##### Table of Contents

---

UNITED STATESSECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

---

(Mark One)

|  |                                                                                        
|- | ---------------------------------------------------------------------------------------
|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF
1934 
|  |                                                                                        
|  | For the quarterly period ended June 30, 2003                                           
|  |                                                                                        
|  | or                                                                                     
|  |                                                                                        
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES 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                          
|(Jurisdiction of incorporation) |  | (I.R.S. Employer Identification No.)

275 Sacramento StreetSan Francisco, California 94111(415) 962-5000(Address, including zip code, and telephone number,including area code, of registrants principal executive offices)

---

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  o

Indicate by
check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  o    No  x

As of July 31, 2003, the
registrant had outstanding (not including: (i) 54,247 Class A ordinary shares held in treasury as of that date, (ii) 1,266,814 Class A ordinary shares issuable as of that date to former holders of ACTV, Inc. common stock upon presentment of ACTV,
Inc. common stock certificates, or (iii) 50,467 Class A ordinary shares issuable as of that date to former holders of Spyglass, Inc. common stock upon presentment of Spyglass, Inc. common stock certificates):

81,942,159 Class A ordinary shares, no par value; and

30,631,746 Class B ordinary shares, no par value

---



---

##### Table of Contents

TABLE OF CONTENTS

|              |                                                                                                                  |      | 
|------------- | ---------------------------------------------------------------------------------------------------------------- | ---- | 
|              |                                                                                                                  | Page
|              |                                                                                                                  |     
|PART I.       | FINANCIAL INFORMATION                                                                                            | 2   
|              |                                                                                                                  |     
|Item 1.       | Financial Statements (unaudited)                                                                                 | 2   
|              |                                                                                                                  |     
|              | Condensed Consolidated Balance Sheets at June 30, 2003 and December 31, 2002                                     | 2   
|              |                                                                                                                  |     
|              | Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2003 and 2002 | 3   
|              |                                                                                                                  |     
|              | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2003 and 2002                  | 4   
|              |                                                                                                                  |     
|              | Notes to Condensed Consolidated Financial Statements                                                             | 5   
|              |                                                                                                                  |     
|Item 2.       | Managements Discussion and Analysis of Financial Condition and Results of Operations                            | 17  
|              |                                                                                                                  |     
|Item 3.       | Quantitative and Qualitative Disclosures About Market Risk                                                       | 24  
|              |                                                                                                                  |     
|Item 4.       | Controls and Procedures                                                                                          | 26  
|              |                                                                                                                  |     
|PART II.      | OTHER INFORMATION                                                                                                | 26  
|              |                                                                                                                  |     
|Item 1.       | Legal Proceedings                                                                                                | 26  
|              |                                                                                                                  |     
|Item 2.       | Changes in Securities and Use of Proceeds                                                                        | 28  
|              |                                                                                                                  |     
|Item 3.       | Defaults Upon Senior Securities                                                                                  | 28  
|              |                                                                                                                  |     
|Item 4.       | Submission of Matters to a Vote of Security Holders                                                              | 28  
|              |                                                                                                                  |     
|Item 5.       | Other Information                                                                                                | 29  
|              |                                                                                                                  |     
|Item 6.       | Exhibits and Reports on Form 8-K                                                                                 | 29  
|              |                                                                                                                  |     
|Signature     | 31                                                                                                              
|              |                                                                                                                  |     
|Exhibit Index | 32                                                                                                              

1



---

##### Table of Contents

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

OPENTV CORP.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share amounts)

|                                                                                                                                                                                                                |               |  |                   |            |   |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- |  | ----------------- | ---------- | - | - | ---------- | -
|                                                                                                                                                                                                                | June 30, 2003 |  | December 31, 2002
|                                                                                                                                                                                                                |               |  | (Unaudited)       |            |   |   |           
|ASSETS                                                                                                                                                                                                          |               |  |                   |            |   |   |            |  
|Current assets:                                                                                                                                                                                                 |               |  |                   |            |   |   |            |  
|Cash and cash equivalents                                                                                                                                                                                       |               |  | $                 | 32,217     |   | $ | 38,568     |  
|Short-term marketable debt securities                                                                                                                                                                           |               |  |                   | 15,347     |   |   | 26,940     |  
|Accounts receivable, net of allowance for doubtful accounts of $1,279 and  $1,966 at June 30, 2003
and December 31, 2002, respectively                                                                          |               |  |                   | 13,807     |   |   | 10,672     |  
|Prepaid expenses and other current assets                                                                                                                                                                       |               |  |                   | 4,396      |   |   | 4,304      |  
|                                                                                                                                                                                                                |               |  |                   |           
|Total current assets                                                                                                                                                                                            |               |  |                   | 65,767     |   |   | 80,484     |  
|Long-term marketable debt securities                                                                                                                                                                            |               |  |                   | 18,454     |   |   | 22,199     |  
|Property and equipment, net                                                                                                                                                                                     |               |  |                   | 12,419     |   |   | 15,020     |  
|Goodwill, net                                                                                                                                                                                                   |               |  |                   | 45,023     |   |   | 45,416     |  
|Intangible assets, net                                                                                                                                                                                          |               |  |                   | 20,873     |   |   | 28,354     |  
|Other assets                                                                                                                                                                                                    |               |  |                   | 5,128      |   |   | 5,863      |  
|                                                                                                                                                                                                                |               |  |                   |           
|Total assets                                                                                                                                                                                                    |               |  | $                 | 167,664    |   | $ | 197,336    |  
|                                                                                                                                                                                                                |               |  |                   |           
|LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS EQUITY                                                                                                                                                         |               |  |                   |            |   |   |            |  
|Current liabilities:                                                                                                                                                                                            |               |  |                   |            |   |   |            |  
|Accounts payable                                                                                                                                                                                                |               |  | $                 | 2,934      |   | $ | 5,252      |  
|Accrued liabilities                                                                                                                                                                                             |               |  |                   | 25,792     |   |   | 22,845     |  
|Accrued restructuring                                                                                                                                                                                           |               |  |                   | 12,177     |   |   | 14,615     |  
|Due to Liberty Broadband                                                                                                                                                                                        |               |  |                   | 535        |   |   | 1,156      |  
|Current portion of deferred revenue                                                                                                                                                                             |               |  |                   | 7,331      |   |   | 6,340      |  
|                                                                                                                                                                                                                |               |  |                   |           
|Total current liabilities                                                                                                                                                                                       |               |  |                   | 48,769     |   |   | 50,208     |  
|Deferred revenue, less current portion                                                                                                                                                                          |               |  |                   | 5,403      |   |   | 4,886      |  
|                                                                                                                                                                                                                |               |  |                   |           
|Total liabilities                                                                                                                                                                                               |               |  |                   | 54,172     |   |   | 55,094     |  
|Minority interest                                                                                                                                                                                               |               |  |                   | 1,146      |   |   | 1,246      |  
|Shareholders equity:                                                                                                                                                                                           |               |  |                   |            |   |   |            |  
|Class A ordinary shares, no par value, 500,000,000 shares authorized;  41,780,852 and 41,587,033 shares issued and
outstanding, including treasury shares, at June 30, 2003 and December 31, 2002, respectively |               |  |                   | 2,143,272  |   |   | 2,143,124  |  
|Class B ordinary shares, no par value, 200,000,000 shares authorized; 30,631,746 shares issued and
outstanding                                                                                                  |               |  |                   | 35,953     |   |   | 35,953     |  
|Additional paid-in capital                                                                                                                                                                                      |               |  |                   | 461,986    |   |   | 461,263    |  
|Treasury shares at cost, 54,247 and 50,629 shares at June 30, 2003  and December 31, 2002,
respectively                                                                                                         |               |  |                   | (16        | ) |   | (16        | )
|Deferred share-based compensation                                                                                                                                                                               |               |  |                   | (79        | ) |   | (221       | )
|Accumulated other comprehensive income                                                                                                                                                                          |               |  |                   | 132        |   |   | 494        |  
|Accumulated deficit                                                                                                                                                                                             |               |  |                   | (2,528,902 | ) |   | (2,499,601 | )
|                                                                                                                                                                                                                |               |  |                   |           
|Total shareholders equity                                                                                                                                                                                      |               |  |                   | 112,346    |   |   | 140,996    |  
|                                                                                                                                                                                                                |               |  |                   |           
|Total liabilities, minority interest and shareholders equity                                                                                                                                                   |               |  | $                 | 167,664    |   | $ | 197,336    |  
|                                                                                                                                                                                                                |               |  |                   |           

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

2



---

##### Table of Contents

OPENTV CORP.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share and per share amounts)(Unaudited)

|                                                                                                        |                             |  |                           |            |      |   |            |   |   |            |   |   |            |  
|------------------------------------------------------------------------------------------------------- | --------------------------- |  | ------------------------- | ---------- | ---- | - | ---------- | - | - | ---------- | - | - | ---------- | -
|                                                                                                        | Three Months Ended June 30, |  | Six Months Ended June 30, |           
|                                                                                                        | 2003                        |  | 2002                      |            | 2003 |   | 2002       |  
|Revenues:                                                                                               |                             |  |                           |            |      |   |            |   |   |            |   |   |            |  
|Royalties                                                                                               |                             |  | $                         | 5,793      |      | $ | 4,056      |   | $ | 11,919     |   | $ | 12,365     |  
|Services, support and other                                                                             |                             |  |                           | 5,741      |      |   | 6,867      |   |   | 11,065     |   |   | 13,082     |  
|Channel fees                                                                                            |                             |  |                           | 2,900      |      |   | 2,491      |   |   | 5,758      |   |   | 5,149      |  
|License fees                                                                                            |                             |  |                           | 1,304      |      |   | 732        |   |   | 2,342      |   |   | 2,477      |  
|                                                                                                        |                             |  |                           |            |      |   |            |  
|Total revenues (inclusive of $3,655, $3,213, $7,265 and $6,112
of related party revenues, respectively) |                             |  |                           | 15,738     |      |   | 14,146     |   |   | 31,084     |   |   | 33,073     |  
|Operating expenses:                                                                                     |                             |  |                           |            |      |   |            |   |   |            |   |   |            |  
|Cost of revenues(1)                                                                                     |                             |  |                           | 9,373      |      |   | 11,428     |   |   | 20,920     |   |   | 21,482     |  
|Research and development(2)                                                                             |                             |  |                           | 4,828      |      |   | 7,792      |   |   | 10,247     |   |   | 17,506     |  
|Sales and marketing(3)                                                                                  |                             |  |                           | 4,248      |      |   | 8,472      |   |   | 9,156      |   |   | 17,714     |  
|General and administrative(4)                                                                           |                             |  |                           | 3,398      |      |   | 5,381      |   |   | 7,835      |   |   | 10,031     |  
|Restructuring costs                                                                                     |                             |  |                           |           |      |   |           |   |   | 6,927      |   |   | 9,620      |  
|Amortization of intangible assets                                                                       |                             |  |                           | 2,267      |      |   | 3,675      |   |   | 4,667      |   |   | 7,494      |  
|                                                                                                        |                             |  |                           |            |      |   |            |  
|Total operating expenses                                                                                |                             |  |                           | 24,114     |      |   | 36,748     |   |   | 59,752     |   |   | 83,847     |  
|                                                                                                        |                             |  |                           |            |      |   |            |  
|Loss from operations                                                                                    |                             |  |                           | (8,376     | )    |   | (22,602    | ) |   | (28,668    | ) |   | (50,774    | )
|Interest income                                                                                         |                             |  |                           | 433        |      |   | 1,439      |   |   | 892        |   |   | 2,836      |  
|Other expense, net                                                                                      |                             |  |                           | (965       | )    |   | (78        | ) |   | (984       | ) |   | (61        | )
|Impairment of equity investments                                                                        |                             |  |                           |           |      |   | (725       | ) |   |           |   |   | (6,225     | )
|Share of losses of equity investee                                                                      |                             |  |                           |           |      |   | (1,726     | ) |   |           |   |   | (7,275     | )
|Minority interest                                                                                       |                             |  |                           | 52         |      |   | 130        |   |   | 100        |   |   | 277        |  
|                                                                                                        |                             |  |                           |            |      |   |            |  
|Loss before income taxes and cumulative effect of accounting change                                     |                             |  |                           | (8,856     | )    |   | (23,562    | ) |   | (28,660    | ) |   | (61,222    | )
|Income tax expense                                                                                      |                             |  |                           | (380       | )    |   | (398       | ) |   | (641       | ) |   | (717       | )
|                                                                                                        |                             |  |                           |            |      |   |            |  
|Loss before cumulative effect of accounting change                                                      |                             |  |                           | (9,236     | )    |   | (23,960    | ) |   | (29,301    | ) |   | (61,939    | )
|Cumulative effect of accounting change, net of tax                                                      |                             |  |                           |           |      |   |           |   |   |           |   |   | (129,852   | )
|                                                                                                        |                             |  |                           |            |      |   |            |  
|Net loss                                                                                                |                             |  | $                         | (9,236     | )    | $ | (23,960    | ) | $ | (29,301    | ) | $ | (191,791   | )
|                                                                                                        |                             |  |                           |            |      |   |            |  
|Net loss per share, basic and diluted:                                                                  |                             |  |                           |            |      |   |            |   |   |            |   |   |            |  
|Before cumulative effect of accounting change                                                           |                             |  | $                         | (0.13      | )    | $ | (0.33      | ) | $ | (0.41      | ) | $ | (0.87      | )
|Cumulative effect of accounting change, net of tax                                                      |                             |  |                           |           |      |   |           |   |   |           |   |   | (1.81      | )
|                                                                                                        |                             |  |                           |            |      |   |            |  
|                                                                                                        |                             |  | $                         | (0.13      | )    | $ | (0.33      | ) | $ | (0.41      | ) | $ | (2.68      | )
|                                                                                                        |                             |  |                           |            |      |   |            |  
|Shares used in per share calculation, basic and diluted                                                 |                             |  |                           | 72,358,351 |      |   | 71,906,785 |   |   | 72,316,915 |   |   | 71,580,350 |  
|                                                                                                        |                             |  |                           |            |      |   |            |  

---

(1) Inclusive of $28, $449, $68 and $936 of share-based compensation for the three months ended
June 30, 2003 and 2002, and for the six months ended June 30, 2003 and 2002, respectively. (2) Inclusive of $18, $126, $43 and $268 of share-based compensation for the three months ended June 30, 2003 and 2002, and for the six months ended June
30, 2003 and 2002, respectively.(3) Inclusive of $7, $109, $18 and $237 of share-based compensation for the three months ended June 30, 2003 and 2002, and for the six months ended June 30, 2003 and 2002, respectively.(4) Inclusive of $7,
$394, $25 and $802 of share-based compensation for the three months ended June 30, 2003 and 2002, and for the six months ended June 30, 2003 and 2002, respectively.

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

3



---

##### Table of Contents

OPENTV CORP.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)

|                                                                            |                           |  |      |         |   |   |          |  
|--------------------------------------------------------------------------- | ------------------------- |  | ---- | ------- | - | - | -------- | -
|                                                                            | Six Months Ended June 30, | 
|                                                                            | 2003                      |  | 2002 |        
|Cash flows used in operating activities:                                    |                           |  |      |         |   |   |          |  
|Net loss                                                                    |                           |  | $    | (29,301 | ) | $ | (191,791 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |                           |  |      |         |   |   |          |  
|Cumulative effect of accounting change, net of tax                          |                           |  |      |        |   |   | 129,852  |  
|Depreciation and amortization of property and equipment                     |                           |  |      | 3,446   |   |   | 4,906    |  
|Amortization of intangible assets                                           |                           |  |      | 7,481   |   |   | 10,038   |  
|Amortization of share-based compensation                                    |                           |  |      | 154     |   |   | 2,243    |  
|Non-cash employee compensation                                              |                           |  |      | 376     |   |   | 376      |  
|Provision for doubtful accounts                                             |                           |  |      | 256     |   |   | 734      |  
|Non-cash restructuring costs                                                |                           |  |      | 532     |   |   | 1,969    |  
|Impairment of equity investments                                            |                           |  |      |        |   |   | 6,225    |  
|Share of losses of equity investee                                          |                           |  |      |        |   |   | 7,275    |  
|Minority interest                                                           |                           |  |      | (100    | ) |   | (277     | )
|Changes in operating assets and liabilities:                                |                           |  |      |         |   |   |          |  
|Accounts receivable                                                         |                           |  |      | (3,391  | ) |   | 8,399    |  
|Due from MIH Limited entities                                               |                           |  |      |        |   |   | 2,242    |  
|Prepaid expenses and other current assets                                   |                           |  |      | (92     | ) |   | 799      |  
|Other assets                                                                |                           |  |      | 833     |   |   | 936      |  
|Accounts payable                                                            |                           |  |      | (2,275  | ) |   | (790     | )
|Accrued liabilities                                                         |                           |  |      | 2,888   |   |   | (2,482   | )
|Accrued restructuring                                                       |                           |  |      | (2,603  | ) |   | 4,907    |  
|Due to Liberty Broadband                                                    |                           |  |      | (621    | ) |   |         |  
|Deferred revenue                                                            |                           |  |      | 1,508   |   |   | 66       |  
|                                                                            |                           |  |      |        
|Net cash used in operating activities                                       |                           |  |      | (20,909 | ) |   | (14,373  | )
|Cash flows provided from investing activities:                              |                           |  |      |         |   |   |          |  
|Purchase of property and equipment                                          |                           |  |      | (1,375  | ) |   | (6,079   | )
|Proceeds from sale of marketable debt securities                            |                           |  |      | 45,895  |   |   | 82,734   |  
|Purchase of marketable debt securities                                      |                           |  |      | (30,865 | ) |   | (51,399  | )
|Private equity investments                                                  |                           |  |      |        |   |   | (3,000   | )
|Other                                                                       |                           |  |      | 134     |   |   | (764     | )
|                                                                            |                           |  |      |        
|Net cash provided from investing activities                                 |                           |  |      | 13,789  |   |   | 21,492   |  
|Cash flows provided from financing activities:                              |                           |  |      |         |   |   |          |  
|Proceeds from issuance of ordinary shares                                   |                           |  |      |        |   |   | 776      |  
|Capital contribution from MIH Limited                                       |                           |  |      | 704     |   |   |         |  
|                                                                            |                           |  |      |        
|Net cash provided from financing activities                                 |                           |  |      | 704     |   |   | 776      |  
|Effect of exchange rate changes on cash and cash equivalents                |                           |  |      |         |   |   |          |  
|                                                                            |                           |  |      | 65      |   |   | 332      |  
|                                                                            |                           |  |      |        
|Net increase (decrease) in cash and cash equivalents                        |                           |  |      | (6,351  | ) |   | 8,227    |  
|Cash and cash equivalents, beginning of period                              |                           |  |      | 38,568  |   |   | 69,249   |  
|                                                                            |                           |  |      |        
|Cash and cash equivalents, end of period                                    |                           |  | $    | 32,217  |   | $ | 77,476   |  
|                                                                            |                           |  |      |        

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

4



---

##### Table of Contents

OPENTV CORP.  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  June 30, 2003(Unaudited)

Note 1.  Basis of
Presentation

The accompanying unaudited condensed consolidated financial statements included herein have been
prepared pursuant to the rules and regulations of the Securities and Exchange Commission and reflect all adjustments that in the opinion of management are necessary for a fair presentation of the results of operations, financial position and cash
flows for the periods shown. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and
regulations. The results of operations for such periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2003 or for any future period. These condensed consolidated 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, 2002.

The accompanying condensed consolidated financial statements include the accounts of OpenTV Corp. together with its wholly-owned and
majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Note 2. Significant Accounting Policies

Share-based Compensation

We account for share-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees, and comply with the disclosure provisions of Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based
CompensationTransition and Disclosure, which was effective for the year ended December 31, 2002. Under APB No. 25 compensation expense is based on the difference, if any, on the date of the grant, between the fair value of our shares and
the exercise price of the option or purchase right. Had compensation cost for options plans and the OpenTV, Inc. 1999 Employee Stock Purchase Plan, as amended (the ESPP), been determined based on the fair value at the grant dates for the
awards under a method prescribed by SFAS 148, our net loss would have been increased to the pro-forma amounts indicated below (amounts in millions, except per share amounts):

5



---

##### Table of Contents

|                                                                                                                                            |                            |  |                          |       |      |   |       |   |   |       |   |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- |  | ------------------------ | ----- | ---- | - | ----- | - | - | ----- | - | - | ------ | -
|                                                                                                                                            | Three Months EndedJune 30, |  | Six Months EndedJune 30, |      
|                                                                                                                                            | 2003                       |  | 2002                     |       | 2003 |   | 2002  |  
|Net loss, as reported                                                                                                                       |                            |  | $                        | (9.2  | )    | $ | (24.0 | ) | $ | (29.3 | ) | $ | (191.8 | )
|Add: Share-based employee compensation expense included in reported net loss, net of related tax effects                                    |                            |  |                          | 0.1   |      |   | 1.1   |   |   | 0.2   |   |   | 2.2    |  
|Add (deduct): Share-based employee compensation expense determined under fair value-based method for all awards, net of related tax
effects |                            |  |                          | 2.1   |      |   | (4.2  | ) |   | 0.6   |   |   | (9.5   | )
|                                                                                                                                            |                            |  |                          |       |      |   |       |  
|                                                                                                                                            |                            |  |                          |       |      |   |       |   |   |       |   |   |        |  
|Pro-forma net loss                                                                                                                          |                            |  | $                        | (7.0  | )    | $ | (27.1 | ) | $ | (28.5 | ) | $ | (199.1 | )
|                                                                                                                                            |                            |  |                          |       |      |   |       |  
|Net loss per share, basic and diluted:                                                                                                      |                            |  |                          |       |      |   |       |   |   |       |   |   |        |  
|As reported                                                                                                                                 |                            |  | $                        | (0.13 | )    | $ | (0.33 | ) | $ | (0.41 | ) | $ | (2.68  | )
|                                                                                                                                            |                            |  |                          |       |      |   |       |  
|Pro-forma                                                                                                                                   |                            |  | $                        | (0.10 | )    | $ | (0.38 | ) | $ | (0.39 | ) | $ | (2.78  | )
|                                                                                                                                            |                            |  |                          |       |      |   |       |  

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

We calculated the fair value of each option grant on the date of the grant using the Black-Scholes option pricing model with the
following assumptions:

|                               |                                  |             |                                  |       |                               |             |                               |             | 
|------------------------------ | -------------------------------- | ----------- | -------------------------------- | ----- | ----------------------------- | ----------- | ----------------------------- | ----------- | 
|                               | Three Months Ended June 30, 2003 |             | Three Months Ended June 30, 2002 |       | Six Months EndedJune 30, 2003 |             | Six Months EndedJune 30, 2002 |            
|Risk-free interest rate        |                                  | 2.19%2.25% |                                  | 2.75% |                               | 2.19%2.25% |                               | 2.23%2.75% | 
|Average expected life (months) |                                  | 60          |                                  | 60    |                               | 60          |                               | 60          | 
|Volatility                     |                                  | 132%        |                                  | 137%  |                               | 132%        |                               | 101%137%   | 
|Dividend yield                 |                                  |            |                                  |      |                               |            |                               |            | 

The weighted average fair value of options
granted during the three months ended June 30, 2003 and 2002 was $1.46 and $5.55 respectively. The weighted average fair value of options granted during the six months ended June 30, 2003 and 2002 was $1.46 and $5.90, respectively.

We calculated the fair value of purchase rights under the ESPP using the Black-Scholes option pricing model with the following
assumptions:

|                               |                                |      
|------------------------------ | ------------------------------ | -----
|                               | Six Months Ended June 30, 2002
|Risk-free interest rate        |                                | 2.21%
|Average expected life (months) |                                | 6    
|Volatility                     |                                | 78%  
|Dividend yield                 |                                |     

6



---

##### Table of Contents

The weighted average fair value of purchase rights during the six months ended June 30, 2002
was $2.80. There were no purchase rights granted during the six months ended June 30, 2003 or for the three months ended June 30, 2002.

Recent Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies the guidance in Emerging Issues Task Force (EITF) No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). The principal difference between SFAS 146 and EITF 94-3 relates to SFAS 146's timing for
recognition of a liability for a cost associated with an exit or disposal activity. SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability
for an exit cost was recognized at the date of an entitys commitment to an exit plan. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of SFAS 146 did not have a material impact on
our financial position, results of operations, and cash flows.

In November 2002, the FASB issued Interpretation
(FIN) No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others, which clarifies disclosure and recognition/measurement requirements related to
certain guarantees. The disclosure requirements are effective for financial statements issued after December 15, 2002 and the recognition/measurement requirements are effective on a prospective basis for guarantees issued or modified after December
31, 2002. The adoption of FIN 45 did not have a material impact on our financial position, results of operations, and cash flows.

In January 2003, the EITF reached a consensus regarding EITF No. 00-21, Revenue Arrangements with Multiple Deliverables,
which requires companies to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting. In applying EITF 00-21, revenue arrangements with multiple deliverables should be divided into separate units of
accounting if the deliverables in the arrangement meet certain criteria. Arrangement consideration should be allocated among the separate units of accounting based on their relative fair values. This issue is effective for revenue arrangements
entered into for fiscal periods beginning after June 14, 2003. The adoption of this consensus is not expected to have a material impact on our financial position, results of operations, and cash flows.

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable Interest Entities, which addresses consolidation by a
business of variable interest entities in which it is the primary beneficiary. FIN 46 is effective immediately for certain disclosure requirements and variable interest entities created after January 31, 2003, and in the first interim or annual
period beginning after June 15, 2003 for all other variable interest entities entered into prior to January 31, 2003. We do not have any interest in variable entities, therefore the adoption of FIN 46 will not have an impact on our financial
position, results of operations and cash flows.

Note 3.  Intangible Assets, net

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

7



---

##### Table of Contents

|                            |                    |               |                     |                   |                         |   |                   |  |                   |       |   |   |      |  |   |     
|--------------------------- | ------------------ | ------------- | ------------------- | ----------------- | ----------------------- | - | ----------------- |  | ----------------- | ----- | - | - | ---- |  | - | ----
|                            |                    | June 30, 2003 |                     | December 31, 2002 |                        
|                            | Usefullife inyears |               | GrossCarryingAmount |                   | AccumulatedAmortization |   | NetCarryingAmount |  | NetCarryingAmount
|Intangible assets:          |                    |               |                     |                   |                         |   |                   |  |                   |       |   |   |      |  |   |     
|Patents                     |                    |               |                     | 35               |                         | $ | 29.8              |  | $                 | (23.3 | ) | $ | 6.5  |  | $ | 8.7 
|Developed technologies      |                    |               |                     | 35               |                         |   | 21.0              |  |                   | (15.9 | ) |   | 5.1  |  |   | 7.9 
|Contracts and relationships |                    |               |                     | 35               |                         |   | 19.5              |  |                   | (11.1 | ) |   | 8.4  |  |   | 10.6
|Purchased technologies      |                    |               |                     | 3.55             |                         |   | 0.7               |  |                   | (0.4  | ) |   | 0.3  |  |   | 0.4 
|Trademarks                  |                    |               |                     | 35               |                         |   | 1.2               |  |                   | (0.6  | ) |   | 0.6  |  |   | 0.8 
|                            |                    |               |                     |                   |                         |   |                   | 
|                            |                    |               |                     |                   |                         | $ | 72.2              |  | $                 | (51.3 | ) | $ | 20.9 |  | $ | 28.4
|                            |                    |               |                     |                   |                         |   |                   | 

The intangible assets are being
amortized on a straight-line basis over their estimated useful lives. Amortization of intangible assets (including amounts reported in cost of revenues) was $3.7 million and $4.9 million for the three months ended June 30, 2003 and 2002,
respectively and $7.5 million and $10.0 million for the six months ended June 30, 2003 and 2002, respectively. The estimated annual amortization expense through 2007 is as follows (in millions):

|                            |  |  |                     |     
|--------------------------- |  |  | ------------------- | ----
|Year ending December 31,    |  |  | AmortizationExpense
|2003 (Remaining six months) |  |  | $                   | 6.2 
|2004                        |  |  |                     | 6.4 
|2005                        |  |  |                     | 3.6 
|2006                        |  |  |                     | 2.8 
|2007                        |  |  |                     | 1.9 
|                            | 
|                            |  |  | $                   | 20.9
|                            | 

Note 4.  Restructuring Costs

We monitor our organizational structure and associated operating expenses periodically. Depending upon events and circumstances, actions
may be taken to restructure the business, including terminating employees, abandoning excess lease space and incurring other exit costs. Any resulting restructuring accrual includes numerous estimates, which are developed based on managements
knowledge of the activity being affected and the cost to exit existing commitments. These estimates could differ from actual results. We monitor the initial estimates periodically and record an adjustment for any significant changes in
estimates.

2002 Restructuring

The following tables set forth the payments made during the six months ended June 30, 2003 relating to various restructuring activities
initiated during calendar year 2002 (in millions):

8



---

##### Table of Contents

|                                                         |                                 |  |                   |      |            |   |       |   |   |      |   |   |      |  
|-------------------------------------------------------- | ------------------------------- |  | ----------------- | ---- | ---------- | - | ----- | - | - | ---- | - | - | ---- | -
|                                                         | Employee Severance And Benefits |  | Excess Facilities |      | Legal Fees |   | Total |  
|Balance, December 31, 2002                               |                                 |  | $                 | 2.3  |            | $ | 12.1  |   | $ | 0.2  |   | $ | 14.6 |  
|Cash payments                                            |                                 |  |                   | (1.2 | )          |   | (2.6  | ) |   | (0.1 | ) |   | (3.9 | )
|Reversal of excess provision relating to Wink aquisition |                                 |  |                   | (0.1 | )          |   |      |   |   |     |   |   | (0.1 | )
|                                                         |                                 |  |                   |      |            |   |       |  
|Balance, June 30, 2003                                   |                                 |  | $                 | 1.0  |            | $ | 9.5   |   | $ | 0.1  |   | $ | 10.6 |  
|                                                         |                                 |  |                   |      |            |   |       |  

The outstanding accrual for employee severance and benefits is
expected to be paid primarily in 2003 and the accrual for excess facilities relates to operating lease obligations that continue through 2006.

2003 Restructuring

In February 2003, we announced the termination of approximately 70 employees located in France, the reduction of excess office space and
the write-down of certain property and equipment. The employee separation benefits included severance payments, medical and other related employee benefit obligations estimated at $4.7 million. Facilities consolidation charges for the reduction of
excess office space are estimated to be $1.7 million. These costs included payments required under a non-cancelable lease contract, lease buyout costs, and shut-down costs. Asset write-offs of $0.5 million were incurred in connection with leasehold
improvements and other property and equipment that were abandoned.

The following sets forth the payments made
against the accrual through June 30, 2003 (in millions):

|                        |                               |  |                  |      |                   |   |       |   |   |      |   |   |      |  
|----------------------- | ----------------------------- |  | ---------------- | ---- | ----------------- | - | ----- | - | - | ---- | - | - | ---- | -
|                        | EmployeeSeveranceAnd Benefits |  | ExcessFacilities |      | Assets Write-offs |   | Total |  
|Restructuring provision |                               |  | $                | 4.7  |                   | $ | 1.7   |   | $ | 0.5  |   | $ | 6.9  |  
|Cash payments           |                               |  |                  | (3.5 | )                 |   | (1.5  | ) |   |     |   |   | (5.0 | )
|Non-cash charges        |                               |  |                  |     |                   |   |      |   |   | (0.5 | ) |   | (0.5 | )
|Currency effect         |                               |  |                  | 0.2  |                   |   |      |   |   |     |   |   | 0.2  |  
|                        |                               |  |                  |      |                   |   |       |  
|Balance, June 30, 2003  |                               |  | $                | 1.4  |                   | $ | 0.2   |   | $ |     |   | $ | 1.6  |  
|                        |                               |  |                  |      |                   |   |       |  

The outstanding accrual for employee severance and benefits and for
excess facilities costs are expected to be paid in 2003.

Note 5.  Net Loss Per Share

Basic and diluted net loss per share are computed using the weighted-average number of ordinary shares outstanding during the periods
presented, net of ordinary shares subject to repurchase. The following items as of June 30, 2003 and 2002 were not included in the computation of diluted net loss per share because the effect would be anti-dilutive:

9



---

##### Table of Contents

|                                                                     |                              |           |                            |           |  |           |  |          
|-------------------------------------------------------------------- | ---------------------------- | --------- | -------------------------- | --------- |  | --------- |  | ---------
|                                                                     | Three Months Ended  June 30, |           | Six Months Ended  June 30,
|                                                                     |                              | 2003      |                            | 2002      |  | 2003      |  | 2002     
|Class A ordinary shares issuable upon exercise of stock options      |                              | 4,653,017 |                            | 6,954,364 |  | 4,483,865 |  | 7,168,600
|Class A ordinary shares issuable upon exercise of warrants           |                              | 506,520   |                            | 681,520   |  | 506,520   |  | 681,520  
|Class A ordinary shares issuable for shares of Open TV, Inc. Class A |                              |           |                            |           |  |           |  |          
|common stock (including shares of Open TV, Inc. Class A              |                              |           |                            |           |  |           |  |          
|common stock issuable upon exercise of stock options)                |                              | 900,094   |                            | 991,844   |  | 900,094   |  | 998,823  
|Class B ordinary shares issuable for shares of Open TV, Inc.         |                              |           |                            |           |  |           |  |          
|Class B common stock                                                 |                              | 7,594,796 |                            | 7,594,796 |  | 7,594,796 |  | 7,594,796

Had such items been included in the
calculation of diluted net loss per share, the weighted average shares used in the calculation would have been increased by approximately 8.7 million and 9.6 million for the three months ended June 30, 2003 and 2002, respectively, and 8.6 million
and 9.8 million for the six months ended June 30, 2003 and 2002, respectively.

Note 6.  Comprehensive Loss

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

|                                                                                                 |                             |  |                           |        |      |   |         |   |   |         |   |   |          |  
|------------------------------------------------------------------------------------------------ | --------------------------- |  | ------------------------- | ------ | ---- | - | ------- | - | - | ------- | - | - | -------- | -
|                                                                                                 | Three Months Ended June 30, |  | Six Months Ended June 30, |       
|                                                                                                 | 2003                        |  | 2002                      |        | 2003 |   | 2002    |  
|Net loss                                                                                         |                             |  | $                         | (9,236 | )    | $ | (23,960 | ) | $ | (29,301 | ) | $ | (191,791 | )
|Other comprehensive income (loss):                                                               |                             |  |                           |        |      |   |         |   |   |         |   |   |          |  
|Foreign currency translation gains (losses)                                                      |                             |  |                           | (10    | )    |   | 207     |   |   | (54     | ) |   | 331      |  
|Unrealized gains (losses) on investments, net of income taxes                                    |                             |  |                           | (49    | )    |   | 937     |   |   | (128    | ) |   | 209      |  
|Reclassification for realized gains from sale of marketable debt securities, net of income taxes |                             |  |                           | (90    | )    |   | (145    | ) |   | (180    | ) |   | (145     | )
|                                                                                                 |                             |  |                           |        |      |   |         |  
|Comprehensive loss                                                                               |                             |  | $                         | (9,385 | )    | $ | (22,961 | ) | $ | (29,663 | ) | $ | (191,396 | )
|                                                                                                 |                             |  |                           |        |      |   |         |  

Note 7.  Segment Information

SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, requires enterprises to report selected information about
operating segments in interim financial reports. It also establishes standards for related disclosures about products, geographic areas and major customers. The method for determining what information to report is based upon the
management approach. Our Chief Executive Officer reviews revenues by both geography and customer, and we do not have separately reportable operating segments. Therefore, we believe that we operate in a single industry segment.

Our revenues by geographic area based on the location of customers were as follows (in millions):

10



---

##### Table of Contents

|                               |                             |  |                            |      |      |   |      |  |   |      |  |   |     
|------------------------------ | --------------------------- |  | -------------------------- | ---- | ---- | - | ---- |  | - | ---- |  | - | ----
|                               | Three Months Ended June 30, |  | Six Months Ended  June 30,
|                               | 2003                        |  | 2002                       |      | 2003 |   | 2002
|Europe, Africa and Middle East |                             |  | $                          | 8.1  |      | $ | 7.8  |  | $ | 15.7 |  | $ | 17.4
|Americas                       |                             |  |                            | 5.4  |      |   | 4.8  |  |   | 11.3 |  |   | 11.6
|Asia Pacific                   |                             |  |                            | 2.2  |      |   | 1.5  |  |   | 4.1  |  |   | 4.1 
|                               |                             |  |                            |      |      |   |     
|                               |                             |  | $                          | 15.7 |      | $ | 14.1 |  | $ | 31.1 |  | $ | 33.1
|                               |                             |  |                            |      |      |   |     

Americas include United States revenue of $4.7 million and $3.8 million for the three months ended June 30, 2003 and 2002, respectively, and $8.9 million
and $8.2 million for the six months ended June 30, 2003 and 2002, respectively.

Three major customers accounted for the following
percentages of revenues:

|         |                             |      |                           |      |   |      |   |      |  
|-------- | --------------------------- | ---- | ------------------------- | ---- | - | ---- | - | ---- | -
|         | Three Months Ended June 30, |      | Six Months Ended June 30, |     
|Customer |                             | 2003 |                           | 2002 |   | 2003 |   | 2002 |  
|A        |                             | 11   | %                         | 11   | % | 11   | % | 10   | %
|B        |                             | 12   | %                         | 11   | % | 12   | % | 10   | %
|C        |                             | 11   | %                         |     |   | 11   | % |     |  

Two customers accounted for 10% and 18% of net
accounts receivable, respectively, as of June 30, 2003.

Additional summarized information by geographic area is as
follows (in millions):

|                           |                              |   |                            |     |      |     |      |   |      |     |   |     |    
|-------------------------- | ---------------------------- | - | -------------------------- | --- | ---- | --- | ---- | - | ---- | --- | - | --- | ---
|                           | Three Months Ended  June 30, |   | Six Months Ended  June 30,
|Capital expenditures, net: |                              |   | 2003                       |     | 2002 |     | 2003 |   | 2002
|United States              |                              | $ | 0.7                        |     | $    | 1.3 |      | $ | 1.1  |     | $ | 4.1
|Other countries            |                              |   | 0.3                        |     |      | 1.4 |      |   | 0.3  |     |   | 2.0
|                           |                              |   |                            |     |      |     |     
|                           |                              |   | $                          | 1.0 |      | $   | 2.7  |   | $    | 1.4 |   | $   | 6.1
|                           |                              |   |                            |     |      |     |     

11



---

##### Table of Contents

|                   |               |  |                   |      |  |   |     
|------------------ | ------------- |  | ----------------- | ---- |  | - | ----
|Long-lived assets: | June 30, 2003 |  | December 31, 2002
|United States      |               |  | $                 | 75.5 |  | $ | 81.9
|Other countries    |               |  |                   | 7.9  |  |   | 12.8
|                   |               |  |                  
|                   |               |  | $                 | 83.4 |  | $ | 94.7
|                   |               |  |                  

Note 8.  Commitments and Contingencies

Operating Leases

We lease facilities from third parties under operating lease agreements or sublease agreements in the United States, Europe and Asia. These leases expire
between August 2003 and January 2010. Total rent expense was $1.3 million and $2.0 million for the three months ended June 30, 2003 and 2002, respectively, and $3.4 million and $4.1 million for the six months ended June 30, 2003 and 2002,
respectively. There was no sublease income for the three months and six months ended June 30, 2003 or 2002.

Future minimum payments
under non-cancelable operating leases as of June 30, 2003 were as follows (in millions):

|                            |  |   |                     |     
|--------------------------- |  | - | ------------------- | ----
|Year ending December 31,    |  |   | Minimum Commitments
|2003 (Remaining six months) |  | $ | 4.1                
|2004                        |  |   |                     | 7.6 
|2005                        |  |   |                     | 3.6 
|2006                        |  |   |                     | 2.5 
|2007                        |  |   |                     | 1.9 
|Thereafter                  |  |   | 4.5                
|                            | 
|                            |  |   | $                   | 24.2
|                            | 

Of this
amount $8.6 million was included in accrued restructuring in the consolidated balance sheet as of June 30, 2003.

Other Commitments

In the
ordinary course of business we enter into various arrangements with vendors and other business partners for marketing, minimum revenue guarantees, bandwidth, and other services. Minimum commitments under these arrangements as of June 30, 2003 were
$6.0 million for the remaining six months of the year ending December 31, 2003 and $4.3 million and $2.4 million for the years ending December 31, 2004 and 2005, respectively. In addition, we have contingent commitments with certain cable and
satellite service providers that are based on households or settop boxes deployed. Based on current expectations, we believe that such commitments may aggregate up to approximately $3 million for the six months ending December 31, 2003 and $2
million and $1 million for the years ending December 31, 2004 and 2005, respectively.

As of June 30, 2003, we had two standby letters
of credit aggregating $2.0 million that were issued to landlords at two of our leased properties in the United States and we had $10.0 million of marketable debt securities pledged with a bank for foreign exchange facilities.

12



---

##### Table of Contents

In March 1998, we entered into a licensing and distribution agreement with Sun Microsystems, Inc. under which Sun Microsystems
granted us a non-exclusive, nontransferable license to develop and distribute products based upon Sun Microsystemss Java technology. Subsequent amendments extended our license through December 2006. As amended, the agreement requires us to
make a payment of $4.0 million to Sun Microsystems in February 2007, less any amounts previously paid for support and royalty fees, which have been nominal to date.

Contingencies

On February 7, 2002, OpenTV, Inc. filed a lawsuit
against Liberate Technologies, Inc. alleging patent infringement in connection with two patents held by OpenTV, Inc. relating to interactive technology. The lawsuit, captioned OpenTV, Inc. v. Liberate Technologies, Case No. C-02-0655, is pending in
the United States District Court for the Northern District of California. On March 21, 2002, Liberate Technologies filed a counterclaim against OpenTV, Inc. for alleged infringement of four patents allegedly owned by Liberate Technologies. Liberate
Technologies has since dismissed its claims of infringement on two of those patents. In January 2003, the Court granted two of OpenTV, Inc.s motions for summary judgment pursuant to which the court dismissed Liberate Technologies claim
of infringement on one of the remaining patents and dismissed a defense asserted by Liberate Technologies to OpenTV, Inc.s infringement claims, resulting in only one patent of Liberate Technologies remaining in the counterclaim. We believe
OpenTV, Inc.s lawsuit is meritorious and intend to vigorously pursue prosecution of our claims against Liberate Technologies. In addition, we believe that OpenTV, Inc. has meritorious defenses to the counterclaims brought against it and will
defend itself vigorously. No provision has been made in our condensed consolidated financial statements for this matter. We are unable to predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

In July 2001, the first of a series of putative securities class actions, Brody v. OpenTV Corp., et al., Civil Action No. 01-CV-7032, was filed in 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. These lawsuits were consolidated and are captioned In re
OpenTV Corp. Initial Public Offering Securities Litigation, Civil Action No. 01-CV-7032. The complaints allege undisclosed and improper practices concerning the allocation of our initial public offering shares, in violation of the federal securities
laws, and seek unspecified damages on behalf of persons who purchased OpenTV Class A ordinary shares during the period from November 23, 1999 through December 6, 2000. The Court has appointed a lead plaintiff for the consolidated cases. On April 19,
2002, the plaintiffs filed an amended complaint. Other actions have been filed making similar allegations regarding the initial public offerings of more than 300 other companies, including Wink Communications as discussed in greater detail below.
All of these lawsuits have been coordinated for pretrial purposes as In re Initial Public Offering Securities Litigation, Civil Action No. 21-MC-92. Defendants in these cases have filed omnibus motions to dismiss on common pleading issues. Oral
arguments on these omnibus motions to dismiss were held on November 1, 2002. All claims against our officers and directors have been dismissed without prejudice in this litigation. On February 19, 2003, the Court denied in part and granted in part
the motion to dismiss filed on behalf of defendants, including us. The Courts order dismissed all claims against us except for a claim brought under Section 11 of the Securities Act of 1933. However, the Court has given plaintiffs an
opportunity to amend their claims in order to state a claim. A proposal has been made for the settlement and release of claims against the issuer defendants, including us, in exchange for a guaranteed recovery to be paid by the insurance carriers of
the issuer defendants and an assignment of certain claims. The settlement is subject to a number of conditions, including approval of the proposed settling parties and the Court. If the settlement does not occur, and the litigation against us
continues, we believe that we have meritorious defenses to the claims asserted against us and will defend ourselves vigorously. No provision has been made in our condensed consolidated financial statements for this matter. We are unable to predict
the likelihood of an unfavorable outcome or estimate our potential liability, if any.

13



---

##### Table of Contents

In November 2001, the first of a series of putative securities class actions, Collegeware v. Wink Communications, Inc., et al., was
filed in United States District Court for the Southern District of New York against certain investment banks which acted as underwriters for Wink Communications initial public offering, Wink Communications, and two of Wink Communications
officers and directors. We acquired Wink Communications in October 2002. These lawsuits are captioned In re Wink Communications, Inc. Initial Public Offering Securities Litigation, Civil Action No. 01-Civ. 10638 (SAS). The complaints allege
undisclosed and improper practices concerning the allocation of Wink Communications initial public offering shares, in violation of the federal securities laws, and seek unspecified damages on behalf of persons who purchased Wink
Communications common stock during the period from August 19, 1999 through December 6, 2000. On April 19, 2002, the plaintiffs filed an amended complaint. This action is among the over 300 lawsuits that have been consolidated for pretrial
purposes as In re Initial Public Offering Securities Litigation, Civil Action No. 21- MC-92. Defendants in these cases have filed motions to dismiss on common pleading issues. Oral arguments on these omnibus motions to dismiss were held on November
1, 2002. On February 19, 2003, the Court ruled on the motions to dismiss. The Court denied the motions to dismiss claims against Wink Communications and the individual defendants under Sections 11 and 15 of the Securities Act of 1933. The Court
granted the motion to dismiss the claims under Section 10(b) of the Securities Exchange Act of 1934 against Wink Communications and one individual defendant, and denied that motion against the other individual defendant and 59 individual defendants
in the related cases, on the basis that the respective amended complaints alleged that the individuals sold stock. The Court granted the motion to dismiss the claims under Section 20(a) of the Securities Exchange Act of 1934. As described above, a
proposal has been made for the settlement and release of claims against the issuer defendants, including Wink Communications, in exchange for a guaranteed recovery to be paid by the insurance carriers of the issuer defendants and an assignment of
certain claims. The settlement is subject to a number of conditions, including approval of the proposed settling parties and the Court. If the settlement does not occur, and the litigation against Wink Communications continues, we believe that Wink
Communications has meritorious defenses to the claims brought against it and that Wink Communications will defend itself vigorously. No provision has been made in our condensed consolidated financial statements for this matter. We are unable to
predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

On November 18, 2002, a purported class action complaint
was filed in the Court of Chancery of the State of Delaware in and for the County of New Castle against ACTV, Inc., its directors and us. The complaint generally alleges that the directors of ACTV breached their fiduciary duties to the ACTV
shareholders in approving the ACTV merger agreement pursuant to which we acquired ACTV on July 1, 2003, and that, in approving the ACTV merger agreement, ACTVs directors failed to take steps to maximize the value of ACTV to its shareholders.
The complaint further alleges that we aided and abetted the purported breaches of fiduciary duties committed by ACTVs directors on the theory that the merger could not occur without our participation. The complaint seeks certain forms of
equitable relief, including enjoining the consummation of the merger. Our acquisition of ACTV was completed on July 1, 2003. We believe that the allegations are without merit and intend to defend against the complaint vigorously. No provision has
been made in our condensed consolidated financial statements for this matter. We are unable to predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

On April 1, 2003, James Brown, a former executive officer of OpenTV, filed a lawsuit in the Superior Court of the State of California, County of Santa Clara, against
OpenTV, Inc. in connection with the termination of his employment with OpenTV, Inc. in January 2003. The lawsuit alleged, among other things, breach of contract, breach of the covenant of good faith and fair dealing, failure to pay wages, wrongful
termination in violation of public policy and the intentional infliction of emotional distress. On June 16, 2003, Mr. Brown filed with the Court a request for dismissal of his complaint without prejudice and the Court entered the dismissal as
requested. We believe that OpenTV, Inc. has meritorious defenses to the claims brought against it by Mr. Brown in his original complaint and that OpenTV, Inc. would defend itself vigorously in the event Mr. Brown were further to pursue this matter.
No provision has been made in our condensed consolidated financial statements for this matter. We are unable to predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

14



---

##### Table of Contents

On March 3, 2003, Thomas Weisel Partners LLC filed a demand for arbitration against our subsidiary, OpenTV, Inc., asserting claims
for breach of contract and other legal and equitable claims arising from the acquisition of Wink Communications by OpenTV U.S. Holdings, Inc., another one of our subsidiaries. The arbitration, styled Thomas Weisel Partners LLC v. OpenTV, Inc., was
submitted to a JAMS Alternative Dispute Resolution forum in San Francisco, California. The demand alleged that OpenTV, Inc., failed to pay Thomas Weisel Partners LLC $1,903,624 upon the acquisition of Wink Communications as required by the terms of
a letter agreement between the parties, and sought undisclosed damages. In the second quarter of 2003, OpenTV, Inc. reached a settlement in principle with Thomas Weisel Partners LLC and we recorded $925,000 in our condensed consolidated financial
statements for settlement expense in connection therewith. OpenTV, Inc. entered into a definitive Settlement Agreement with Thomas Weisel Partners LLC in July 2003 and made the $925,000 settlement payment to Thomas Weisel Partners LLC in August
2003, following which Thomas Weisel Partners LLC submitted a dismissal of its claims with prejudice.

On December 4, 2000, a suit was filed in the United
States District Court for the District of Delaware by Pegasus Development Corporation and Personalized Media Communications, LLC (PMC) alleging that DIRECTV, Inc., Hughes Electronics Corporation, Thomson Consumer Electronics and Philips
Electronics North America, Inc., are willfully infringing certain claims of seven United States patents assigned or licensed to PMC. Though Wink Communications is not a defendant in the suit, PMC may allege certain products of Wink Communications,
possibly in combination with the products provided by the defendants, infringe PMCs patents. The agreements between Wink Communications and each of the defendants include indemnification obligations that may be triggered by the litigation. If
it is determined that Wink Communications is obligated to defend any defendant in this matter, and/or that the products of Wink Communications infringe any of the asserted claims, our business performance, financial position, results of operations
or cash flows may be adversely affected. No provision has been made in our condensed consolidated financial statements for this matter. We are unable to estimate our potential liability, if any.

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. (BI) alleging that
DIRECTV, Inc. (DIRECTV), EchoStar Communications Corporation (EchoStar), 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. Though neither Wink Communications nor OpenTV, Inc. is currently a defendant in the suit, BI may allege that certain of their products, possibly in combination with the products provided by
some of the defendants, infringe BIs patent. The agreements between (1) OpenTV, Inc. and EchoStar and (2) Wink Communications and DIRECTV include indemnifications obligations for OpenTV, Inc. and Wink Communications, respectively, 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. Further, if liability is found against DIRECTV in
this matter, and if such a decision implicates Wink Communications technology or products, DIRECTV has notified Wink Communications 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 Wink Communications were to be named as a defendant and it is determined that the products of Wink Communications infringe and of the asserted claims, and/or it is determined that Wink
Communications is obligated to defend DIRECTV in this matter, our business performance, financial position, results of operations or cash flows may be adversely affected. No provision has been made in our condensed consolidated financial statements
for these matters. We are unable to estimate our potential liability, if any.

On December 20, 2000, ACTV, Inc. and its wholly owned subsidiary
HyperTV Networks, Inc. filed a lawsuit in the United States District Court for the Southern District of New York, Case No. 00-CV-9622, against The Walt Disney Company and certain of its affiliates (collectively, the Disney Group). We
acquired ACTV, Inc. on July 1, 2003.  In that litigation, the Disney Group has filed counterclaims against ACTV that seek a declaration that ACTVs patents in suit have not been infringed, are invalid, and are unenforceable.  On May
24, 2002, the Court granted the Disney Groups motion for summary judgment of non-infringement with respect to the three patents in suit.  On July 3, 2002, ACTV appealed the District Court decision and the appeal is currently pending in
the U.S. Court of Appeals for the Federal Circuit in Washington, D.C, Case No. 02-1491.  If ACTV were successful in the appeal, the case would be remanded back to the District Court.  The Disney Group is also seeking to recover its costs
and reasonable attorneys fees under 35 U.S.C. Section 285.  In order to justify such an award, the Disney Group would have to prevail on the merits of the case, and the District Court would have to find that the case was an
exceptional case, for example, by finding that ACTV did not conduct a reasonable pre-suit investigation or that ACTV had engaged in litigation misconduct.  In the unlikely event of such a finding, any such award could be
substantial.  We believe that ACTVs lawsuit is meritorious and that ACTV intends to vigorously pursue prosecution of its claims against the Disney Group.  In addition, we believe that ACTV has meritorious defenses to the
counterclaims brought against it and that ACTV will defend itself vigorously against such counterclaims.  The parties to this litigation have expressed a desire to engage in settlement negotiations, but we can provide no assurances that any
settlement can be concluded or, if a settlement can be concluded, on what terms. We are unable to predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

15



---

##### Table of Contents

We may incur substantial expenses in defending against these and other third party claims. In this regard, our subsidiaries
routinely are required to indemnify customers and licensees with respect to potential patent, intellectual property rights and other claims arising from products or services provided to such customers and licensees. These indemnification obligations
may extend to the costs of defending customers and licensees against claims related to products or services provided by our subsidiaries. The costs of defending against third party claims of any type, including those specifically described above,
may be significant even if we and our subsidiaries are not found to have legal liability in connection with such claims. In the event of a determination adverse to us and/or our subsidiaries resulting from any such proceeding or claim, we may incur
substantial monetary liability or be required to change our business practices. Accordingly, any such legal proceedings, claims or determinations could have a material effect on our business performance or on our financial position, results of
operations or cash flows.

Note 9. Related Party Transactions

The table below reflects transactions
involving the following related parties during the periods indicated (in thousands):

|                                |  |                             |                                                          |                           |  |      |       |      |   |       |  |      |       |  |   |       | 
|------------------------------- |  | --------------------------- | -------------------------------------------------------- | ------------------------- |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- |  | - | ----- | 
|                                |  | Three Months Ended June 30, |                                                          | Six Months Ended June 30, | 
|Related Party                   |  |                             | Nature of Transaction                                    |                           |  | 2003 |       | 2002 |   | 2003  |  | 2002 |      
|Shareholders:                   |  |                             |                                                          |                           |  |      |       |      |   |       |  |      |       |  |   |       | 
|Liberty Broadband               |  |                             | Management expense                                       |                           |  | $    | 487   |      | $ |      |  | $    | 913   |  | $ |      | 
|Motorola and General Instrument |  |                             | License fees and services revenue                        |                           |  |      | 1,654 |      |   | 1,604 |  |      | 3,384 |  |   | 3,379 | 
|                                |  |                             | Equipment purchases                                      |                           |  |      | 37    |      |   | 53    |  |      | 37    |  |   | 70    | 
|EchoStar                        |  |                             | Royalties, license fees and services and support revenue |                           |  |      | 1,720 |      |   | 941   |  |      | 3,419 |  |   | 1,320 | 
|MIH Limited and its affiliates  |  |                             | License fees and services and support revenue            |                           |  |      | 281   |      |   | 574   |  |      | 462   |  |   | 1,014 | 
|Sun Microsystems                |  |                             | Software technology license and equipment purchases      |                           |  |      |      |      |   | 47    |  |      |      |  |   | 88    | 
|Equity Investments:             |  |                             |                                                          |                           |  |      |       |      |   |       |  |      |       |  |   |       | 
|WOW TV                          |  |                             | Services revenue                                         |                           |  |      |      |      |   | 94    |  |      |      |  |   | 399   | 

The related party payable relating to Liberty Broadband is shown in a separate line
in our condensed consolidated balance sheets. The receivables from all other related parties aggregated $3.5 million as of June 30, 2003 and are shown in accounts receivable in our condensed consolidated balance sheets. Deferred revenue not yet
recognized from EchoStar was $8.0 million as of June 30, 2003.

In April 2002, we entered into agreements with certain of our executive officers and
senior management personnel that provided for retention payments to be paid in installments to such persons in the event of certain transactions involving a change in control. Our obligation to make these payments was triggered on August 27, 2002
when Liberty Media acquired MIH Limiteds (MIHL) controlling ownership stake in us. We recorded compensation expense of $0.2 million and $0.4 million for the three months and six months ended June 30, 2003, respectively for the
payments made under such agreements. Pursuant to a reimbursement agreement with MIHL, we were reimbursed for these retention payments, and these reimbursements have been reflected as a capital contribution in the condensed consolidated balance
sheets.

In June 2000, we entered into an employment agreement with James Ackerman, our Chief Executive Officer and a member of our board of directors,
pursuant to which we agreed, among other things, (a) to provide an interest-free loan of approximately $2.4 million to be forgiven in annual installments over a period of four years and (b) to issue Class A ordinary shares having an aggregate fair
market value of approximately $0.6 million in annual installments over the same four-year period. In January 2001, 25% of the cash portion

16



---

##### Table of Contents

of the loan was forgiven and 14,525 Class A ordinary shares were issued. In January 2002, another 25% of the loan amount was forgiven and 17,830 Class A ordinary shares were issued.
Another 25% of the loan amount was forgiven in January 2003 and 121,402 Class A ordinary shares were authorized to be issued in February 2003. The amounts forgiven annually were reported as compensation expense. The annual grants of Class A ordinary
shares in 2001 and 2002 were reported as compensation expense and the grant of Class A ordinary shares authorized to be issued in 2003 is being reported as compensation expense.

Note 10. Subsequent Event
- Acquisition of ACTV, Inc.

On July 1, 2003, pursuant to an Agreement and Plan of Merger, dated as of September 26, 2002, as amended, we acquired
ACTV, Inc. In the merger, each outstanding share of common stock, par value $0.10 per share, of ACTV was converted into the right to receive 0.73333 of an OpenTV Corp. Class A ordinary share. Based on the number of shares of ACTV common stock
outstanding as of July 1, 2003, we expect to issue approximately 41,648,399 Class A ordinary shares in this transaction. In addition, we reserved 6,750,103 Class A ordinary shares for issuance upon the exercise of options to purchase ACTV common
stock that were assumed by us in the merger. The acquisition will be accounted for as a purchase.

The purchase price of ACTV was estimated to be $61.8
million, representing the Class A ordinary shares to be issued in the merger valued at a per share value of $1.31, which is equal to the average last sale prices per our Class A ordinary share as reported on the Nasdaq National Market for the
trading-day period two days before and after September 26, 2002, the date the merger was agreed upon and announced, the fair value of the outstanding stock options of ACTV assumed by us of $3.9 million, and estimated transaction costs of $3.3
million.

ACTV is engaged in providing proprietary technologies, tools, and technical and creative services for interactive TV advertising, programming,
and enhanced media applications. We believe that:

| |   |                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the merger will provide the opportunity for us to extend our leadership in the interactive television industry by adding ACTVs key capabilities in the area of enhanced and targeted advertising and
multiple camera angle applications to our products and services mix; and

| |   |                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the merger will enhance our ability to develop advanced interactive television solutions because of an increased library of technology and intellectual property and an increase in innovative talent.

ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain
statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. To the extent that such statements are not recitations of historical fact, such
statements constitute forward-looking statements that, by definition, involve risks and uncertainties. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is
expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Some but not all of the risks, uncertainties and other factors
that could cause actual results or events to differ materially from those anticipated in such forward-looking statements are identified in Item 1 of OpenTV Corp.s Annual Report on Form 10-K for the fiscal year ended December 31, 2002, as filed
with the Securities and Exchange Commission.

17



---

##### Table of Contents

These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly
Report on Form 10-Q, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other
change in events, conditions or circumstances on which any such statement is based.

The following discussion should be read together with the
Unaudited Condensed Consolidated Financial Statements and notes to those financial statements included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements, notes to those financial statements and
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, 2002, as filed with the Securities and Exchange Commission.

Overview

We provide technology, content, applications, and professional services that enable digital television
network operators in over sixty countries to deliver and manage interactive television services for their subscribers. Our technology is available on all major digital television platforms  cable, satellite and terrestrial  and is
currently deployed in the major geographic areas of the world.

During 2003 and 2002, reductions by cable and satellite providers in their capital
spending and rollout of interactive television-related products and similar reductions by other customers had a significant adverse effect on the interactive-television market, and on our operations. As more fully described below, we expect this
trend to continue throughout the remainder of 2003 and until economic conditions improve for interactive television participants.

Comparability of
operating results between 2003 and 2002 is impacted by the acquisition of Wink Communications, which occurred in October 2002, and our restructuring initiatives, which were undertaken during the latter half of 2002 and the first quarter of 2003 and
the impacts of which will continue in future periods.

We earn significant revenues from customers who are also strategic investors in our business and
certain other related parties. Revenues from these related parties during the periods indicated were as follows (in millions):

|                                |                            |  |                          |     |      |   |      |  |   |     |  |   |    
|------------------------------- | -------------------------- |  | ------------------------ | --- | ---- | - | ---- |  | - | --- |  | - | ---
|                                | Three Months EndedJune 30, |  | Six Months EndedJune 30,
|                                | 2003                       |  | 2002                     |     | 2003 |   | 2002
|Motorola and General Instrument |                            |  | $                        | 1.7 |      | $ | 1.6  |  | $ | 3.4 |  | $ | 3.4
|EchoStar                        |                            |  |                          | 1.7 |      |   | 0.9  |  |   | 3.4 |  |   | 1.3
|MIH Limited and its affiliates  |                            |  |                          | 0.3 |      |   | 0.6  |  |   | 0.5 |  |   | 1.0
|WowTV                           |                            |  |                          |    |      |   | 0.1  |  |   |    |  |   | 0.4
|                                |                            |  |                          |     |      |   |     
|                                |                            |  | $                        | 3.7 |      | $ | 3.2  |  | $ | 7.3 |  | $ | 6.1
|                                |                            |  |                          |     |      |   |     

Results of Operations

Revenues

Revenues for the three months ended June 30, 2003, increased by $1.6 million from $14.1 million in 2002 to $15.7
million in 2003. For the six months ended June 30, 2003, revenues declined by $2.0 million from $33.1 million in 2002 to $31.1 million in 2003. Revenues by line item were as follows (in millions):

18



---

##### Table of Contents

|                            |                            |  |                          |      |      |  |     |   |      |      |   |  |      |   |   |      |  |  |     |   |   |      |  |  |     |  
|--------------------------- | -------------------------- |  | ------------------------ | ---- | ---- |  | --- | - | ---- | ---- | - |  | ---- | - | - | ---- |  |  | --- | - | - | ---- |  |  | --- | -
|                            | Three Months EndedJune 30, |  | Six Months EndedJune 30, |     
|                            | 2003                       |  | *                        |      | 2002 |  | *   |   | 2003 |      | * |  | 2002 |   | * |     
|Royalties                   |                            |  | $                        | 5.8  |      |  | 37  | % | $    | 4.1  |   |  | 29   | % | $ | 11.9 |  |  | 38  | % | $ | 12.4 |  |  | 37  | %
|Services, support and other |                            |  |                          | 5.7  |      |  | 36  |   |      | 6.8  |   |  | 48   |   |   | 11.1 |  |  | 36  |   |   | 13.1 |  |  | 40  |  
|Channel fees                |                            |  |                          | 2.9  |      |  | 19  |   |      | 2.5  |   |  | 18   |   |   | 5.8  |  |  | 19  |   |   | 5.1  |  |  | 15  |  
|License fees                |                            |  |                          | 1.3  |      |  | 8   |   |      | 0.7  |   |  | 5    |   |   | 2.3  |  |  | 7   |   |   | 2.5  |  |  | 8   |  
|                            |                            |  |                          |      |      |  |     |   |      |      |   |  |      |   |   |     
|                            |                            |  | $                        | 15.7 |      |  | 100 | % | $    | 14.1 |   |  | 100  | % | $ | 31.1 |  |  | 100 | % | $ | 33.1 |  |  | 100 | %
|                            |                            |  |                          |      |      |  |     |   |      |      |   |  |      |   |   |     

* Percent of total revenues

Royalties

Royalties for the second quarter increased by $1.7 million from $4.1 million in 2002 to $5.8 million in 2003. Americas accounted for $1.0 million of the increase, primarily
due to strong set-top box shipments by EchoStar Communications Corporation. Europe accounted for $0.8 million of the increase, principally due to set-top box shipments associated with British Sky Broadcasting, or BSkyB, and Asia Pacific had a
decrease of $0.1 million. One of our shareholders, EchoStar, accounted for $1.6 million of total royalties for the second quarter, compared with $0.9 million for the prior year. Our customers who sell set-top boxes to BSkyB accounted for $1.5
million of total royalties for the second quarter, compared with $1.1 million for the prior year.

Sequentially, royalties for the second quarter
decreased $0.3 million from those in the first quarter of 2003. In Europe total royalties were the same in each quarter, with a decrease in shipments to BSkyB offset by increased shipments to other networks. In Americas the royalties from EchoStar
were also the same in each quarter, with other networks accounting for a decrease of $0.3 million. In Asia Pacific total royalties were also the same in each quarter. Due to a delay in receipt of the royalty reports, the royalties for the first
quarter generally reflect shipments in the fourth quarter of the prior year. Historically, the fourth quarter has been the strongest quarter for shipments during each year.

Royalties for the six months ended June 30, 2003 decreased $0.5 million from $12.4 million in 2002 to $11.9 million in 2003. Although our customers who sell to BSkyB had an
increase in unit shipments of over 20% compared with the prior year, other network operators in Europe continued to experience slow deployments of set-top boxes. Overall unit shipments and royalties in Europe decreased by 13% for the six months
ended June 30, 2003, compared with the prior year. Europe accounted for 48% of total royalties for the six months ended June 30, 2003, Americas accounted for 44% and Asia Pacific accounted for 8%. One of our shareholders, EchoStar, accounted for
$3.3 million of total royalties for the six months ended June 30, 2003, compared with $1.1 million for the prior year. Our customers who sell set-top boxes to BSkyB accounted for $3.4 million of royalties for the six months ended June 30, 2003,
compared with $2.6 million in the prior year.

Royalty revenues are dependent on continued deployment of set-top boxes by existing customers, upgrades to
newer versions of our software by existing customers and new customers launching our technologies in their systems. Should set-top box deployments and software upgrades by existing customers slow or the acquisition of new customers not occur, our
royalty revenues would be negatively impacted in the future. As there is a limited number of network operators capable of deploying interactive television on a large-scale basis, we expect future royalty revenues to remain generally consistent with
current levels for the near term, assuming our existing customer base continues to deploy our technologies at the same rates.

Services, support and other

19



---

##### Table of Contents

Services, support and other revenue consist primarily of professional services consulting engagements for set-top box
manufacturers, network operators and system integrators, maintenance and support for set-top box manufacturers and broadcasters, and software customization and implementation support to customers. As a result of the continued slowdown in spending
among current and prospective customers, revenues in this category declined by $1.1 million in the second quarter of 2003 from $6.8 million in 2002 to $5.7 million in 2003. For the six months ended June 30, 2003, revenues in this category declined
by $2.0 million from $13.1 million in 2002 to $11.1 million in 2003. One of our shareholders, General Instrument Corporation, and its parent company, Motorola, Inc., are major customers for professional services and accounted for $1.7 million of
revenue for the second quarter, compared with $1.6 million for the prior year. For the six months ended June 30, 2003, Motorola accounted for $3.4 million of revenue, the same amount as in 2002. We expect professional services sold to Motorola to
reduce from their current levels through the remainder of 2003; and, in periods subsequent to 2003, the level of professional services sold to Motorola may further decline when the minimum guaranteed level of services provisions in the services
agreement with Motorola expire.

Channel fees

Our Static subsidiary operates the PlayJam
interactive games channel in the United Kingdom, France and the United States. We receive revenue primarily from premium rate telephone calls that are placed by consumers, using the telephone or the remote-control, for membership registration, game
score registration for the chance to win prizes, and for access to pay-per-play content. For the second quarter of 2003, channel fees increased by $0.4 million from $2.5 million in 2002 to $2.9 million in 2003. For the six months ended June 30,
2003, channel fees increased by $0.7 million from $5.1 million in 2002 to $5.8 million in 2003. Digital Interactive Television Group, a British telecommunications company that supports the collection of premium rate telephony charges for the PlayJam
channel on BSkyB, accounted for $2.0 million of channel fees for the second quarter, compared with $1.6 million for the prior year. For the six months ended June 30, 2003, Digital Interactive Television Group accounted for $3.7 million of channel
fees, compared with $3.3 million in the prior year.

License fees

We derive license fees
from the sale of products such as OpenTV Streamer, OpenTV Software Developers Kit and various applications, including OpenTV Publisher. These fees can vary greatly from quarter to quarter depending on whether any significant sales occur. License
fees for the second quarter of 2003 increased by $0.6 million from $0.7 million in 2002 to $1.3 million in 2003. License fees for the quarter included $0.5 million for an integrated browser product sold to a customer in Asia. For the six months
ended June 30, 2003, license fees declined by $0.2 million from $2.5 million in 2002 to $2.3 million in 2003, due to the continued slowdown in interactive-television-related spending by our customers.

Operating Expenses

As a result of significant restructuring initiatives undertaken during 2002, our total operating
expenses for the second quarter of 2003 decreased by $12.6 million from $36.7 million in 2002 to $24.1 million in 2003. For the six months ended June 30, 2003, our total operating expenses decreased by $24.0 million from $83.8 million in 2002 to
$59.8 million in 2003. The results for 2003 include the results of Wink Communications, which was acquired in October 2002. Operating expenses by line item were as follows (in millions):

20



---

##### Table of Contents

|                                  |                              |  |                           |      |      |   |      |  |   |      |  |   |      | 
|--------------------------------- | ---------------------------- |  | ------------------------- | ---- | ---- | - | ---- |  | - | ---- |  | - | ---- | 
|                                  | Three Months Ended  June 30, |  | Six Months Ended June 30, |     
|                                  | 2003                         |  | 2002                      |      | 2003 |   | 2002 | 
|Cost of revenues                  |                              |  | $                         | 9.4  |      | $ | 11.4 |  | $ | 20.9 |  | $ | 21.5 | 
|Research and development          |                              |  |                           | 4.8  |      |   | 7.8  |  |   | 10.3 |  |   | 17.5 | 
|Sales and marketing               |                              |  |                           | 4.2  |      |   | 8.4  |  |   | 9.2  |  |   | 17.7 | 
|General and administrative        |                              |  |                           | 3.4  |      |   | 5.4  |  |   | 7.8  |  |   | 10.0 | 
|Restructuring costs               |                              |  |                           |     |      |   |     |  |   | 6.9  |  |   | 9.6  | 
|Amortization of intangible assets |                              |  |                           | 2.3  |      |   | 3.7  |  |   | 4.7  |  |   | 7.5  | 
|                                  |                              |  |                           |      |      |   |      | 
|Total Operating Expenses          |                              |  | $                         | 24.1 |      | $ | 36.7 |  | $ | 59.8 |  | $ | 83.8 | 
|                                  |                              |  |                           |      |      |   |      | 

Cost of revenues

Cost of revenues
consist primarily of compensation-related expenses and related overhead costs associated with professional services engagements, the costs, including network infrastructure and bandwidth, of operating the PlayJam interactive games channel, and
amortization of developed technology.

Cost of revenues for the second quarter of 2003 decreased by $2.0 million from $11.4 million in 2002 to $9.4
million in 2003. Wink Communications accounted for an increase of $2.5 million which was offset by $2.9 million of cost savings from the restructuring initiatives and $0.4 million from reduced amortization of share-based compensation. There was also
a credit of $1.2 million resulting from the reversal of a contract cancellation penalty which had been accrued in 2002.

Cost of revenues for the six
months ended June 30, 2003 decreased by $0.6 million from $21.5 million in 2002 to $20.9 million in 2003. Wink Communications accounted for an increase of $5.1 million. The restructuring initiatives from 2002 accounted for a decrease of $3.6 million
and there was a reduction of $0.9 million due to reduced amortization of share-based compensation. The second quarter of 2003 also benefited from the reversal of a contract cancellation penalty previously accrued of $1.2 million.

Research and development

Research and development expenses consist primarily of compensation-related
expenses and related overhead costs incurred for both new product development and enhancements to our range of software and applications products.

Due
to the significant restructuring initiatives in 2002, research and development expenses for the second quarter of 2003 decreased by $3.0 million from $7.8 million in 2002 to $4.8 million in 2003. For the six months ended June 30, 2003, research and
development decreased by $7.2 million from $17.5 million in 2002 to $10.3 million in 2003. Research and development activities are expected to remain more focused on near-term business opportunities through the remainder of 2003.

Sales and marketing

Sales and marketing expenses consist primarily of advertising and other
marketing-related expenses, compensation-related expenses and related overhead costs, sales commissions and travel costs.

21



---

##### Table of Contents

Sales and marketing expenses for the second quarter of 2003 decreased by $4.2 million from $8.4 million in 2002 to $4.2 million in
2003, primarily due to the significant restructuring initiatives in 2002, partially offset by an increase of $1.2 million as a result of the acquisition of Wink Communications.

Sales and marketing expenses for the six months ended June 30, 2003 decreased by $8.5 million from $17.7 million in 2002 to $9.2 million in 2003, primarily due to the
significant restructuring initiatives in 2002, partially offset by an increase of $2.6 million as a result of the acquisition of Wink Communications.

General and administrative

General and administrative expenses consist primarily of compensation-related expenses and related overhead costs, provision for doubtful accounts and fees for professional
services.

General and administrative expenses for the second quarter of 2003 decreased by $2.0 million from $5.4 million in 2002 to $3.4 million in
2003. Restructuring initiatives accounted for more than half of the decrease and there were also reductions of $0.5 million in provision for doubtful accounts and $0.4 million for amortization of share-based compensation.

General and administrative expenses for the six months ended June 30, 2003 decreased by $2.2 million from $10.0 million in 2002 to $7.8 million in 2003. Restructuring
initiatives accounted for $0.9 million of the decrease and there were also reductions of $0.5 million in provision for doubtful accounts and $0.8 million for amortization of share-based compensation.

Restructuring costs

In the quarter ended March 31, 2003, we implemented a reduction of approximately 70 people in our
office in Paris, France. This action also included the abandonment of an office lease and the write-down of fixed assets. Total costs from this restructuring were estimated to be $6.9 million.

In the quarter ended March 31, 2002, we announced a restructuring action which included the termination of approximately 50 people at various locations around the world,
the abandonment of various office leases and the write-down of fixed assets. The estimated cost of this restructuring action was $9.6 million.

Amortization of intangible assets

For the second quarter of 2003, amortization of intangible assets decreased by $1.4 million from $3.7 million in 2002 to $2.3 million in 2003. For the six months ended June
30, 2003, amortization of intangible assets decreased by $2.8 million from $7.5 million in 2002 to $4.7 million in 2003. The decreases were due to completion of the amortization period for certain intangibles associated with the acquisition of
Spyglass.

Other Income and Expense Items

As a result of the decline in the total investment
portfolio resulting from the acquisition of Wink Communications in October 2002, and the use of cash to support our operations, interest income for the second quarter of 2003 was $0.4 million compared with $1.4 million for the prior year. Interest
income for the six months ended June 30, 2003, was $0.9 million compared with $2.8 million for the prior year. Other expense of $1.0 million for the three months and six months ended June 30, 2003, included $0.9 million for the settlement of fees
under an investment banking arrangement. During 2002 all private-equity investments were written off, so there was no impairment of investments in equity investees or share of losses of equity investees in 2003, compared with an impairment of $0.7
million and our share of losses of equity investee of

22



---

##### Table of Contents

$1.7 million for the second quarter of 2002, and an impairment of $6.2 million and our share of losses of equity investee of $7.3 million for the six months ended June 30,
2002.

Liquidity and Capital Resources

We invest a portion of our cash in debt instruments
that are highly liquid, high-quality investment grade securities and that predominantly have maturities of less than two years. As of June 30, 2003, we had cash and cash equivalents of $32.2 million, which was a decrease of $6.4 million from
December 31, 2002. Taking into account short-term and long-term marketable debt securities of $33.8 million, our cash, cash equivalents and marketable debt securities were $66.0 million as of June 30, 2003, compared with $87.7 million as of December
31, 2002.

Due to our continuing operating losses, cash used in operating activities was $20.9 million for the six months ended June 30, 2003, compared
with $14.4 million for the six months ended June 30, 2002. The increase in cash used in operating activities was the result of continued operating losses coupled with the cash outlays associated with our restructuring initiatives.

Cash provided from investing activities was $13.8 million for the six months ended June 30, 2003, primarily due to the net sale of marketable debt securities. For
the six months ended June 30, 2002, cash provided from investing activities was $21.5 million.

Cash provided from financing activities was $0.7 million
for the six months ended June 30, 2003, compared with $0.8 million for the six months ended June 30, 2002.

On July 1, 2003, we completed the
acquisition of ACTV, Inc., which as of that date had cash, cash equivalents and marketable securities of approximately $38 million.

We still expect that
cash used in operating activities for the year ended December 31, 2003, before taking into account the acquisition of ACTV, Inc., will be in the range of $30 million to $40 million, which is similar to the amount of cash used in operating activities
for each of the last two years. We expect that available cash resources from our existing operations coupled with the cash resources of ACTV, Inc. will be sufficient to fund our combined operations for at least the next twelve months. Our future
capital requirements will depend on a variety of factors, including market acceptance of interactive television, the resources we devote to developing, marketing, selling and supporting our products, and other factors.

Operating leases

We have various non-cancelable operating lease agreements for our worldwide offices
which had the following commitments as of June 30, 2003 (in millions):

23



---

##### Table of Contents

|                            |  |                     |     |      | 
|--------------------------- |  | ------------------- | --- | ---- | 
|Year ending December 31,    |  | Minimum Commitments |    
|2003 (Remaining six months) |  | $                   | 4.1 |     
|2004                        |  |                     |     | 7.6  | 
|2005                        |  |                     |     | 3.6  | 
|2006                        |  |                     |     | 2.5  | 
|2007                        |  |                     |     | 1.9  | 
|Thereafter                  |  |                     |     | 4.5  | 
|                            |  |                    
|                            |  |                     | $   | 24.2 | 
|                            |  |                    

Other commitments

In the ordinary
course of business we enter into various arrangements with vendors and other business partners for marketing, minimum revenue guarantees, bandwidth, and other services. Minimum commitments under these arrangements as of June 30, 2003 were $6.0
million for the remaining six months of the year ending December 31, 2003 and $4.3 million and $2.4 million for the years ending December 31, 2004 and 2005, respectively. In addition, we have contingent commitments with certain cable and satellite
service providers that are based on households or set-top boxes deployed. Based on current expectations, we believe that such commitments may aggregate up to approximately $3 million for the six months ending December 31, 2003 and $2 million and $1
million for the years ending December 31, 2004 and 2005, respectively.

At June 30, 2003, we had two standby letters of credit aggregating $2.0 million
that were issued to landlords at two of our leased properties in the U.S. and we had $10.0 million of marketable debt securities pledged with a bank for foreign exchange facilities.

In March 1998, we entered into a licensing and distribution agreement with Sun Microsystems, Inc. under which Sun Microsystems granted us a non-exclusive, non-transferable
license to develop and distribute products based upon Sun Microsystemss Java technology. Subsequent amendments extended the license through December 2006. As amended, the agreement requires us to make a payment of $4.0 million to Sun
Microsystems in February 2007, less any amounts previously paid for support and royalty fees, which have been nominal to date.

In connection with our
acquisition of ACTV on July 1, 2003, we assumed additional business, employment and facility obligations which approximate $8.0 million for the remainder of 2003 and $7.0 million in 2004, with facilities obligations extending on through
2016.

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 titled accumulated other comprehensive income.

24



---

##### Table of Contents

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 June 30, 2003 using a model that assumes immediate sustained parallel changes in interest rates
across the range of maturities (in thousands):

|                                      |  |                                                       |   |                                |  |                                                       |        |                                                       |   |        |  |   |       
|------------------------------------- |  | ----------------------------------------------------- | - | ------------------------------ |  | ----------------------------------------------------- | ------ | ----------------------------------------------------- | - | ------ |  | - | ------
|Issuer                                |  | Valuation of Securities if Interest Rates Decrease 1% |   | Fair Value as of June 30, 2003 |  | Valuation of Securities if Interest Rates Increase 1% |        | Valuation of Securities if Interest Rates Increase 2%
|United States government and agencies |  |                                                       | $ | 18,883                         |  | $                                                     | 18,775 |                                                       | $ | 18,561 |  | $ | 18,403
|Corporate notes and bonds             |  |                                                       |   | 13,093                         |  |                                                       | 13,026 |                                                       |   | 12,951 |  |   | 12,881
|Certificates of deposit               |  |                                                       |   | 2,030                          |  |                                                       | 2,000  |                                                       |   | 1,961  |  |   | 1,915 
|                                      |  |                                                       |   |                                |  |                                                       |       
|                                      |  |                                                       | $ | 34,006                         |  | $                                                     | 33,801 |                                                       | $ | 33,473 |  | $ | 33,199
|                                      |  |                                                       |   |                                |  |                                                       |       

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. Our functional currencies are generally the local currencies of the countries in which we have business units. We incur a substantial majority of our expenses, and earn most of our revenues, in United States dollars. 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

25



---

##### Table of Contents

treatment under Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities.

We regularly assess foreign currency exchange rate risk that results from our global operations. We did not use foreign currency forward exchange contracts in hedging
foreign currency exposures during the six months ended June 30, 2003. There were no foreign exchange forward contracts or other procedures implemented to hedge foreign currency exposures outstanding as of June 30, 2003.

ITEM 4.  CONTROLS AND PROCEDURES

In accordance with Exchange Act Rules 13a-15 and 15d-15,
we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2003 to provide reasonable assurance that
information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and
forms.

There has been no change in our internal controls over financial reporting that occurred during the three months ended
June 30, 2003 that has materially affected, or is reasonably likely to materially affect our internal controls over financial reporting.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In re OpenTV Corp. Initial Public Offering Securities
Litigation, Civil Action No. 01-CV-7032. In July 2001, the first of a series of putative securities class actions, Brody v. OpenTV Corp., et al., Civil Action No. 01-CV-7032, was filed in 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. These lawsuits were consolidated and are captioned In re OpenTV Corp. Initial Public Offering
Securities Litigation, Civil Action No. 01-CV-7032. The complaints allege undisclosed and improper practices concerning the allocation of our initial public offering shares, in violation of the federal securities laws, and seek unspecified damages
on behalf of persons who purchased OpenTV Class A ordinary shares during the period from November 23, 1999 through December 6, 2000. The Court has appointed a lead plaintiff for the consolidated cases. On April 19, 2002, the plaintiffs filed an
amended complaint. Other actions have been filed making similar allegations regarding the initial public offerings of more than 300 other companies, including Wink Communications as discussed in greater detail below. All of these lawsuits have been
coordinated for pretrial purposes as In re Initial Public Offering Securities Litigation, Civil Action No. 21-MC-92. Defendants in these cases have filed omnibus motions to dismiss on common pleading issues. Oral arguments on these omnibus motions
to dismiss were held on November 1, 2002. All claims against our officers and directors have been dismissed without prejudice in this litigation. On February 19, 2003, the Court denied in part and granted in part the motion to dismiss filed on
behalf of defendants, including us. The Courts order dismissed all claims against us except for a claim brought under Section 11 of the Securities Act of 1933. However, the Court has given plaintiffs an opportunity to amend their claims in
order to state a claim.

A proposal has been made for the settlement and release of claims against the issuer defendants,
including us, in exchange for a guaranteed recovery to be paid by the insurance carriers of the issuer defendants and an assignment of certain claims. The settlement is subject to a number of conditions,

26



---

##### Table of Contents

including approval of the proposed settling parties and the Court. If the settlement does not occur, and the litigation against us continues, we believe that we have meritorious
defenses to the claims asserted against us and will defend ourselves vigorously.

No provision has been made in our condensed
consolidated financial statements for this matter. We are unable to predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

In re Wink Communications, Inc. Initial Public Offering Securities Litigation, Civil Action No. 01-Civ. 10638(SAS). In November 2001, the
first of a series of putative securities class actions, Collegeware v. Wink Communications, Inc., et al., was filed in United States District Court for the Southern District of New York against certain investment banks which acted as underwriters
for the initial public offering of our wholly-owned subsidiary, Wink Communications, Inc., Wink Communications, and two of Wink Communications officers and directors. These lawsuits are captioned In re Wink Communications, Inc. Initial Public
Offering Securities Litigation, Civil Action No. 01-Civ. 10638 (SAS). The complaints allege undisclosed and improper practices concerning the allocation of Wink Communications initial public offering shares, in violation of the federal
securities laws, and seek unspecified damages on behalf of persons who purchased Wink Communications common stock during the period from August 19, 1999 through December 6, 2000. On April 19, 2002, the plaintiffs filed an amended complaint.
This action is among the over 300 lawsuits that have been consolidated for pretrial purposes as In re Initial Public Offering Securities Litigation, Civil Action No. 21- MC-92. Defendants in these cases have filed motions to dismiss on common
pleading issues. Oral arguments on these omnibus motions to dismiss were held on November 1, 2002. On February 19, 2003, the Court ruled on the motions to dismiss. The Court denied the motions to dismiss claims against Wink Communications and the
individual defendants under Sections 11 and 15 of the Securities Act of 1933. The Court granted the motion to dismiss the claims under Section 10(b) of the Securities Exchange Act of 1934 against Wink Communications and one individual defendant, and
denied that motion against the other individual defendant and 59 individual defendants in the related cases, on the basis that the respective amended complaints alleged that the individuals sold stock. The Court granted the motion to dismiss the
claims under Section 20(a) of the Securities Exchange Act of 1934.

As described above, a proposal has been made for the
settlement and release of claims against the issuer defendants, including Wink Communications, in exchange for a guaranteed recovery to be paid by the insurance carriers of the issuer defendants and an assignment of certain claims. The settlement is
subject to a number of conditions, including approval of the proposed settling parties and the Court. If the settlement does not occur, and the litigation against Wink Communications continues, we believe that Wink Communications has meritorious
defenses to the claims brought against it and that Wink Communications will defend itself vigorously.

No provision has been
made in our condensed consolidated financial statements for this matter. We are unable to predict the likelihood of an unfavorable outcome or estimate our potential liability, if any.

Arbitration Demand from Thomas Weisel Partners LLC. On March 3, 2003, Thomas Weisel Partners LLC filed a demand for arbitration against our
subsidiary, OpenTV, Inc., asserting claims for breach of contract and other legal and equitable claims arising from the acquisition of Wink Communications by OpenTV U.S. Holdings, Inc., another one of our subsidiaries. The arbitration, styled Thomas
Weisel Partners LLC v. OpenTV, Inc., was submitted to a JAMS Alternative Dispute Resolution forum in San Francisco, California. The demand alleged that OpenTV, Inc., failed to pay Thomas Weisel Partners LLC $1,903,624 upon the acquisition of Wink
Communications as required by the terms of a letter agreement between the parties, and sought undisclosed damages.

In the second
quarter of 2003, OpenTV, Inc. reached a settlement in principle with Thomas Weisel Partners LLC and we recorded $925,000 million in our condensed consolidated financial statements for

27



---

##### Table of Contents

settlement expense in connection therewith. OpenTV, Inc. entered into a definitive Settlement Agreement with Thomas Weisel Partners LLC in July 2003 and made the $925,000 settlement
payment to Thomas Weisel Partners LLC in August 2003, following which Thomas Weisel Partners LLC submitted a dismissal of its claims with prejudice.

James Brown v. OpenTV, Inc., Case No.CV815906.On April 1, 2003, James Brown, a former executive officer of OpenTV, filed a lawsuit in
the Superior Court of the State of California, County of Santa Clara, against OpenTV, Inc. in connection with the termination of his employment with OpenTV, Inc. in January 2003. The lawsuit alleged, among other things, breach of contract, breach of
the covenant of good faith and fair dealing, failure to pay wages, wrongful termination in violation of public policy and the intentional infliction of emotional distress.

On June 16, 2003, Mr. Brown filed with the Court a request for dismissal of his complaint without prejudice and the Court entered the dismissal as
requested.

We believe that OpenTV, Inc. has meritorious defenses to the claims brought against it by Mr. Brown in his original
complaint and that OpenTV, Inc. would defend itself vigorously in the event that Mr. Brown were further to pursue this matter. No provision has been made in our condensed consolidated financial statements for this matter. We are unable to predict
the likelihood of an unfavorable outcome or estimate our potential liability, if any.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

Not
applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

OpenTV Corp. held an annual
meeting of security holders on June 3, 2003. Holders of 41,605,203 OpenTV Corp. Class A ordinary shares and 30,631,746 OpenTV Corp. Class B ordinary shares outstanding as of the close of business on May 14, 2003, the record date for the annual
meeting, were entitled to vote at the annual meeting. Such holders were entitled to one vote for each Class A ordinary share held as of the record date and ten votes for each Class B ordinary share held as of the record date with respect to each
proposal submitted for consideration by security holders at the annual meeting. The following matters were submitted for consideration by security holders at the annual meeting with the results of voting indicated:

| |    |                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------
| | 1. | To approve the issuance of OpenTV Corp.s Class A ordinary shares in connection with its acquisition of ACTV, Inc.



|            |  |                        |  |                 |  |                 
|----------- |  | ---------------------- |  | --------------- |  | ----------------
|Votes For   |  | Votes Against/Withheld |  | Votes Abstained |  | Broker Non-Votes
|315,594,689 |  | 167,843                |  | 25,566          |  | 13,965,034      

| |    |                                                               
| | -- | --------------------------------------------------------------
| | 2. | Election of the following persons as directors of OpenTV Corp.

|                    |           |             |                |        | 
|------------------- | --------- | ----------- | -------------- | ------ | 
|                    | Votes For |             | Votes Withheld |       
|James J. Ackerman   |           | 329,656,677 |                | 96,455 | 
|Robert R. Bennett   |           | 329,673,447 |                | 79,685 | 
|Peter C. Boylan III |           | 329,671,964 |                | 81,168 | 
|J. Timothy Bryan    |           | 329,665,500 |                | 87,632 | 
|J. David Wargo      |           | 329,672,979 |                | 80,153 | 
|Anthony G. Werner   |           | 329,966,193 |                | 86,939 | 

| |    |                                                 
| | -- | ------------------------------------------------
| | 3. | To approve the OpenTV Corp. 2003 Incentive Plan.



|            |  |                        |  |                 |  |                 
|----------- |  | ---------------------- |  | --------------- |  | ----------------
|Votes For   |  | Votes Against/Withheld |  | Votes Abstained |  | Broker Non-Votes
|315,459,044 |  | 293,206                |  | 35,848          |  | 13,965,034      

| |    |                                                                                                                            
| | -- | ---------------------------------------------------------------------------------------------------------------------------
| | 4. | Ratification of the appointment of KPMG LLP as independent auditors for OpenTV Corp. for the year ending December 31, 2003.

28



---

##### Table of Contents

|            |  |                        |  |                 | 
|----------- |  | ---------------------- |  | --------------- | 
|Votes For   |  | Votes Against/Withheld |  | Votes Abstained | 
|329,633,936 |  | 84,412                 |  | 34,784          | 

No other matters were submitted to security holders for a
vote.

ITEM 5.  OTHER INFORMATION

Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits:

| |                |  |            
| | -------------- |  | -----------
| |                |  |            
| | Exhibit Number |  | Description

| |      |  |                                          
| | ---- |  | -----------------------------------------
| |      |  |                                          
| | 3(i) |  | Memorandum of Association of OpenTV Corp.

| |       |  |                                        
| | ----- |  | ---------------------------------------
| |       |  |                                        
| | 3(ii) |  | Articles of Association of OpenTV Corp.

| |   |  |                                                                 
| | - |  | ----------------------------------------------------------------
| |   |  |                                                                 
| | 4 |  | Specimen Certificate for Class A ordinary shares of OpenTV Corp.

| |      |  |                                 
| | ---- |  | --------------------------------
| |      |  |                                 
| | 10.1 |  | OpenTV Corp. 2003 Incentive Plan

| |      |  |                                                                                                                                                
| | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
| |      |  |                                                                                                                                                
| | 31.1 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by James J. Ackerman, Chief Executive Officer of OpenTV Corp.

| |      |  |                                                                                                                                             
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------
| |      |  |                                                                                                                                             
| | 31.2 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Craig M. Waggy, Chief Financial Officer of OpenTV Corp.

| |      |  |                                                                                                                                                                                               
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |  |                                                                                                                                                                                               
| | 32.1 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by James J. Ackerman, Chief Executive Officer of OpenTV Corp.

| |      |  |                                                                                                                                                                                            
| | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |  |                                                                                                                                                                                            
| | 32.2 |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Craig M. Waggy, Chief Financial Officer of OpenTV Corp.

(b)   Reports on Form 8-K filed during the quarter ended June 30, 2003:

|                        |  |                 |  |                            | 
|----------------------- |  | --------------- |  | -------------------------- | 
|Date Filed or Furnished |  | Item Reported   |  | Financial Statements Filed | 
|April 1, 2003           |  | Items 9 and 12* |  | None.                      | 
|                        |  |                 |  |                            | 
|April 21, 2003          |  | Items 9 and 12* |  | Yes.                       | 
|                        |  |                 |  |                            | 
|May 19, 2003            |  | Items 9 and 12* |  | Yes.                       | 

29



---

##### Table of Contents

*     These Reports on Form 8-K were furnished to the Securities and Exchange Commission, and are not to be deemed (1) filed for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or (2) incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.

30



---

##### Table of Contents

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: August 14, 2003 | By:          | /s/   CRAIG M. WAGGY   
|                      |              |                        
|                      |              | Craig M. Waggy         
|                      |              | Chief Financial Officer

31



---

##### Table of Contents

EXHIBIT INDEX

|ExhibitNumber |  | Description                                                                                                                                                                                   
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |  |                                                                                                                                                                                               
|3(i)(a)       |  | Memorandum of Association of OpenTV Corp.                                                                                                                                                     
|              |  |                                                                                                                                                                                               
|3(ii)(b)      |  | Articles of Association of OpenTV Corp.                                                                                                                                                       
|              |  |                                                                                                                                                                                               
|4(c)          |  | Specimen Certificate for Class A ordinary shares of OpenTV Corp.                                                                                                                              
|              |  |                                                                                                                                                                                               
|10(d)         |  | OpenTV Corp. 2003 Incentive Plan                                                                                                                                                              
|              |  |                                                                                                                                                                                               
|31.1(e)       |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by James J. Ackerman, Chief Executive Officer of OpenTV Corp.                                               
|              |  |                                                                                                                                                                                               
|31.2(e)       |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, executed by Craig M. Waggy, Chief Financial Officer of OpenTV Corp.                                                  
|              |  |                                                                                                                                                                                               
|32.1(e)       |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by James J. Ackerman, Chief Executive Officer of OpenTV
Corp.
|              |  |                                                                                                                                                                                               
|32.2(e)       |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Craig M. Waggy, Chief Financial Officer of OpenTV
Corp.   



---



|    |                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Incorporated by reference to Exhibit 3.1 to OpenTV Corp.s Registration Statement on Form F-1 as amended (Registration No. 333-89609), which the Securities and Exchange Commission declared effective on November
23, 1999.

|    |                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Incorporated by reference to Exhibit 3(ii) to OpenTV Corp.s Quarterly Report on Form 10-Q, as filed with the Securities and Exchange Commission on November 11, 2002.

|    |                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | Incorporated by reference to Exhibit 4.1 to OpenTV Corp.s Registration Statement on Form F-1 as amended (Registration No. 333-89609), which the Securities and Exchange Commission declared effective on
November 23, 1999.

|    |                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | Incorporated by reference to Exhibit 10.32 to Amendment No. 1 to the Registration Statement on Form S-4 of OpenTV Corp. (Registration No. 333-102944), as filed with the Securities and Exchange Commission on April
25, 2003

|    |                
|--- | ---------------
|(e) | Filed herewith.