issued for interim and annual periods ending after September 15, 2009. On the effective date of the Codification, all existing non-SEC accounting and reporting standards were superseded by the Codification and any accounting
literature not included in the Codification is no longer authoritative. Following the Codification, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issue Task Force abstracts. Instead, it will issue
accounting standard updates which will serve to update the Codification, provide background information about guidance and provide the basis for conclusion on the changes to the Codification. Therefore, beginning with the quarter ending September
30, 2009, all references made to GAAP in the Companys notes to condensed consolidated financial statements use the new Codification numbering system. The Codification does not change or alter existing GAAP and, therefore, did not have an
impact on our financial statements.

In April 2009, the FASB issued SFAS No. 165,Subsequent Events
as codified under FASB ASC Topic 855Subsequent Events (ASC 855). ASC 855 establishes general standards for accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued
or available to be issued. ASC 855 is effective for financial statements issued for interim and annual periods ending after June 15, 2009. The adoption of ASC 855 did not have a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 157-4,Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly as codified under FASB Accounting Standards Codification Subtopic 820-10, Fair Value Measurements and Disclosures(ASC 820-10). ASC
820-10 provides



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additional guidance on factors to consider in estimating fair value when there has been a significant decrease in market activity for a financial asset. ASC 820-10 applies prospectively;
retrospective application is not permitted. ASC 820-10 is effective for interim and annual periods ending after June 15, 2009. The adoption of ASC 820-10 did not have a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2,Recognition and Presentation of Other-Than-Temporary
Impairments both which were codified under FASB Accounting Standards Codification Topic 320 Investments in Debt and Equity Securities(ASC 320). ASC 320 changes the method for determining whether an
other-than-temporary impairment exists for debt securities and the requirements for measurement and presentation of such impairment. ASC 320 is effective for interim and annual periods ending after June 15, 2009. The adoption of ASC 320 did not have
a material impact on our financial statements.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1,Interim
Disclosures about Fair Value of Financial Instruments both which were codified under FASB Accounting Standards Codification Subtopic 825-10, Fair Value Measurements and Disclosures(ASC 825-10). ASC 825-10
require an entity to provide disclosures about the fair value of its financial instruments in interim reporting periods and annual reporting periods. ASC 825-10 is effective for interim and annual periods ending after June 15, 2009. The adoption of
ASC 825-10 did not have a material impact on our financial statements.

Results of Operations for the Three and Nine Months Ended
September 30, 2009 and 2008

Revenues

We have entered into commercial arrangements involving both product licenses and service elements that are bundled together. Under GAAP, revenues from such bundled offerings have been allocated to theRoyalties and licenses andServices and other revenue line items based on the relative fair values of the product and service elements in each of the contracts. Our determination of the relative fair values of
these elements is based on the relative amounts of the fees we charge our customers for the product licenses and service elements, as set forth in each of the applicable contracts.

Revenues for the three months ended September 30, 2009 were $31.8 million, an increase of $4.9 million, or 18%, from
$26.9 million for the same period in 2008. Revenues for the nine months ended September 30, 2009 were $88.8 million, an increase of $1.3 million, or 1%, from $87.5 million for the same period in 2008.

Revenues by line item were as follows (in millions, except percentages):



|                       |  |                                  |      |        |   |                  |                                 |   |        |  |      |   |                  |   |      |  |   |      |  |   |      |   |  |     |   
|---------------------- |  | -------------------------------- | ---- | ------ | - | ---------------- | ------------------------------- | - | ------ |  | ---- | - | ---------------- | - | ---- |  | - | ---- |  | - | ---- | - |  | --- | --
|                       |  | Three Months Ended September 30, |      | Change |   |                  | Nine Months Ended September 30, |   | Change | 
|                       |  | 2009                             |      | 2008   |   | 2009 versus 2008 |                                 |   | 2009   |  | 2008 |   | 2009 versus 2008 |  
|Royalties and licenses |  | $                                | 20.7 |        | $ | 16.5             |                                 | $ | 4.2    |  | 25   | % |                  | $ | 61.9 |  | $ | 56.9 |  | $ | 5.0  |   |  | 9   | % 
|Services and other     |  |                                  | 11.1 |        |   | 10.4             |                                 |   | 0.7    |  | 7    | % |                  |   | 26.9 |  |   | 30.6 |  |   | (3.7 | ) |  | (12 | )%
|                       |  |                                  |      |        |   |                  |                                 |   |        |  |      |   |                  |   |      |  |   |      |  |   |      |   |  |     |   
|Total revenues         |  | $                                | 31.8 |        | $ | 26.9             |                                 | $ | 4.9    |  | 18   | % |                  | $ | 88.8 |  | $ | 87.5 |  | $ | 1.3  |   |  | 1   | % 
|                       |  |                                  |      |        |   |                  |                                 |   |        |  |      |   |                  |   |      |  |   |      |  |   |      |   |  |     |   

Royalties and licenses

We generally derive royalties from the sale of set-top boxes and other products that incorporate our software. Royalties are typically paid
by either the network operator or the set-top box manufacturer depending upon our payment arrangements with those customers, and we have historically recognized revenues through one-time royalty payments or ongoing license fees. We recognize
royalties upon receipt of royalty reports reflecting unit shipments or activation of our software by network operators or manufacturers. Royalty reports are generally received one quarter in arrears. For non-refundable prepaid royalties, we
recognize revenues upon initial delivery of the software to our customers. We also license our technology and services indirectly through distribution arrangements with key partners other than network operators and set-top box manufacturers, such as
conditional access vendors, who pay the applicable license and royalty fees directly to us on behalf of the network operator or set-top box manufacturer. In addition, we have entered into license agreements with network operators who pay us under a
subscription-based model pursuant to which we are paid a monthly fee for each set-top box that is shipped or deployed commercially by the network operator for so long as that box remains in use by the network operator. Although this licensing model
has not generated a significant portion of our revenues to date, we expect to continue offering this licensing model in the future and expect to derive a greater percentage of our revenues from subscriber-based fees over time.



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The aggregate amount of royalties we receive from our customers during a quarterly period is
influenced by a number of factors. In the case of our set-top box software, these include: initial deployments by new customers, the activation of new subscribers by existing customers, the shipment of additional set-top boxes as replacements for
older or defective set-top boxes or for purposes of simply upgrading existing set-top boxes, and sales of new products or services by the network operators that require new or updated set-top boxes. We have historically provided various types of
prospective volume discounts on optional future deployments of our licensed middleware products based on the volume of the customers previous deployments of the particular licensed products, and we expect to continue to do so in the future.
Unless we are able to offset anticipated discounts through a change in product mix, shipment volume increases, upgrades to our software or other methods which enable us to charge higher fees, we may experience slower royalty growth as discounting is
triggered.

A significant portion of our revenues is dependent upon our customers subscriber base, the growth in their
subscriber base, and the related quantities of set-top boxes deployed with our software. Specific royalty trends associated with set-top box deployments by our customers are difficult to discern in many cases as we do not control or directly
influence actual deployment schedules of our customers. However, our general experience in the past suggests that set-top box deployments by our customers tend to be stronger in the third and fourth quarters of the calendar year, though many
factors, such as the general economic climate and the specific financial condition of our customers, can influence the actual level of set-top box deployments at any given time. Because we receive most of our royalty reports one quarter in arrears,
our royalty revenues in the past have generally been higher in the first and fourth quarters of the calendar year, though our revenues in the fourth quarter of 2009 and beyond may be negatively impacted if our customers reduce deployments of our
products due to the general deterioration in economic conditions worldwide.

We also derive fees from the licensing of other
products, such as OpenTV Streamer, our campaign management solution known as EclipsePlus and OpenTV Participate. These license fees can be in the form of one-time, upfront payments by our customers, the total of which can vary significantly
from quarter to quarter, or can be in the form of a recurring license fee, the total of which is less likely to vary significantly from quarter to quarter.

Royalties and licenses revenues by region were as follows (in millions, except percentages):



|                                      |  |                                  |      |   |        |   |      |                                 |  |   |        |   |  |      |    |  |                  |      |   |  |   |      |   |  |   |      |   |  |     |   
|------------------------------------- |  | -------------------------------- | ---- | - | ------ | - | ---- | ------------------------------- |  | - | ------ | - |  | ---- | -- |  | ---------------- | ---- | - |  | - | ---- | - |  | - | ---- | - |  | --- | --
|                                      |  | Three Months Ended September 30, |      |   | Change |   |      | Nine Months Ended September 30, |  |   | Change |  
|                                      |  | 2009                             |      |   | 2008   |   |      | 2009 versus 2008                |  |   | 2009   |   |  | 2008 |    |  | 2009 versus 2008 |     
|Europe, Middle East and Africa        |  | $                                | 13.4 |   |        | $ | 8.5  |                                 |  | $ | 4.9    |   |  | 58   | %  |  | $                | 37.0 |   |  | $ | 27.9 |   |  | $ | 9.1  |   |  | 33  | % 
|Americas                              |  |                                  | 4.1  |   |        |   | 4.6  |                                 |  |   | (0.5   | ) |  | (11  | )% |  |                  | 13.9 |   |  |   | 14.8 |   |  |   | (1.0 | ) |  | (7  | )%
|Asia Pacific                          |  |                                  | 3.2  |   |        |   | 3.4  |                                 |  |   | (0.2   | ) |  | (6   | )% |  |                  | 11.0 |   |  |   | 14.2 |   |  |   | (3.2 | ) |  | (23 | )%
|                                      |  |                                  |      |   |        |   |      |                                 |  |   |        |   |  |      |    |  |                  |      |   |  |   |      |   |  |   |      |   |  |     |   
|Total royalties and licenses revenues |  | $                                | 20.7 |   |        | $ | 16.5 |                                 |  | $ | 4.2    |   |  | 25   | %  |  | $                | 61.9 |   |  | $ | 56.9 |   |  | $ | 4.9  |   |  | 9   | % 
|                                      |  |                                  |      |   |        |   |      |                                 |  |   |        |   |  |      |    |  |                  |      |   |  |   |      |   |  |   |      |   |  |     |   
|As percentage of total revenues       |  |                                  | 65   | % |        |   | 61   | %                               |  |   |        |   |  |      |    |  |                  | 70   | % |  |   | 65   | % |  |   |      |   |  |     |   

Three Months ended September 30, 2009 versus Three Months ended
September 30, 2008. Royalties and licenses revenues for the three months ended September 30, 2009 increased $4.2 million, or 25%, to $20.7 million.



| |  | Europe, Middle East and Africa accounted for $13.4 million in royalties and licenses revenues for the three months ended September 30, 2009, an
increase of $4.9 million, or 58%, compared to the same period in 2008.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

British Sky Broadcasting (BSkyB),
directly and indirectly through our set-top box manufacturer customers who sell set-top boxes to BSkyB, accounted for $3.0 million, or 14%, of our total worldwide royalties and licenses revenues for the three months ended September 30,
2009. BSkyB royalties and licenses revenues for the three months ended September 30, 2009 decreased by $0.6 million compared to the same period in 2008 primarily as a result of a volume-based price reduction that became effective as of
January 1, 2009, which was partially offset by increased deployments of our products. This volume-based price reduction may negatively impact the overall level of revenues that we generate from BSkyB in the future unless we are able to offset
the effect of such reduction through increased deployments of our products, an upgrade to a new version of our product that is not subject to the price reduction, or some other means. Royalties and licenses revenues from Multichoice Africa increased
$2.5 million for the three months ended September 30, 2009 compared to the same period in 2008 as a result of an increase in deployments of set-top boxes containing our software and revised royalty reports received during the quarter from two
set-top box manufacturers who supply set-top boxes to Multichoice Africa, which reported additional shipments of set-top boxes containing our software. Royalties and licenses revenues from TV Cabo and Portugal Telecom increased $0.5 million and $0.3
million, respectively, in the three months ended September 30, 2009 compared to the same period in 2008; both of these operators launched in 2008 and we received their initial royalty



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reports during the fourth quarter of 2008. Royalties and licenses revenues from UPC Broadband (UGC), HOT Telecom and Sky Italia increased by $0.8 million, $0.6 million and $0.4 million,
respectively, in the three months ended September 30, 2009 compared to the same period in 2008 primarily due to increased deployments of set-top boxes containing our software. Royalties and licenses revenues from other customers in the region
accounted for a net increase of $0.4 million compared to the same period in 2008 due to higher volumes of set-top box shipments by those customers.



| |  | The Americas region accounted for $4.1 million in royalties and licenses revenues for the three months ended September 30, 2009, a decrease of
$0.5 million, or 11%, compared to the same period in 2008.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EchoStar, including DISH Network and EchoStar
Technologies LLC, accounted for $1.2 million, or 6%, of our total worldwide royalties and licenses revenues for the three months ended September 30, 2009. Royalties and licenses revenues from EchoStar for the three months ended
September 30, 2009 were consistent with the same period in 2008. Royalties and licenses revenues from Time Warner Cable decreased $0.6 million compared to the same period in 2008 primarily due to a new pricing model that became effective
as of January 1, 2009 as part of an upgrade sold to that customer for our latest EclipsePlus product. This pricing model includes a one-time, upfront license fee that is typically recognized over the term of the contract as compared to
our prior pricing model under which we recognized recurring license fees as received. Royalties and licenses revenues from Net Servicos de Communicacao S.A (NET) and Bell TV increased by $0.3 million and $0.2 million, respectively, for the three
months ended September 30, 2009 compared to the same period in 2008 primarily due to increased deployments of set-top boxes containing our software. Royalties and licenses revenues from other customers in the region accounted for
a net decrease of $0.4 million compared to the same period in 2008 primarily due to decreased deployments of our products by those customers.



| |  | The Asia Pacific region accounted for $3.2 million in royalties and licenses revenues for the three months ended September 30, 2009, a decrease of
$0.2 million, or 6%, compared to the same period in 2008.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Royalties and licenses revenues from Reliance
increased $0.4 million during the three months ended September 30, 2009 compared to the same period in 2008 primarily due to an increase in the number of set-top boxes reported as being shipped. Royalties and licenses revenues from Panasonic
decreased $0.3 million for the three months ended September 30, 2009 compared to the same period in 2008 primarily as a result of a volume-based price reduction for our OpenTV Integrated Browser product that became effective during the second
half of 2008. Royalties and licenses revenues from JCOM decreased $0.3 million for the three months ended September 30, 2009 compared to the same period in 2008 primarily due to a change in the timing for delivery of royalty reports for our
OpenTV Integrated Browser product that resulted in an additional royalty report being delivered in the three months ended September 30, 2008. Royalties and licenses revenues from other customers in the region were consistent with the same
period in 2008.

Nine Months ended September 30, 2009 versus Nine Months ended September 30,
2008. Royalties and licenses revenues for the nine months ended September 30, 2009 increased $5.0 million, or 9%, to $61.9 million.



| |  | Europe, Middle East and Africa accounted for $37.0 million in royalties and licenses revenues for the nine months ended September 30, 2009, an
increase of $9.1 million, or 33%, compared to the same period in 2008.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

BSkyB, directly and indirectly
through our set-top box manufacturer customers who sell set-top boxes to BSkyB, accounted for $12.6 million, or 20%, of our total worldwide royalties and licenses revenues for the nine months ended September 30, 2009. BSkyB royalties and
licenses revenues for the nine months ended September 30, 2009 decreased by $0.8 million compared to the same period in 2008 primarily due to a volume-based price reduction that became effective as of January 1, 2009, which was
partially offset by increased deployments of our products. As described above, this volume-based price reduction may negatively impact the overall level of revenues that we generate from BSkyB in the future. Royalties and licenses revenues from
Portugal Telecom and TV Cabo increased $1.6 million and $1.4 million, respectively, in the nine months ended September 30, 2009 compared to the same period in 2008; both of these operators launched in 2008 and we received their initial royalty
reports during the fourth quarter of 2008. Royalties and licenses revenues from Multichoice Africa increased $3.2 million for the nine months ended September 30, 2009



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compared to the same period in 2008 as a result of an increase in deployments of set-top boxes containing our software and revised royalty reports received during the quarter from two set-top box
manufacturers who supply set-top boxes to Multichoice Africa, which reported additional shipments of set-top boxes containing our software. Royalties and licenses revenues from UGC increased $2.1 million for the nine months ended September 30,
2009 compared to the same period in 2008 primarily due to an accumulation of inventory of set-top boxes containing our PVR software in the nine months ended September 30, 2008 which resulted in a decrease in orders of new set-top boxes by that
customer during the period. Royalties and licenses revenues from HOT Telecom and Sky Italia increased $1.3 million and $0.6 million, respectively, in the nine months ended September 30, 2009 compared to the same period in 2008 primarily due to
increased deployments of set-top boxes containing our software. Royalties and licenses revenues from other customers in the region accounted for a net decrease of $0.3 million compared to the same period in 2008 due to lower volumes of set-top box
shipments by those customers.



| |  | The Americas region accounted for $13.9 million in royalties and licenses revenues for the nine months ended September 30, 2009, a decrease of
$0.9 million, or 6%, compared to the same period in 2008.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

EchoStar, including DISH Network and EchoStar
Technologies LLC, accounted for $5.2 million, or 8%, of our total worldwide royalties and licenses revenues for the nine months ended September 30, 2009. Royalties and licenses revenues from EchoStar for the nine months ended
September 30, 2009 increased $0.9 million compared to the same period in 2008 primarily due to receipt of a late royalty report during the three months ended March 31, 2009 for set-top boxes that were shipped during 2008 but not previously
reported to us. Royalties and licenses revenues from Time Warner Cable and Comcast decreased $1.8 million and $0.6 million, respectively, compared to the same period in 2008 primarily due to a new pricing model that became effective as of
January 1, 2009 as part of an upgrade sold to those customers for our latest EclipsePlus product. This pricing model includes a one-time, upfront license fee that is typically recognized over the term of the contract as compared to our
prior pricing model under which we recognized recurring license fees as received. Royalties and licenses revenues from Bell TV increased $0.6 million for the three months ended September 30, 2009 compared to the same period in 2008
primarily due to an increase in the number of set-top boxes reported as being shipped. Royalties and licenses revenues from other customers in the region were consistent with the same period in 2008.



| |  | The Asia Pacific region accounted for $11.0 million in royalties and licenses revenues for the nine months ended September 30, 2009, a decrease of
$3.2 million, or 23%, compared to the same period in 2008.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Royalties and licenses revenues from Reliance
decreased $1.0 million primarily due to the one-time license fee for enterprise software received from Reliance in the three months ended June 30, 2008. Royalties and license revenues from Austar decreased $1.3 million during the nine months
ended September 30, 2009 compared to the same period in 2008 due to lower volumes of set-top box deployments. Royalties and license revenues from Sky Network Television increased $0.6 million during the nine months ended September 30, 2009
compared to the same period in 2008 due to higher volumes of set-top box deployments. Royalties and licenses revenues from Panasonic decreased $1.5 million primarily as a result of a volume-based price reduction for our OpenTV Integrated Browser
product that became effective during the second half of 2008. Royalties and licenses revenues from JCOM decreased $0.4 million for the nine months ended September 30, 2009 compared to the same period in 2008 primarily due to a change in the
timing for delivery of royalty reports for our OpenTV Integrated Browser product that resulted in an additional royalty report being delivered in the three months ended September 30, 2008. Royalties and licenses revenues from other customers in
the region accounted for a net increase of $0.4 million compared to the same period in 2008 due to an increase in deployments of our products.

Services and other

Services and other revenues are primarily generated from professional services, maintenance
and support, training, service usage fees, revenue sharing arrangements and programming fees. Professional services revenues are generally derived from deployment and integration consulting engagements for network operators, set-top box
manufacturers and systems integrators. The professional services engagements we enter into with our customers are generally discrete projects that are tailored to meet our customers specific project requirements. The project scope, term and
fees in respect of our professional services engagements are dependent upon these customer requirements and generally vary from project to project based on the products involved, the level of customization and integration required and other
project-specific variables.



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Maintenance and support and training revenues are generally realized as services are
provided to network operators and set-top box manufacturers. A set-top box manufacturers decision to purchase maintenance and support from us depends largely on whether such manufacturer is actively shipping set-top boxes with our software or
reasonably expects to do so in quantities large enough to justify payment of these amounts which, in both cases, is dependent upon such manufacturers supply contracts with network operators and set-top box demand by the network operator.

Services and other revenues were as follows (in millions, except percentages):



|                                  |  |                                  |      |   |        |   |      |                                 |  |   |        |  |   |      |  |   |                  |   |  |   |      |   |  |   |      |   |  |     |   
|--------------------------------- |  | -------------------------------- | ---- | - | ------ | - | ---- | ------------------------------- |  | - | ------ |  | - | ---- |  | - | ---------------- | - |  | - | ---- | - |  | - | ---- | - |  | --- | --
|                                  |  | Three Months Ended September 30, |      |   | Change |   |      | Nine Months Ended September 30, |  |   | Change | 
|                                  |  | 2009                             |      |   | 2008   |   |      | 2009 versus 2008                |  |   | 2009   |  |   | 2008 |  |   | 2009 versus 2008 |  
|Total services and other revenues |  | $                                | 11.1 |   |        | $ | 10.4 |                                 |  | $ | 0.7    |  | 7 | %    |  | $ | 26.9             |   |  | $ | 30.6 |   |  | $ | (3.7 | ) |  | (12 | )%
|As percentage of total revenues   |  |                                  | 35   | % |        |   | 39   | %                               |  |   |        |  |   |      |  |   | 30               | % |  |   | 35   | % |  |   |      |   |  |     |   

Three Months ended September 30, 2009 versus Three Months ended
September 30, 2008. Services and other revenues for the three months ended September 30, 2009 increased $0.7 million, or 7%, to $11.1 million compared to the same period in 2008.

Services and other revenues from FOXTEL, Austar, NET and Sky Perfect increased $0.4 million, $0.3 million, $0.3 million and $0.3 million,
respectively, primarily due to an increase in professional services engagements with those customers in the three months ended September 30, 2009 compared to the same period in 2008. The increases were partially offset by a decrease of $0.3
million in services and other revenues from UGC which was primarily the result of a decrease in professional services engagements with that customer in the three months ended September 30, 2009 compared to the same period in 2008. Services and
other revenues from other customers during the three months ended September 30, 2009 accounted for a net decrease of $0.3 million compared to the same period in 2008.

Nine Months ended September 30, 2009 versus Nine Months ended September 30, 2008. Services and other revenues for the nine
months ended September 30, 2009 decreased $3.7 million, or 12%, to $26.9 million compared to the same period in 2008.

Services and other revenues from Numericable, Multichoice Africa, Digiturk, Reliance, Austar, Sky Network Television and Comcast decreased $1.7 million, $0.9 million, $0.8 million, $0.8 million, $0.7 million, $0.4 million and $0.3 million,
respectively, primarily due to a decrease in professional services engagements with those customers in the nine months ended September 30, 2009 compared to the same period in 2008. The decreases were partially offset by an increase of $1.9
million in services and other revenues from SKY Perfect as a result of an increase in professional services engagements with that customer. Services and other revenues from other customers during the nine months ended September 30, 2009 were
consistent with the same period in 2008.

Cost of Royalties and Licenses

Cost of royalties and licenses consists primarily of amortization of developed technology and patents, patent-related legal costs, materials
and shipping costs, and cost of revenue share payments. Cost of royalties and licenses was as follows (in millions, except percentages):



|                                |  |                                  |     |   |        |   |     |                                 |  |   |        |   |  |      |    |  |                  |     |   |  |   |     |   |  |   |      |   |  |     |   
|------------------------------- |  | -------------------------------- | --- | - | ------ | - | --- | ------------------------------- |  | - | ------ | - |  | ---- | -- |  | ---------------- | --- | - |  | - | --- | - |  | - | ---- | - |  | --- | --
|                                |  | Three Months Ended September 30, |     |   | Change |   |     | Nine Months Ended September 30, |  |   | Change |  
|                                |  | 2009                             |     |   | 2008   |   |     | 2009 versus 2008                |  |   | 2009   |   |  | 2008 |    |  | 2009 versus 2008 |    
|Cost of royalties and licenses  |  | $                                | 0.9 |   |        | $ | 1.2 |                                 |  | $ | (0.3   | ) |  | (25  | )% |  | $                | 2.8 |   |  | $ | 4.0 |   |  | $ | (1.2 | ) |  | (30 | )%
|As percentage of total revenues |  |                                  | 3   | % |        |   | 4   | %                               |  |   |        |   |  |      |    |  |                  | 3   | % |  |   | 5   | % |  |   |      |   |  |     |   

Three Months ended September 30, 2009 versus Three Months ended
September 30, 2008. Cost of royalties and licenses for the three months ended September 30, 2009 decreased $0.3 million, or 25%, to $0.9 million. As a percentage of revenues, cost of royalties and licenses decreased to 3% for the
three months ended September 30, 2009 compared to 4% in the same period in 2008. The amortization of developed technologies and patents decreased



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by $0.3 million for the three months ended September 30, 2009 compared to the same period in 2008, reflecting the full amortization of our developed technologies from CAM Systems, which we
acquired in the third quarter of 2005, and the full amortization of our developed technologies from BettingCorp, which we acquired in the third quarter of 2003.

Nine Months ended September 30, 2009 versus Nine Months ended September 30, 2008. Cost of royalties and licenses for the nine months ended September 30, 2009 decreased $1.2 million,
or 30%, to $2.8 million. As a percentage of revenues, cost of royalties and licenses decreased to 3% for the nine months ended September 30, 2009 compared to 5% in the same period in 2008. The amortization of developed technologies and
patents decreased by $1.5 million for the nine months ended September 30, 2009 compared to the same period in 2008, reflecting the full amortization of our developed technologies from CAM Systems, which we acquired in the third quarter of 2005,
and the full amortization of our developed technologies from BettingCorp, which we acquired in the third quarter of 2003. The decrease was partially offset by a $0.3 million increase in cost of equipment supplied to customers and the impact of a
$0.2 million reversal of a previously accrued liability during the three months ended September 30, 2008, which related to a contract commitment that we assumed from our acquisition of Wink Communications in 2002. The accrual release was
recorded as a reduction to cost of royalties and licenses, where the accrual was originally charged.

Cost of Services and Other

Cost of services and other consists primarily of personnel and personnel-related support costs associated with
maintenance and support, professional services engagements, consulting and subcontractor costs, third party material costs and depreciation. Cost of services and other was as follows (in millions, except percentages):



|                                |  |                                  |      |   |        |   |     |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |      |   |  |   |     |  |   |  
|------------------------------- |  | -------------------------------- | ---- | - | ------ | - | --- | ------------------------------- |  | - | ------ |  | -- | ---- |  | - | ---------------- | - |  | - | ---- | - |  | - | --- |  | - | -
|                                |  | Three Months Ended September 30, |      |   | Change |   |     | Nine Months Ended September 30, |  |   | Change | 
|                                |  | 2009                             |      |   | 2008   |   |     | 2009 versus 2008                |  |   | 2009   |  |    | 2008 |  |   | 2009 versus 2008 |  
|Cost of services and other      |  | $                                | 10.9 |   |        | $ | 9.1 |                                 |  | $ | 1.8    |  | 20 | %    |  | $ | 31.1             |   |  | $ | 29.2 |   |  | $ | 1.9 |  | 7 | %
|As percentage of total revenues |  |                                  | 34   | % |        |   | 34  | %                               |  |   |        |  |    |      |  |   | 35               | % |  |   | 33   | % |  |   |     |  |   |  

Three Months ended September 30, 2009 versus Three Months ended
September 30, 2008. Cost of services and other for the three months ended September 30, 2009 increased $1.8 million, or 20%, to $10.9 million. As a percentage of revenues, cost of services and other was 34% for the three months
ended September 30, 2009, which is consistent with the same period in 2008. Personnel and personnel-related support costs increased by $0.7 million due to an overall increase in headcount, and consulting and subcontractor costs increased by
$0.7 million in order to meet staffing requirements for our projects. In addition, we increased our provision for service contracts that are under loss position by $0.8 million as a result of changes in cost estimates impacting some of our
professional services engagements. These increases were partially offset by an additional $0.4 million of project costs that were recorded as deferred costs during the three months ended September 30, 2009.

Nine Months ended September 30, 2009 versus Nine Months ended September 30, 2008. Cost of services and other for the nine
months ended September 30, 2009 increased $1.9 million, or 7%, to $31.1 million. As a percentage of revenues, cost of services and other increased to 35% for the nine months ended September 30, 2009 compared to 33% in the same period
in 2008. We increased our provision for service contracts that are under loss position by $1.5 million as a result of changes in cost estimates impacting some of our professional services engagements. This increase was partially offset by an
additional $0.4 million of project costs that were recorded as deferred costs during the nine months ended September 30, 2009. Personnel and personnel-related support costs increased by $0.5 million due to an overall increase in headcount, and
consulting and subcontractor costs increased by $0.2 million in order to meet staffing requirements for our projects. These increases were partially offset by a $0.4 million contribution we received from our insurance company in connection with a
customer settlement during the nine months ended September 30, 2009.

Research and Development

Research and development expenses consist primarily of personnel and personnel-related support costs and consulting and subcontractor costs
incurred for both new product development and enhancements to our existing software products and applications. Research and development remains important to our long-term growth strategy. We will continue to focus on the timely development of new
and enhanced interactive television and advanced advertising products for our customers, and we plan to continue investing at levels that we believe are sufficient to develop our technologies and product offerings.



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Research and development expenses were as follows (in millions, except percentages):



|                                |  |                                  |     |   |        |   |     |                                 |  |   |        |  |   |      |  |   |                  |   |  |   |      |   |  |   |     |  |   |  
|------------------------------- |  | -------------------------------- | --- | - | ------ | - | --- | ------------------------------- |  | - | ------ |  | - | ---- |  | - | ---------------- | - |  | - | ---- | - |  | - | --- |  | - | -
|                                |  | Three Months Ended September 30, |     |   | Change |   |     | Nine Months Ended September 30, |  |   | Change | 
|                                |  | 2009                             |     |   | 2008   |   |     | 2009 versus 2008                |  |   | 2009   |  |   | 2008 |  |   | 2009 versus 2008 |  
|Research and development        |  | $                                | 8.7 |   |        | $ | 8.0 |                                 |  | $ | 0.7    |  | 9 | %    |  | $ | 25.9             |   |  | $ | 25.8 |   |  | $ | 0.1 |  |  | %
|As percentage of total revenues |  |                                  | 27  | % |        |   | 30  | %                               |  |   |        |  |   |      |  |   | 29               | % |  |   | 29   | % |  |   |     |  |   |  

Three Months ended September 30, 2009 versus Three Months ended
September 30, 2008. Research and development expenses for the three months ended September 30, 2009 increased $0.7 million, or 9%, to $8.7 million. As a percentage of revenues, research and development expenses was 27% for
the three months ended September 30, 2009 compared to 30% in the same period in 2008. The increase was attributable to a $0.7 million increase in personnel and personnel-related support costs due to an increase in headcount to support research
and development projects.

Nine Months ended September 30, 2009 versus Nine Months ended September 30, 2008.
Research and development expenses for the nine months ended September 30, 2009 increased $0.1 million to $25.9 million. As a percentage of revenues, research and development expenses was 29% for the nine months ended
September 30, 2009 which is consistent with the same period in 2008. Personnel and personnel-related support costs for the nine months ended September 30, 2009 decreased $0.2 million primarily as a result of a bonus expense of $0.5 million
and share-based compensation expense of $0.4 million related to the 2007 Management Bonus and Equity Issuance Plan that was recorded during the nine months ended September 30, 2008. This decrease was partially offset by an increase of $0.4
million in consulting and subcontractor costs due to additional staffing requirements for our research and development projects.

Sales
and Marketing

Sales and marketing expenses consist primarily of personnel and personnel-related support costs,
consulting and subcontractor costs, and marketing-related expenses. Sales and marketing expenses were as follows (in millions, except percentages):



|                                |  |                                  |     |   |        |   |     |                                 |  |   |        |   |  |      |    |  |                  |     |   |  |   |     |   |  |   |      |   |  |     |   
|------------------------------- |  | -------------------------------- | --- | - | ------ | - | --- | ------------------------------- |  | - | ------ | - |  | ---- | -- |  | ---------------- | --- | - |  | - | --- | - |  | - | ---- | - |  | --- | --
|                                |  | Three Months Ended September 30, |     |   | Change |   |     | Nine Months Ended September 30, |  |   | Change |  
|                                |  | 2009                             |     |   | 2008   |   |     | 2009 versus 2008                |  |   | 2009   |   |  | 2008 |    |  | 2009 versus 2008 |    
|Sales and marketing             |  | $                                | 2.4 |   |        | $ | 2.8 |                                 |  | $ | (0.4   | ) |  | (14  | )% |  | $                | 6.1 |   |  | $ | 7.5 |   |  | $ | (1.4 | ) |  | (19 | )%
|As percentage of total revenues |  |                                  | 8   | % |        |   | 10  | %                               |  |   |        |   |  |      |    |  |                  | 7   | % |  |   | 9   | % |  |   |      |   |  |     |   

Three Months ended September 30, 2009 versus Three Months ended
September 30, 2008. Sales and marketing expenses for the three months ended September 30, 2009 decreased $0.4 million, or 14%, to $2.4 million. As a percentage of revenues, sales and marketing expenses decreased to 8% for the three
months ended September 30, 2009 compared to 10% in the same period in 2008. Personnel and personnel-related support costs for the three months ended September 30, 2009 decreased $0.3 million compared to the same period in 2008 due to a
reduction in headcount. In addition, marketing expenses decreased $0.1 million as a result of lower spending on trade shows and other marketing activities during the three months ended September 30, 2009.

Nine Months ended September 30, 2009 versus Nine Months ended September 30, 2008. Sales and marketing expenses for the nine
months ended September 30, 2009 decreased $1.4 million, or 19%, to $6.1 million. As a percentage of revenues, sales and marketing expenses decreased to 7% for the nine months ended September 30, 2009 compared to 9% in the same
period in 2008. Personnel and personnel-related support costs for the nine months ended September 30, 2009 decreased $0.9 million due to a reduction in headcount. In addition, marketing expenses decreased $0.5 million as a result of lower
spending on trade shows and other marketing activities during the nine months ended September 30, 2009.



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General and Administrative

General and administrative expenses consist primarily of personnel and personnel-related support costs, including for our executives and our
board of directors, consulting and subcontractor costs, fees for professional services, including legal and accounting fees, insurance, provision for doubtful accounts and non-income tax-related expenses. General and administrative expenses were as
follows (in millions, except percentages):



|                                |  |                                  |     |   |        |   |     |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |      |   |  |   |     |  |   |  
|------------------------------- |  | -------------------------------- | --- | - | ------ | - | --- | ------------------------------- |  | - | ------ |  | -- | ---- |  | - | ---------------- | - |  | - | ---- | - |  | - | --- |  | - | -
|                                |  | Three Months Ended September 30, |     |   | Change |   |     | Nine Months Ended September 30, |  |   | Change | 
|                                |  | 2009                             |     |   | 2008   |   |     | 2009 versus 2008                |  |   | 2009   |  |    | 2008 |  |   | 2009 versus 2008 |  
|General and administrative      |  | $                                | 6.0 |   |        | $ | 4.1 |                                 |  | $ | 1.9    |  | 46 | %    |  | $ | 15.5             |   |  | $ | 15.0 |   |  | $ | 0.5 |  | 3 | %
|As percentage of total revenues |  |                                  | 19  | % |        |   | 15  | %                               |  |   |        |  |    |      |  |   | 17               | % |  |   | 17   | % |  |   |     |  |   |  

Three Months ended September 30, 2009 versus Three Months ended
September 30, 2008. General and administrative expenses for the three months ended September 30, 2009 increased $1.9 million, or 46%, to $6.0 million. As a percentage of revenues, general and administrative expenses increased to
19% for the three months ended September 30, 2009 compared to 15% in the same period in 2008. During the three months ended September 30, 2009, we accrued a reserve of $1.8 million in respect of potential exposure for state and local sales
taxes for past sales of our software products to customers located in the United States. Sales of our products may be exempt from sales tax in certain jurisdictions subject to satisfaction of applicable requirements, including receipt of appropriate
exemption documentation from our customers. The reserve is an estimate that may change in future periods based upon our receipt of such documentation. Finally, bad debt expense was $0.2 million higher during the three months ended September 30,
2009 compared to the same period in 2008 which is generally consistent with a higher accounts receivable balance.

Nine
Months ended September 30, 2009 versus Nine Months ended September 30, 2008. General and administrative expenses for the nine months ended September 30, 2009 increased $0.5 million, or 3%, to $15.5 million. As a percentage of
revenues, general and administrative expenses was 17% which was consistent with the same period in 2008. During the nine months ended September 30, 2009, we accrued a reserve of $1.8 million in respect of potential exposure for state and local
sales taxes for past sales of our software products to customers located in the United States. Sales of our products may be exempt from sales tax in certain jurisdictions subject to satisfaction of applicable requirements, including receipt of
appropriate exemption documentation from our customers. The reserve is an estimate that may change in future periods based upon our receipt of such documentation. Personnel and personnel-related support costs for the nine months ended
September 30, 2009 decreased $2.2 million as a result of a bonus expense of $0.9 million and share-based compensation expense of $0.5 million related to the 2007 Management Bonus and Equity Issuance Plan that was recorded during the nine months
ended September 30, 2008. In addition, personnel and personnel-related support costs decreased $0.6 million due to our reversal of the remaining accrual for severance and other costs relating to a former senior executive officer and the effect
of an insurance contribution we received in connection with a settlement reached with such former executive officer. Consulting and subcontractor costs during the nine months ended September 30, 2009 decreased $0.2 million compared to the same
period in 2008. Finally, bad debt expense was $0.6 million higher during the nine months ended September 30, 2009 compared to the same period in 2008, which is consistent with a higher accounts receivable balance and reflects a write-off of
uncollectable receivables and a $0.3 million reversal of a provision for bad debt that occurred in the three months ended June 30, 2008.

Amortization of Intangible Assets

Intangible assets are amortized on a straight-line basis over their
estimated useful lives of four to 13 years. As noted above, cost of royalties and licenses includes amounts relating to the amortization of developed technologies and patents. Amortization of intangible assets, excluding these developed
technologies and patents, was as follows (in millions, except percentages):



|                                  |  |                                  |     |   |        |   |     |                                 |  |   |        |   |  |      |    |  |                  |     |   |  |   |     |   |  |   |      |   |  |     |   
|--------------------------------- |  | -------------------------------- | --- | - | ------ | - | --- | ------------------------------- |  | - | ------ | - |  | ---- | -- |  | ---------------- | --- | - |  | - | --- | - |  | - | ---- | - |  | --- | --
|                                  |  | Three Months Ended September 30, |     |   | Change |   |     | Nine Months Ended September 30, |  |   | Change |  
|                                  |  | 2009                             |     |   | 2008   |   |     | 2009 versus 2008                |  |   | 2009   |   |  | 2008 |    |  | 2009 versus 2008 |    
|Amortization of intangible assets |  | $                                | 0.1 |   |        | $ | 0.2 |                                 |  | $ | (0.1   | ) |  | (50  | )% |  | $                | 0.2 |   |  | $ | 0.6 |   |  | $ | (0.4 | ) |  | (67 | )%
|As percentage of total revenues   |  |                                  |    | % |        |   | 1   | %                               |  |   |        |   |  |      |    |  |                  |    | % |  |   | 1   | % |  |   |      |   |  |     |   

Amortization of intangible assets for the three months ended September 30, 2009
decreased $0.1 million, or 50%, to $0.1 million, and amortization of intangible assets for the nine months ended September 30, 2009 decreased $0.4 million, or 67%, to $0.2 million. The decreases were due to the impairment during the
fourth quarter of 2008 of the unamortized value of one of the customer contracts we assumed as part of our acquisition of substantially all of the assets of CAM Systems in September 2005.



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Interest Income

Interest income consists primarily of interest earned on our cash and cash equivalents, and marketable debt securities, net of interest expense. Interest income was as follows (in millions):



|                |  |                                  |     |        |   |                  |                                 |   |        |   |      |     |                  |  |   |     |  |   |     |  |   |      |   |  |     |   
|--------------- |  | -------------------------------- | --- | ------ | - | ---------------- | ------------------------------- | - | ------ | - | ---- | --- | ---------------- |  | - | --- |  | - | --- |  | - | ---- | - |  | --- | --
|                |  | Three Months Ended September 30, |     | Change |   |                  | Nine Months Ended September 30, |   | Change |  
|                |  | 2009                             |     | 2008   |   | 2009 versus 2008 |                                 |   | 2009   |   | 2008 |     | 2009 versus 2008 | 
|Interest income |  | $                                | 0.1 |        | $ | 0.5              |                                 | $ | (0.4   | ) |      | (80 | )%               |  | $ | 0.3 |  | $ | 1.9 |  | $ | (1.6 | ) |  | (84 | )%

Interest income for the three months ended September 30, 2009 decreased
$0.4 million, or 80%, to $0.1 million, and interest income for the nine months ended September 30, 2009 decreased $1.6 million, or 84%, to $0.3 million. These decreases were due to lower effective interest rates earned on
our investment portfolio, which consists primarily of cash and cash equivalents, money market funds and short-term marketable debt securities issued by United States government entities and other highly-rated institutions.

Other Income and Expense Items

Other income and expense items consist primarily of gains or losses from foreign currency exchange, gains or losses on the disposal of capital assets, miscellaneous income and other unusual items. The net
of other income and expense items was as follows (in millions):



|                       |  |                                  |     |      |        |      |                  |                                 |   |        |  |     |      |  |                  |      |   |  |   |     |  |   |      |   |  |      |   
|---------------------- |  | -------------------------------- | --- | ---- | ------ | ---- | ---------------- | ------------------------------- | - | ------ |  | --- | ---- |  | ---------------- | ---- | - |  | - | --- |  | - | ---- | - |  | ---- | --
|                       |  | Three Months Ended September 30, |     |      | Change |      |                  | Nine Months Ended September 30, |   | Change | 
|                       |  | 2009                             |     | 2008 |        |      | 2009 versus 2008 |                                 |   | 2009   |  |     | 2008 |  | 2009 versus 2008 |     
|Other income (expense) |  | $                                | 0.2 |      | $      | (1.5 | )                |                                 | $ | 1.7    |  | 113 | %    |  | $                | (0.8 | ) |  | $ | 0.8 |  | $ | (1.6 | ) |  | (200 | )%

For the three and nine months ended September 30, 2009 and the three months
ended September 30, 2008, net other income (expense) was negatively impacted by losses on foreign exchange resulting from the weakening of the United States dollar relative to the foreign currencies in which a portion of our cash, receivable
and payable balances were denominated. This was partially offset by a $0.1 million return on an investment during the three months ended September 30, 2009. In addition, during the three months ended September 30, 2009, our settlement of
accumulated accounts payable balances denominated in foreign currencies with our foreign operating entities resulted in a reduction in the negative impact of foreign exchange movements compared with the same period in 2008. For the nine months ended
September 30, 2008, net other income (expense) benefited from the weakening of the United States Dollar relative to the foreign currencies in which a portion of our cash balance was denominated.

Income Taxes

As of
September 30, 2009, unrecognized tax benefits approximated $1.2 million, all of which would affect our effective tax rate if recognized.

We estimate that we had net United States federal tax loss carryforwards of approximately $185 million at the end of 2008, although our ability to make use of those tax loss carryforwards may be
limited under applicable tax regulations. The calculation of those tax loss carryforwards is a complex matter and may require reassessment from time to time, which could result in changes to that estimate. For all periods presented, substantially
all federal tax benefits related to our losses have been offset by an increase in the valuation allowance against the resulting deferred tax assets. Notwithstanding those federal tax loss carryforwards, we are subject to income taxes in certain
state and foreign jurisdictions, and we have foreign taxes withheld from certain royalty payments.

Income tax expense
consists primarily of foreign taxes, state taxes, tax benefits or refunds, and changes to reserves for identified potential foreign tax exposure. Incomes taxes were as follows (in millions):



|                             |  |                                  |     |      |        |      |                  |                                 |   |        |  |      |   |                  |   |     |  |   |     |  |   |     |  |     |  
|---------------------------- |  | -------------------------------- | --- | ---- | ------ | ---- | ---------------- | ------------------------------- | - | ------ |  | ---- | - | ---------------- | - | --- |  | - | --- |  | - | --- |  | --- | -
|                             |  | Three Months Ended September 30, |     |      | Change |      |                  | Nine Months Ended September 30, |   | Change | 
|                             |  | 2009                             |     | 2008 |        |      | 2009 versus 2008 |                                 |   | 2009   |  | 2008 |   | 2009 versus 2008 |  
|Income tax expense (benefit) |  | $                                | 0.2 |      | $      | (0.4 | )                |                                 | $ | 0.6    |  | 150  | % |                  | $ | 0.9 |  | $ | 0.3 |  | $ | 0.6 |  | 200 | %

The income tax expense of $0.2 million recorded in the three months ended
September 30, 2009 versus the income tax benefit of $0.4 million recorded in the same period in 2008 and the income tax expense of $0.9 million recorded in the nine months ended September 30, 2009 versus the income tax expense of $0.3
million recorded in the same period in 2008, primarily resulted from relative differences in the rates of taxation in the various foreign jurisdictions in which we generate revenue and a release of tax reserves following the expiration of the
applicable statute of limitations.



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Business Segment Results

In March 2008, Nigel (Ben) Bennett was appointed as Chief Executive Officer after having served as Chief Operating Officer and Acting
Chief Executive Officer since August 2007. Accordingly, Mr. Bennett is our chief operating decision maker, or CODM. Our CODM currently assesses our results and financial performance and reviews our internal budgeting reports on the basis of two
segments: middleware solutions and advertising solutions. We have prepared this segment analysis in accordance with SFAS 131,Disclosure about Segments of an Enterprise and Related Informationas codified under FASB Accounting
Standards Codification Topic 280 Segment Reporting (ASC 280).

Middleware solutions is composed of
set-top box middleware and embedded browser technologies, such as OpenTV Spyglass, as well as software components that are deployed at the network operators headend.

Advertising solutions includes our OpenTV EclipsePlus, Eclipse and Participate products.

Our management reviews and assesses the contribution margin of each of these segments, which is not a financial measure
calculated in accordance with GAAP. We define contribution margin for these purposes as segment revenues less related direct or indirect allocable costs, including personnel and personnel-related support costs, communications, facilities,
maintenance and support, consulting and subcontractor costs, travel, marketing and network infrastructure and bandwidth costs. There are significant judgments management makes with respect to the direct and indirect allocation of costs that may
affect the calculation of contribution margins. While management believes these and other related judgments are reasonable and appropriate, others could assess such matters differently.

Contribution margin is a non-GAAP financial measure that excludes unallocated corporate support, interest, taxes, depreciation and
amortization, amortization of intangible assets, share-based compensation, impairment of goodwill, impairment of intangibles, other income, noncontrolling interest, restructuring provisions, and unusual items such as contract amendments that
mitigate potential loss positions. These exclusions reflect costs not considered directly allocable to individual business segments and result in a definition of contribution margin that does not take into account some of the substantial costs of
doing business. Management believes that segment contribution margin is a helpful measure in evaluating the performance of our business segments. While our management may consider contribution margin to be an important measure of comparative
operating performance, this measure should be considered in addition to, but not as a substitute for, profit from operations, net income, cash flow and other measures of financial performance prepared in accordance with GAAP that are presented in
our financial statements. In addition, our calculation of contribution margin may be different from, and not comparable to, the calculation used by other companies.

Because these segments reflect the manner in which management reviews our business, they necessarily involve judgments that management believes are reasonable in light of the circumstances under which
they are made. These judgments may change over time or may be modified to reflect new facts or circumstances. Segments may also be changed or modified to reflect technologies and applications that are newly created, or that change over time, or
other business conditions that evolve, each of which may result in reassessing specific segments and the elements included within each of those segments. Recent events may affect the manner in which we present segments in the future.

Middleware Solutions

Revenues and contribution margin of our middleware solutions segment were as follows (in millions, except percentages):



|                                           |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |      |   |  |   |      |   |  |     |   
|------------------------------------------ |  | -------------------------------- | ---- | - | ------ | - | ---- | ------------------------------- |  | - | ------ |  | -- | ---- |  | - | ---------------- | - |  | - | ---- | - |  | - | ---- | - |  | --- | --
|                                           |  | Three Months Ended September 30, |      |   | Change |   |      | Nine Months Ended September 30, |  |   | Change | 
|                                           |  | 2009                             |      |   | 2008   |   |      | 2009 versus 2008                |  |   | 2009   |  |    | 2008 |  |   | 2009 versus 2008 |  
|Royalties and licenses                     |  | $                                | 20.1 |   |        | $ | 15.1 |                                 |  | $ | 5.0    |  | 33 | %    |  | $ | 60.0             |   |  | $ | 52.3 |   |  | $ | 7.7  |   |  | 15  | % 
|Services and other                         |  |                                  | 8.8  |   |        |   | 8.8  |                                 |  |   |       |  |   | %    |  |   | 20.7             |   |  |   | 25.2 |   |  |   | (4.5 | ) |  | (18 | )%
|                                           |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |      |   |  |   |      |   |  |     |   
|Total middleware solutions                 |  | $                                | 28.9 |   |        | $ | 23.9 |                                 |  | $ | 5.0    |  | 21 | %    |  | $ | 80.7             |   |  | $ | 77.5 |   |  | $ | 3.2  |   |  | 4   | % 
|                                           |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |      |   |  |   |      |   |  |     |   
|As percentage of total revenues            |  |                                  | 91   | % |        |   | 89   | %                               |  |   |        |  |    |      |  |   | 91               | % |  |   | 89   | % |  |   |      |   |  |     |   
|Contribution margin - middleware solutions |  | $                                | 11.6 |   |        | $ | 9.3  |                                 |  | $ | 2.3    |  | 25 | %    |  | $ | 30.9             |   |  | $ | 30.9 |   |  | $ |     |   |  |    | % 
|                                           |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |      |   |  |   |      |   |  |     |   



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Three Months ended September 30, 2009 versus Three Months ended September 30,
2008. Total revenues from the middleware solutions segment for the three months ended September 30, 2009 increased $5.0 million, or 21%, to $28.9 million.

Royalties and licenses revenues from the middleware solutions segment account for the majority of our overall royalties and licenses. Royalties and licenses revenues from set-top box shipments and other
product sales accounted for 70% and 63% of segment revenues for the three months ended September 30, 2009 and 2008, respectively. Royalties and licenses revenues from the middleware solutions segment for the three months ended
September 30, 2009 increased $5.0 million, or 33%, to $20.1 million. As described underRoyalties and licenses inRevenues above, BSkyB, directly and indirectly through our set-top box manufacturer
customers who sell set-top boxes to BSkyB, accounted for $3.0 million, or 14%, of our total worldwide royalties and licenses revenues for the three months ended September 30, 2009. BSkyB royalties and licenses revenues for the three months
ended September 30, 2009 decreased by $0.6 million compared to the same period in 2008 primarily as a result of a volume-based price reduction that became effective as of January 1, 2009. This volume-based price reduction may
negatively impact the overall level of revenues that we generate from BSkyB in the future unless we are able to offset the effect of such reduction through increased deployments of our products, an upgrade to a new version of our product that is not
subject to the price reduction, or some other means. Royalties and licenses revenues from TV Cabo, Reliance and Portugal Telecom increased $0.5 million, $0.4 million and $0.3 million, respectively, in the three months ended September 30, 2009
compared to the same period in 2008 primarily due to an increase in the number of set-top boxes reported as being shipped. Royalties and licenses revenues from Multichoice Africa increased $2.5 million for the three months ended September 30,
2009 compared to the same period in 2008 as a result of an increase in deployments of set-top boxes containing our software and revised royalty reports received during the quarter from two set-top box manufacturers who supply set-top boxes to
Multichoice Africa, which reported additional shipments of set-top boxes containing our software. Royalties and licenses revenues from UGC, HOT Telecom, Sky Italia, NET and Bell TV increased $0.8 million, $0.6 million, $0.4 million, $0.3 million and
$0.2 million, respectively, in the three months ended September 30, 2009 compared to the same period in 2008 primarily due to increased deployments of set-top boxes containing our software. Royalties and licenses revenues from other customers
in the region accounted for a net decrease of $0.4 million compared to the same period in 2008 due to lower volumes of deployments by those customers.

Services and other revenues accounted for 30% and 37% of segment revenues for the three months ended September 30, 2009 and 2008, respectively. Services and other revenues from the middleware
solutions segment for the three months ended September 30, 2009 were consistent with the same period in 2008. As described underServices and other inRevenues above, services and other revenues from
FOXTEL, Austar, NET and Sky Perfect increased $0.4 million, $0.3 million, $0.3 million and $0.3 million, respectively, primarily due to an increase in professional services engagements with those customers in the three months ended
September 30, 2009 compared to the same period in 2008. The increases were partially offset by a decrease of $0.3 million in services and other revenues from UGC due to a decrease in professional services engagements. Services and other
revenues from other customers during the three months ended September 30, 2009 accounted for a net decrease of $1.0 million compared to the same period in 2008.

Costs associated with our middleware solutions segment consist primarily of personnel and personnel-related support costs and consulting and
subcontractor costs incurred in connection with professional services engagements. Total contribution margin for the middleware solutions segment for the three months ended September 30, 2009 increased $2.3 million, or 25%, to
$11.6 million compared to the same period in 2008 primarily as a result of a $5.1 million increase in revenues generated in this segment, which was partially offset by $0.8 million increase in provision for service contracts that are under loss
position as a result of changes in cost estimates impacting some of our professional services engagements, an additional $0.4 million of project costs that were recorded as deferred costs, a $1.0 million increase in personnel and personnel-related
support costs and a $1.0 million increase in consulting and subcontractor costs.

Nine Months ended September 30, 2009
versus Nine Months ended September 30, 2008. Total revenues from the middleware solutions segment for the nine months ended September 30, 2009 increased $3.2 million, or 4%, to $80.7 million.

Royalties and licenses revenues from set-top box shipments and other product sales accounted for 74% and 67% of segment revenues for the
nine months ended September 30, 2009 and 2008, respectively. Royalties and licenses revenues from the middleware solutions segment for the nine months ended September 30, 2009 increased



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$7.7 million, or 15%, to $60.0 million. As described underRoyalties and licenses inRevenues above, BSkyB, directly and indirectly through our set-top box
manufacturer customers who sell set-top boxes to BSkyB, accounted for $12.6 million, or 20%, of our total worldwide royalties and licenses revenues for the nine months ended September 30, 2009. BSkyB royalties and licenses revenues for the
nine months ended September 30, 2009 decreased by $0.8 million compared to the same period in 2008 primarily due to a volume-based price reduction that became effective as of January 1, 2009, which was partially offset by increased
deployments of our products. As described above, this volume-based price reduction may negatively impact the overall level of revenues that we generate from BSkyB in the future. Royalties and licenses revenues from Reliance decreased $1.0 million
primarily due to the one-time license fee for enterprise software received from Reliance in the three months ended June 30, 2008. Royalties and licenses revenues from Portugal Telecom and TV Cabo increased $1.6 million and $1.4 million,
respectively, in the nine months ended September 30, 2009 compared to the same period in 2008; both of these operators launched in 2008 and we received their initial royalty reports during the fourth quarter of 2008. Royalties and licenses
revenues from Multichoice Africa increased $3.2 million for the nine months ended September 30, 2009 compared to same period in 2008 as a result of an increase in deployments of set-top boxes containing our software and revised royalty reports
received during the quarter from two set-top box manufacturers who supply set-top boxes to Multichoice Africa, which reported additional shipments of set-top boxes containing our software. Royalties and licenses revenues from UGC increased $2.1
million for the nine months ended September 30, 2009 compared to the same period in 2008 primarily due to an accumulation of inventory of set-top boxes containing our PVR software in the nine months ended September 30, 2008 which resulted
in a decrease in orders of new set-top boxes by that customer during the period. Royalties and licenses revenues from HOT Telecom, SKY Network Television and Sky Italia increased $1.3 million, $0.6 million and $0.6 million, respectively, in the nine
months ended September 30, 2009 compared to the same period in 2008 primarily due to increased deployments of set-top boxes containing our software. Royalties and licenses revenues from Panasonic decreased $1.5 million for the nine months ended
September 30, 2009 compared to the same period in 2008 primarily as a result of a volume-based price reduction for our OpenTV Integrated Browser product that became effective during the second half of 2008. Royalties and licenses revenues from
JCOM decreased $0.4 million for the nine months ended September 30, 20009 compared to the same period in 2008 primarily due to a change in the timing for delivery of royalty reports for our OpenTV Integrated Browser product that resulted in an
additional royalty report being delivered in the three months ended September 30, 2008. Royalties and licenses revenues from other customers accounted for a net increase of $0.6 million compared to the same period in 2008 due to higher volumes
of set-top box shipments by these customers.

Services and other revenues accounted for 26% and 33% of segment revenues for
the nine months ended September 30, 2009 and 2008, respectively. Services and other revenues from the middleware solutions segment for the nine months ended September 30, 2009 decreased $4.5 million, or 18%, to $20.7 million. As described
underServices and other inRevenues above, services and other revenues from Numericable, Multichoice Africa, Digiturk, Reliance, Austar, BSkyB and Sky Network Television decreased $1.7 million, $0.9 million,
$0.8 million, $0.8 million, $0.7 million, $0.5 million and $0.4 million, respectively, primarily due to a decrease in professional services engagements with those customers in the nine months ended September 30, 2009 compared to the same period
in 2008. The decreases were partially offset by an increase of $1.9 million in services and other revenues from SKY Perfect due to additional professional services engagements. Services and other revenues from other customers during the nine months
ended September 30, 2009 accounted for a net decrease of $0.6 million compared to the same period in 2008.

Total
contribution margin for the middleware solutions segment for the nine months ended September 30, 2009 was $30.9 million, consistent with the same period in 2008. Revenues generated in this segment increased $3.2 million which was offset by
a $1.7 million increase in consulting and subcontractor costs, a $1.5 million increase in provision for service contracts that are under loss position as a result of changes in cost estimates impacting some of our professional services engagements,
a $0.4 million increase in personnel and personnel-related support costs, and an additional $0.4 million of project costs that were recorded as deferred costs for the nine months ended September 30, 2009.



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Advertising Solutions

Revenues and contribution margin of our advertising solutions segment were as follows (in millions, except percentages):



|                                            |  |                                  |     |   |        |   |      |                                 |  |   |        |   |  |      |    |  |                  |     |   |  |   |      |   |  |   |      |   |  |     |   
|------------------------------------------- |  | -------------------------------- | --- | - | ------ | - | ---- | ------------------------------- |  | - | ------ | - |  | ---- | -- |  | ---------------- | --- | - |  | - | ---- | - |  | - | ---- | - |  | --- | --
|                                            |  | Three Months Ended September 30, |     |   | Change |   |      | Nine Months Ended September 30, |  |   | Change |  
|                                            |  | 2009                             |     |   | 2008   |   |      | 2009 versus 2008                |  |   | 2009   |   |  | 2008 |    |  | 2009 versus 2008 |    
|Royalties and licenses                      |  | $                                | 0.6 |   |        | $ | 1.4  |                                 |  | $ | (0.8   | ) |  | (57  | )% |  | $                | 1.9 |   |  | $ | 4.6  |   |  | $ | (2.7 | ) |  | (59 | )%
|Services and other                          |  |                                  | 2.3 |   |        |   | 1.6  |                                 |  |   | 0.7    |   |  | 44   | %  |  |                  | 6.2 |   |  |   | 5.4  |   |  |   | 0.8  |   |  | 15  | % 
|                                            |  |                                  |     |   |        |   |      |                                 |  |   |        |   |  |      |    |  |                  |     |   |  |   |      |   |  |   |      |   |  |     |   
|Total advertising solutions revenues        |  | $                                | 2.9 |   |        | $ | 3.0  |                                 |  | $ | (0.1   | ) |  | (3   | )% |  | $                | 8.1 |   |  | $ | 10.0 |   |  | $ | (1.9 | ) |  | (19 | )%
|                                            |  |                                  |     |   |        |   |      |                                 |  |   |        |   |  |      |    |  |                  |     |   |  |   |      |   |  |   |      |   |  |     |   
|As percentage of total revenues             |  |                                  | 9   | % |        |   | 11   | %                               |  |   |        |   |  |      |    |  |                  | 9   | % |  |   | 11   | % |  |   |      |   |  |     |   
|Contribution margin - advertising solutions |  | $                                | 0.2 |   |        | $ | (0.1 | )                               |  | $ | 0.3    |   |  | 300  | %  |  | $                | 0.2 |   |  | $ | 0.8  |   |  | $ | (0.6 | ) |  | (75 | )%
|                                            |  |                                  |     |   |        |   |      |                                 |  |   |        |   |  |      |    |  |                  |     |   |  |   |      |   |  |   |      |   |  |     |   

Three Months ended September 30, 2009 versus Three Months ended
September 30, 2008. Total revenues from the advertising solutions segment for the three months ended September 30, 2009 decreased $0.1 million, or 3%, to $2.9 million.

Royalties and licenses revenues from the advertising solutions segment for the three months ended September 30, 2009 decreased $0.8
million, or 57%, to $0.6 million. As described underRoyalties and licenses inRevenues above, royalties and licenses revenues from Time Warner Cable decreased $0.6 million compared to the same period in
2008 primarily due to a new pricing model that became effective as of January 1, 2009 as part of an upgrade sold to that customer for our latest EclipsePlus product. This pricing model includes a one-time, upfront license fee that is
typically recognized over the term of the contract as compared to our prior pricing model under which we recognized recurring license fees as received. Royalties and licenses revenues from other customers accounted for a net decrease of
$0.2 million compared to the same period in 2008 due to decreased deployments of our products.

Services and other
revenues from the advertising solutions segment for the three months ended September 30, 2009 increased by $0.7 million, or 44%, to $2.3 million. Services and other revenues from Charter Communications increased by $0.3 million during the three
months ended September 30, 2009 compared to the same period in 2008 primarily due to an increase in professional services engagements with that customer. Services and other revenues from other customers accounted for a net increase of $0.4
million during the three months ended September 30, 2009 compared to the same period in 2008 primarily due to an increase in professional services engagements.

Costs associated with our advertising solutions segment consist primarily of personnel and personnel-related support costs and consulting and subcontractor costs incurred in connection with professional
services engagements. Total contribution margin for the advertising solutions segment was $0.2 million for the three months ended September 30, 2009 compared to a loss of $0.1 million for the same period in 2008. Revenues generated in this
segment were consistent with the same period in 2008. Consulting and subcontractor costs decreased $0.4 million during the three months ended September 30, 2009.

Nine Months ended September 30, 2009 versus Nine Months ended September 30, 2008. Total revenues from the advertising solutions segment for the nine months ended September 30, 2009
decreased $1.9 million, or 19%, to $8.1 million.

Royalties and licenses revenues from the advertising solutions segment for
the nine months ended September 30, 2009 decreased $2.7 million, or 59%, to $1.9 million. As described underRoyalties and licenses inRevenues above, royalties and licenses revenues from Time Warner
Cable and Comcast decreased $1.8 million and $0.6 million, respectively, compared to the same period in 2008 primarily due to a new pricing model that became effective as of January 1, 2009 as part of an upgrade sold to those customers for our
latest EclipsePlus product. This pricing model includes a one-time, upfront license fee that is typically recognized over the term of the contract as compared to our prior pricing model under which we recognized recurring license fees as
received. Royalties and licenses revenues from other customers accounted for a net decrease of $0.3 million compared to the same period in 2008 due to decreased deployments of our products.

Services and other revenues from the advertising solutions segment for the nine months ended September 30, 2009 increased by $0.8
million, or 15%, to $6.2 million. Services and other revenues from Time Warner and Charter Communications increased $0.4 million and $0.3 million, respectively, primarily due to an increase in professional services engagements with those customers
in the nine months ended September 30, 2009 compared to the same period in 2008. These increases were partially offset by a decrease of $0.3 million in services and other revenues from Comcast primarily due to a decrease in professional
services engagements. Services and other revenues from other customers during the nine months ended September 30, 2009 accounted for a net increase of $0.4 million compared to the same period in 2008 due to an increase in professional services
engagements.



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Total contribution margin for the advertising solutions segment for the nine months ended
September 30, 2009 decreased $0.6 million, or 75%, to $0.2 million compared to $0.8 million gain in the same period in 2008 primarily as a result of a $1.9 million decrease in revenues. Personnel and personnel-related support costs
decreased $0.9 million and consulting and subcontractor costs decreased $0.5 million.

Reconciliation of Contribution Margin to Net
Income

Total contribution margin reconciled to net income on a GAAP basis was as follows (in millions):



|                                                             |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |       |   |  |   |      |   |  |    |   
|------------------------------------------------------------ |  | -------------------------------- | ---- | - | ------ | - | ---- | ------------------------------- |  | - | ------ |  | -- | ---- |  | - | ---------------- | - |  | - | ----- | - |  | - | ---- | - |  | -- | --
|                                                             |  | Three Months Ended September 30, |      |   | Change |   |      | Nine Months Ended September 30, |  |   | Change | 
|                                                             |  | 2009                             |      |   | 2008   |   |      | 2009 versus 2008                |  |   | 2009   |  |    | 2008 |  |   | 2009 versus 2008 |  
|Total contribution margin                                    |  | $                                | 11.8 |   |        | $ | 9.2  |                                 |  | $ | 2.6    |  | 28 | %    |  | $ | 31.1             |   |  | $ | 31.7  |   |  | $ | (0.6 | ) |  | (2 | )%
|Unallocated corporate overhead                               |  |                                  | (7.4 | ) |        |   | (5.5 | )                               |  |   |        |  |    |      |  |   | (18.7            | ) |  |   | (18.0 | ) |  |   |      |   |  |    |   
|Restructuring and impairment costs                           |  |                                  | (0.2 | ) |        |   |     |                                 |  |   |        |  |    |      |  |   | (0.1             | ) |  |   | (0.6  | ) |  |   |      |   |  |    |   
|Depreciation and amortization                                |  |                                  | (1.1 | ) |        |   | (1.0 | )                               |  |   |        |  |    |      |  |   | (3.3             | ) |  |   | (3.1  | ) |  |   |      |   |  |    |   
|Amortization of intangible assets                            |  |                                  | (0.3 | ) |        |   | (0.8 | )                               |  |   |        |  |    |      |  |   | (1.0             | ) |  |   | (2.8  | ) |  |   |      |   |  |    |   
|Share-based and non-cash compensation                        |  |                                  | (0.3 | ) |        |   | (0.3 | )                               |  |   |        |  |    |      |  |   | (1.1             | ) |  |   | (2.2  | ) |  |   |      |   |  |    |   
|Interest income                                              |  |                                  | 0.1  |   |        |   | 0.5  |                                 |  |   |        |  |    |      |  |   | 0.3              |   |  |   | 1.9   |   |  |   |      |   |  |    |   
|Other income (expense)                                       |  |                                  | 0.2  |   |        |   | (1.5 | )                               |  |   |        |  |    |      |  |   | (0.8             | ) |  |   | 0.7   |   |  |   |      |   |  |    |   
|                                                             |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |       |   |  |   |      |   |  |    |   
|Profit before income taxes                                   |  |                                  | 2.8  |   |        |   | 0.6  |                                 |  |   |        |  |    |      |  |   | 6.4              |   |  |   | 7.6   |   |  |   |      |   |  |    |   
|Income tax expense (benefit)                                 |  |                                  | 0.2  |   |        |   | (0.4 | )                               |  |   |        |  |    |      |  |   | 0.9              |   |  |   | 0.3   |   |  |   |      |   |  |    |   
|                                                             |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |       |   |  |   |      |   |  |    |   
|Net income                                                   |  |                                  | 2.6  |   |        |   | 1.0  |                                 |  |   |        |  |    |      |  |   | 5.5              |   |  |   | 7.3   |   |  |   |      |   |  |    |   
|Less: Net income attributable to the noncontrolling interest |  |                                  |     |   |        |   |     |                                 |  |   |        |  |    |      |  |   |                 |   |  |   |      |   |  |   |      |   |  |    |   
|                                                             |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |       |   |  |   |      |   |  |    |   
|Net income attributable to OpenTV                            |  | $                                | 2.6  |   |        | $ | 1.0  |                                 |  |   |        |  |    |      |  | $ | 5.5              |   |  | $ | 7.3   |   |  |   |      |   |  |    |   
|                                                             |  |                                  |      |   |        |   |      |                                 |  |   |        |  |    |      |  |   |                  |   |  |   |       |   |  |   |      |   |  |    |   

Deferred Revenue

When we apply our revenue recognition policy, we must determine which portions of our revenue are recognized currently and which portions must be deferred, principally in accordance with Statement of
Position (SOP) 97-2,Software Revenue Recognition as codified under FASB Accounting Standards Codification Subtopic 985-605 Software (ASC 985-605), SOP 81-1,Accounting for Performance of
Construction-Type and Certain Production-Type Contracts, as codified under FASB Accounting Standards Codification Subtopic 605-35 Revenue Recognition (ASC 605-35), and SEC Staff Accounting Bulletin No. 104,Revenue Recognition. In order to determine current and deferred revenue, we make judgments and estimates with regard to future product and services deliverables and the appropriate valuation of those deliverables.

Some of our contractual arrangements with our customers involve multiple elements that impact the timing of recognition of revenues received
from such customers, including, for example, our arrangements with Essel Group (which operates the DishTV network in India), FOXTEL in Australia and Comcast and Time Warner Cable in the United States. At the time that a multiple-element arrangement
is entered into, we make a determination as to whether vendor specific objective evidence, or VSOE, of fair value exists for each of the elements involved in the arrangement. To the extent VSOE does not exist for any undelivered elements, then all
or portions of the amounts that we invoice under the applicable arrangement are generally deferred and recognized as revenue over time. For example, some of our arrangements provide for the delivery of future specified products and services, for
which VSOE of fair value does not exist. In addition, some of our contracts include maintenance and support offerings, for which VSOE of fair value does not exist. In instances where VSOE of fair value for maintenance and support does not exist, we
will generally recognize all revenues from the arrangement either over the remaining contractual period of support or over the remaining period during which maintenance and support is expected to be provided, once all other specified deliverables
have been delivered. In instances where VSOE of fair value for maintenance and support exists and there are future specified products and services for which VSOE of fair value does not exist, we will generally recognize all revenues upon the final
delivery of the future specified products and services, except for the fair value of the revenues relating to the remaining undelivered maintenance and support, which will be recognized over the remaining period of support.



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As of September 30, 2009, we had a balance of $39.0 million in deferred revenue
compared to $33.2 million as of December 31, 2008. Based on our current estimates, we expect the following recognition of this deferred revenue balance (in millions):



|                                           |  |                                         |     
|------------------------------------------ |  | --------------------------------------- | ----
|                                           |  | Expected Recognitionof Deferred
Revenue
|Through September 30, 2010                 |  | $                                       | 23.2
|October 1, 2010 through September 30, 2011 |  |                                         | 7.3 
|Thereafter                                 |  |                                         | 8.5 
|                                           |  |                                         |     
|                                           |  | $                                       | 39.0
|                                           |  |                                         |     

In order to determine the expected recognition of deferred revenue set forth in the
foregoing table, we make judgments and estimates regarding, among other things, future product and services deliverables, the appropriate valuation of those products and services and expected changes in customer requirements. These judgments and
estimates could differ from actual events, particularly those that involve factors outside of our control. As a result, the actual revenue recognized from these arrangements and the timing of that recognition may differ from the amounts identified
in this table. While management believes that this information is a helpful measure in evaluating the companys performance, investors should understand that unless and until the company is actually able to recognize these amounts as revenue in
accordance with GAAP, there can be no assurance that the conditions to recognizing that revenue will be satisfied.

Liquidity and Capital
Resources

We expect to be able to fund our operating and capital requirements for at least the next twelve months by using
existing cash balances and short-term and long-term marketable debt securities if our assumptions about our revenues, expenses and cash commitments are generally accurate. Because we cannot be certain that our assumptions about our business or the
digital television and advanced advertising markets in general will prove to be accurate, our funding requirements may differ from our current expectations.

Our primary source of cash from operations is royalty payments from customers. The primary uses of cash are personnel and personnel-related costs, subcontractor and consulting costs, facilities costs, and
capital expenditures. In February 2008, we received $14.3 million in cash from Liberty Media after the expiration of the indemnity period specified in the stock purchase agreement between Liberty Media and Kudelski.

The mix of cash and short-term and long-term investments may change in the future as we make decisions regarding the composition of our
investment portfolio. We use professional investment management firms to manage a significant portion of our invested cash. The portfolio consists of highly liquid, high-quality investment grade securities of the United States government and
agencies, corporate notes and bonds and certificates of deposit that predominantly have maturities of less than three years. All investments are made in accordance with our written investment policy, which has been approved by our board of
directors.

The mix of cash and short-term and long-term securities was as follows, which may change in the future as we make
decisions regarding the composition of our investment portfolio (in millions, except percentages):



|                                      |  |                   |       |                  |   |        |  |   |       |   |  |     |   
|------------------------------------- |  | ----------------- | ----- | ---------------- | - | ------ |  | - | ----- | - |  | --- | --
|                                      |  | September 30,2009 |       | December 31,2008 |   | Change | 
|Cash and cash equivalents             |  | $                 | 78.0  |                  | $ | 93.9   |  | $ | (15.9 | ) |  | (17 | )%
|Short-term marketable debt securities |  |                   | 30.8  |                  |   | 7.7    |  |   | 23.1  |   |  | 300 | % 
|Long-term marketable debt securities  |  |                   | 5.0   |                  |   | 1.2    |  |   | 3.8   |   |  | 317 | % 
|                                      |  |                   |       |                  |   |        |  |   |       |   |  |     |   
|Total cash portfolio                  |  | $                 | 113.8 |                  | $ | 102.8  |  | $ | 11.0  |   |  | 11  | % 
|                                      |  |                   |       |                  |   |        |  |   |       |   |  |     |   

The summary of cash flows from operating activities, investing activities and
financing activities for the nine months ended September 30, 2009 and 2008 was as follows (in millions, except percentages):



|                                                |  |                                 |       |        |      |   |                  |  |   |       |  
|----------------------------------------------- |  | ------------------------------- | ----- | ------ | ---- | - | ---------------- |  | - | ----- | -
|                                                |  | Nine Months Ended September 30, |       | Change |     
|                                                |  | 2009                            |       |        | 2008 |   | 2009 versus 2008 | 
|Cash provided by operating activities           |  | $                               | 13.8  |        |      | $ | 5.4              |  | $ | 8.4   |  
|Cash provided by (used in) investing activities |  | $                               | (30.0 | )      |      | $ | 11.2             |  | $ | (41.2 | )
|Cash provided by (used in) financing activities |  | $                               | (0.3  | )      |      | $ | 13.9             |  | $ | (14.2 | )



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Cash provided by operating activities

The increase of $8.4 million in net cash provided by operating activities during the nine months ended September 30, 2009 as compared to
the same period in 2008 was primarily attributable to a $6.5 million increase in the changes in accounts receivable. This increase primarily reflects the effect of successful collection efforts we undertook on certain large receivables in the three
months ended December 31, 2007 which resulted in a lower receivable balance as of December 31, 2007. This increase was partially offset by a $1.8 million decrease in net income and a $2.0 million decrease in net balances from non-cash
items. In addition, we experienced an increase in accounts payable of $1.6 million and an increase in income tax payable of $1.5 million due to timing of income tax payments, and we recorded $1.8 million for potential sales tax exposure in the three
months ended September 30, 2009.

Cash provided by (used in) investing activities

The decrease of $41.4 million in net cash provided by (used in) investing activities during the nine months ended September 30, 2009
compared to the same period in 2008 primarily represented a $12.1 million decrease in net proceeds from the sales of marketable debt securities and additional investments of $28.0 million in marketable debt securities. In addition, during the nine
months ended September 30, 2008, we received $1.9 million from the sale of a cost investment. These decreases were partially offset by a $0.4 million reduction in capital expenditures.

Cash provided by (used in) financing activities

The decrease of $14.2 million in net cash provided by (used in) financing activities during the nine months ended September 30, 2009 compared to the same period in 2008 was primarily due to the $14.3
million capital contribution received from Liberty Media in February 2008 and $0.2 million cash paid during the nine months ended September 30, 2009 to repurchase our Class A ordinary shares. These decreases were partially offset by a $0.3
million increase in cash paid to satisfy applicable withholding taxes incurred upon the lapsing of restrictions on Class A ordinary shares held by employees.

Commitments and Contractual Obligations

Information as of
September 30, 2009 concerning the amount and timing of required payments under our contractual obligations is summarized below (in millions):



|                                    |  |       |      |                                    |   |                   |  |                   |     |                     |   |     |  |   |    
|----------------------------------- |  | ----- | ---- | ---------------------------------- | - | ----------------- |  | ----------------- | --- | ------------------- | - | --- |  | - | ---
|                                    |  | Total |      | Due inremainingthree monthsin 2009 |   | Due in2010 - 2011 |  | Due in2012 - 2013 |     | Due in2014 or after
|Operating leases obligations        |  | $     | 21.0 |                                    | $ | 1.2               |  | $                 | 5.1 |                     | $ | 5.2 |  | $ | 9.5
|Noncancellable purchase obligations |  |       | 0.2  |                                    |   | 0.2               |  |                   |    |                     |   |    |  |   |   
|                                    |  |       |      |                                    |   |                   |  |                   |     |                     |   |     |  |   |    
|Total contractual obligations       |  | $     | 21.2 |                                    | $ | 1.4               |  | $                 | 5.1 |                     | $ | 5.2 |  | $ | 9.5
|                                    |  |       |      |                                    |   |                   |  |                   |     |                     |   |     |  |   |    

In the ordinary course of business we enter into various arrangements with vendors
and other business partners for marketing and other services. Future minimum commitments under these arrangements as of September 30, 2009 were $0.2 million for the remaining three months of 2009, and insignificant for the years ending
December 31, 2010 and 2011. In addition, we also have arrangements with certain parties that provide for revenue sharing payments.

As of September 30, 2009, we had three standby letters of credit aggregating approximately $1.2 million, two of which were issued to landlords of our leased properties, and one of which was issued to
a sublessee at our New York facility, which we vacated in the second quarter of 2005. As of September 30, 2009, we have pledged a deposit account containing approximately $1.2 million as collateral for these letters of credit.

Off-Balance Sheet Arrangements

As of September 30, 2009, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K under the Securities Exchange Act of 1934, as amended.



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Indemnification

In the ordinary course of our business, we provide indemnification to customers, subject to limitations, against claims of intellectual property infringement made by third parties arising from the use of
our products. Costs related to these indemnification provisions are sometimes difficult to estimate. While we have not historically experienced significant costs for these matters, there may be occasions in the ordinary course of our business where
we assume litigation and other costs on behalf of our customers that could have an adverse effect on our financial position depending upon the outcome of any specific matter. We ordinarily seek to limit our liabilities in those arrangements in
various respects, including monetarily, but the costs associated with any type of intellectual property indemnification arrangement continue to escalate in general, and especially in the technology sector.

As permitted under the laws of the British Virgin Islands, we have agreed to indemnify our officers and directors for certain events or
occurrences while the officer or director is, or was, serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have
director and officer insurance coverage that mitigates our exposure and enables us to recover a portion of any future amounts paid. We believe the estimated fair value of these indemnification agreements in excess of applicable insurance coverage is
not material.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

We are exposed to financial market risks. This exposure relates to our holdings of fixed income investment securities and assets and
liabilities denominated in foreign currencies.

Fixed Income Investment Risk

We own a fixed income investment portfolio with 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, included as a separate component of the balance sheet line item entitled accumulated other
comprehensive income (loss).

Most of these investments consist of a diversified portfolio of highly liquid United
States dollar-denominated debt securities classified by maturity as cash equivalents, short-term investments or long-term investments. These debt securities are not leveraged and are held for purposes other than trading. Our investment policy limits
the maximum maturity of securities in this portfolio to three years and weighted-average maturity to 15 months. Although we expect that market value fluctuations of our investments in short-term debt obligations will not be significant, a sharp
rise in interest rates could have a material adverse effect on the value of securities with longer maturities in the portfolio. Alternatively, a sharp decline in interest rates could have a material positive effect on the value of securities with
longer maturities in the portfolio. We do not currently hedge interest rate exposures.

Our investment policy limits
investment concentration in any one issuer (other than with respect to United States treasury and agency securities) and also restricts this part of our portfolio to investment grade obligations based on the assessments of rating agencies. There
have been instances in the past where the assessments of rating agencies have failed to anticipate significant defaults by issuers. It is possible that we could lose most or all of the value in an individual debt obligation as a result of a default.
A loss through a default may have a material impact on our earnings even though our policy limits investments in the obligations of a single issuer to no more than five percent of the value of our portfolio.

The following table presents the hypothetical changes in fair values in our portfolio of investment securities with original maturities
greater than 90 days as of September 30, 2009 using a model that assumes immediate sustained parallel changes in interest rates across the range of maturities (in thousands):



|                           |  |                                   |        |                                                    |   |                                                      |  |                                                    |        |                                                    |   |        |  |   |       
|-------------------------- |  | --------------------------------- | ------ | -------------------------------------------------- | - | ---------------------------------------------------- |  | -------------------------------------------------- | ------ | -------------------------------------------------- | - | ------ |  | - | ------
|                           |  | Fair Value asof September 30,2009 |        | Valuation ofSecurities
ifInterest RatesDecrease 1% |   | Valuation ofSecurities
ifInterest RatesDecrease 0.5% |  | Valuation ofSecurities
ifInterest RatesIncrease 1% |        | Valuation ofSecurities
ifInterest RatesIncrease 2%
|Marketable debt securities |  | $                                 | 35,828 |                                                    | $ | 35,944                                               |  | $                                                  | 35,888 |                                                    | $ | 35,714 |  | $ | 35,584



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The modeling technique used in the above table estimates fair values based on changes in
interest rates assuming static maturities. The fair value of individual securities in our investment portfolio is likely to be affected by other factors including changes in ratings, market perception of the financial strength of the issuers of such
securities and the relative attractiveness of other investments. Accordingly, the fair value of our individual securities could also vary significantly in the future from the amounts indicated above.

Foreign Currency Exchange Rate Risk

We transact business in various foreign countries. We incur a substantial majority of our expenses, and earn most of our revenues, in United States dollars. Although a majority of our worldwide customers are invoiced and make payments in
United States dollars, some of our customer contracts provide for payments to be remitted in local currency. As of September 30, 2009, we held approximately $6.6 million of various foreign currencies as a result of our worldwide operations.

We have a foreign currency exchange exposure management policy. The policy permits the use of foreign currency forward
exchange contracts and foreign currency option contracts and the use of other hedging procedures in connection with hedging foreign currency exposures. The policy requires that the use of derivatives and other procedures qualify for hedge treatment
under SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities and SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, both of which were codified under
FASB Accounting Standards Codification Topic 815 Derivatives and Hedging (ASC 815). During the three months ended September 30, 2009, we did not use foreign currency forward exchange contracts, options in hedging foreign
currency exposures, or other hedging procedures. However, we regularly assess our foreign currency exchange rate risk that results from our global operations, and we may in the future elect to make use of appropriate hedging strategies.



|Item 4. | Controls and Procedures
|------- | -----------------------

Management of the company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange
Act of 1934, as amended. Based on their evaluation as of September 30, 2009, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended) were effective.

There were no changes in our internal control over
financial reporting during the quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information



|Item 1. | Legal Proceedings
|------- | -----------------

The information set forth in this Section has been included only to the extent that it reflects a significant update of information previously set forth in our Annual Report on Form 10-K for the
year ended December 31, 2008 and our Quarterly Report on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009. To the extent that we do not have any significant changes in the legal proceedings referred to in such Annual
Report or such Quarterly Report, we have not restated the descriptions of those proceedings. That determination not to so restate those descriptions should not be taken as a representation that we have resolved the matter or that it is no longer a
contingency. In addition, any update to the legal proceedings referred to below does not necessarily mean that the information contained in the update is material; rather, we have determined that the updated information is relevant to a fair
assessment of the matter and is intended to provide our investors with a reasonable understanding of the nature of the legal proceeding as we understand it on the date of this Quarterly Report.

Initial Public Offering Securities Litigation.In July 2001, the first of a series of putative securities class actions was filed in
the United States District Court for the Southern District of New York against certain investment banks which acted as underwriters for our initial public offering, us and various of our officers and directors. In November 2001, a similar securities
class action was filed in the United States District Court for the Southern District of New York against Wink Communications and two of its officers and directors and certain



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investment banks which acted as underwriters for Wink Communications initial public offering. We acquired Wink Communications in October 2002. The complaints allege undisclosed and improper
practices concerning the allocation of initial public offering shares, in violation of the federal securities laws, and seek unspecified damages on behalf of persons who purchased our Class A ordinary shares during the period from
November 23, 1999 through December 6, 2000 and Wink Communications common stock during the period from August 19, 1999 through December 6, 2000. Other actions have been filed making similar allegations regarding the initial
public offerings of more than 300 other companies. All of these lawsuits have been coordinated for pretrial purposes as In re Initial Public Offering Securities Litigation, 21 MC 92 (SAS). Defendants in these cases filed an omnibus motion to dismiss
on common pleading issues. All claims against our officers and directors have been dismissed without prejudice in this litigation pursuant to the parties stipulation approved by the Court on October 9, 2002. On February 19, 2003, the
Court denied in part and granted in part the omnibus motion to dismiss filed on behalf of defendants, including us and Wink Communications. The Courts order dismissed all claims against us and Wink Communications except for a claim brought
under Section 11 of the Securities Act of 1933.

In 2007, a settlement that had been pending with the Court since 2004
was terminated by stipulation of the parties, after a ruling by the Second Circuit Court of Appeals in six focus cases in the IPO litigation (neither OpenTV nor Wink Communications is a focus case) made it unlikely that the settlement
would receive final Court approval. Plaintiffs filed amended master allegations and amended complaints in the six focus cases. In 2008, the Court largely denied the defendants motion to dismiss the amended complaints.

Earlier this year, the parties reached a global settlement of the litigation under which insurance will pay the full amount of settlement
share allocated to us and to Wink Communications, and we will bear no financial liability. In October 2009, the Court issued an order granting final approval of the settlement. Shortly thereafter, a group of objectors filed a petition with the
United States Court of Appeals for the Second Circuit requesting permission to appeal the Courts order certifying a class for the settlement; that petition is currently pending. If for any reason the settlement does not become effective, we
believe we have meritorious defenses and intend to defend ourselves vigorously. No provision has been made in our consolidated financial statements for this matter. We are unable to predict the likelihood of an unfavorable outcome or estimate our
potential liability, if any

Giordano Matter.On October 23, 2009, Salvatore L. Giordano, on behalf of himself and
all others similarly situated, filed a putative class action complaint in the United States District Court for the Northern District of California against us, each of our current directors, Kudelski SA and Kudelski Interactive Cayman, Ltd. The
complaint alleges breach of fiduciary duties and aiding and abetting breach of fiduciary duties in connection with the offer by Kudelski Interactive Cayman, Ltd., a wholly-owned subsidiary of Kudelski SA, to purchase for $1.55 per share all of our
outstanding Class A ordinary shares not owned by Kudelski or its affiliates. Although we have not yet been served with the complaint, we believe we have meritorious defenses and intend to defend ourselves vigorously. No provision has been made
in our consolidated financial statements for this matter, and we are unable to predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

Berman Matter. On June 10, 2009, a complaint was filed by John Berman in the Superior Court of California, County of San Mateo
against OpenTV Corp., Liberty Media Corporation and Wink Communications, Inc. The complaint alleges, among other things, that we breached the terms of a settlement and license agreement between Berman and Wink dated July 25, 2000 by making use
of certain patents allegedly held by Berman beyond the scope of the license granted in such settlement and license agreement. We acquired Wink in October 2002 from an affiliate of Liberty. On September 2, 2009, we filed a notice of removal to
the United States District Court for the Northern District of California. On September 10, 2009, we filed an answer denying the material allegations of the complaint. The case is currently pending before the District Court, though no
substantive proceedings have taken place. We believe we have meritorious defenses and intend to defend ourselves vigorously. No provision has been made in our consolidated financial statements for this matter. We are unable to predict the likelihood
of an unfavorable outcome or estimate our potential liability, if any.

Other Matters. From time to time in the
ordinary course of our business, we are also party to other legal proceedings or receive correspondence regarding potential or threatened legal proceedings. While we currently believe that the ultimate outcome of these other proceedings,
individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in our results of operations, legal proceedings are subject to inherent uncertainties.



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|Item 1A. | Risk Factors
|-------- | ------------

Based on information available to management as of the date of this Quarterly Report on Form 10-Q, management has determined that no material changes are required to the risk factor disclosure as reported in our Annual Report on
Form 10-K for the year ended December 31, 2008 other than as set forth herein.

We are currently not in compliance with NASDAQ
listing rules that require us to maintain an audit committee comprised of at least three independent directors. If we are unable to regain compliance in a timely manner, then our shares will be delisted from The NASDAQ Global Market, and our share
price and your liquidity may be negatively impacted.

Our Class A ordinary shares are currently listed on The NASDAQ
Global Market. NASDAQ Listing Rule 5605(c)(2)(A) requires listed companies to maintain an audit committee comprised of at least three directors, all of whom must be independent. On October 7, 2009, Eric J. Tveter resigned as a member of our board of
directors, and as a result, we are no longer in compliance with NASDAQs requirements for continued listing. NASDAQ has provided us with a cure period in order to regain compliance within the following timeframe:



| |  |  | until the earlier of our next annual shareholders meeting or October 7, 2010; or
| | - |  | ---------------------------------------------------------------------------------



| |  |  | if our next annual shareholders meeting is held before April 5, 2010, then we must evidence compliance no later than April 5, 2010.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------

Our next annual shareholders meeting is scheduled to occur on November 4, 2009. Accordingly, we
expect the cure period to expire on April 5, 2010. The compensation and nominating committee of our board of directors has commenced a search for a new independent director, but there can be no guarantee that a qualified candidate will be identified
and appointed to our board of directors and audit committee prior to the end of the cure period provided by NASDAQ. If we are unable to regain compliance with the NASDAQ listing rules and our Class A ordinary shares are delisted, then trading in our
shares would likely be conducted on an over-the-counter (OTC) securities quotation service, such as the OTC Bulletin Board or Pink Sheets. These markets are generally considered to be less efficient than NASDAQ, and our share price, as well as the
liquidity of our Class A ordinary shares, may be adversely impacted as a result.



|Item 6. | Exhibits
|------- | --------

(a) Exhibits. Listed below are the exhibits which are filed as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):



|     |  |                                        
|---- |  | ---------------------------------------
|31.1 |  | Rule 13a-14(a)/15d-14(a) Certification*
|     | 
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification*
|     | 
|32   |  | Section 1350 Certification**           



|* | Filed herewith
|- | --------------

|** | Furnished herewith
|-- | ------------------



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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.



|                       |  |  |  |                        
|---------------------- |  |  |  | -----------------------
|                       |  |  |  | OpenTV Corp.           
|                       |  | 
|Date: November 4, 2009 |  |  |  | /s/    NIGEL W.
BENNETT
|                       |  |  |  | Nigel W. Bennett       
|                       |  |  |  | Chief Executive Officer



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Exhibit Index



|               |  |                                        
|-------------- |  | ---------------------------------------
|Exhibit Number |  | Description                            
|31.1           |  | Rule 13a-14(a)/15d-14(a) Certification*
|               | 
|31.2           |  | Rule 13a-14(a)/15d-14(a) Certification*
|               | 
|32             |  | Section 1350 Certification**           



|* | Filed herewith
|- | --------------

|** | Furnished herewith
|-- | ------------------



48