DG Systems and Microsoft Collaborate On CoolCast; Video on Demand, TV Over IP and PPV Demonstrated at Supercomm 2002.

Business Editors/High-Tech Writers

SUPERCOMM 2002

DALLAS--(BUSINESS WIRE)--June 6, 2002

DG Systems, Inc. (Nasdaq: DGIT) announced today that its CoolCast(R) division is demonstrating its newest service, CoolCast TV, in the DSL Forum Booth at Supercomm 2002, June 4-6 at the Georgia World Congress Center in Atlanta.

CoolCast TV is based on technology jointly developed in CoolCast labs and in Microsoft's Media & Entertainment Solutions Group. This media over IP system offers broadband service providers the option of providing its high speed Internet subscribers a multi-channel, premium digital quality video service on their televisions as well as on their PCs from a single infrastructure. Broadband subscribers will soon be able to view both live and "on demand" streaming media in a traditional format on their televisions or, for a more interactive, multimedia experience, on their PCs.

"The ability to offer multiple streaming media services from a single infrastructure platform provides a number of compelling value propositions for both broadband service providers and media companies. Both need to develop new sales channels with broadband consumers and CoolCast technology provides a clear means to do so," said Ryland Reed, Director of Business Development for CoolCast.

"The combined solution represented by CoolCast TV from Microsoft and DG Systems represents an outstanding opportunity for broadband service providers around the world. This end-to-end solution allows service providers to offer their customers premium streaming media services like VOD, TV over IP, and PPV special events, in a manner that is profitable and consistent with existing business practices for both service providers and media companies," said Mark Kapczynski, Principal, MCS, Media & Entertainment Solutions Group.

"We've long believed in Microsoft's ability to seriously influence the broadcast industry with its commitment to Windows Media technology. We are working closely with Microsoft's Media & Entertainment Solutions Group to finalize a more formal relationship so that we can jointly deliver compelling, streaming media services to broadband service providers throughout the world," said Jeff Dankworth, President of DG's StarGuide and CoolCast subsidiaries.

About CoolCast Technology

CoolCast(R) (www.coolcast.com), a division of DG Systems, is a patented Internet broadcasting platform that aggregates and delivers live and pre-recorded, digital-quality, video & audio programming to broadband subscribers. CoolCast delivers branded media and entertainment from both well known and niche content providers directly to broadband service provider distribution nodes at the edge of access networks. This eliminates all of the issues typically associated with delivering streaming media to edge nodes via terrestrial. In addition, CoolCast uses Windows Media technology, the highest quality compression at any bandwidth, more than twice as efficient as MPEG2, allowing for more streams through any pipe, all the while offering proven, second-generation digital rights management and encryption of the content itself. When Windows Media is combined with the CoolCast IP Broadcasting technology, there simply is no better IP distribution system available to deliver security, scalability, quality and profitability.

The CoolCast technology is patented under U.S. Patent Nos. 6,101,180, 6,226,339, and 6,262,982 and Australian Patent 727,421. The technology also is the subject of patents pending in Japan and elsewhere.

About DG Systems, Inc.

DG Systems and the Company's StarGuide division provide the standard in Digital Media Exchange services for the advertising and broadcast industries, featuring innovative satellite and Internet transmission technology solutions and a suite of digital media asset management tools. DG's extensive industry network is the largest in the advertising and broadcasting industries, reaching more than 5,000 advertisers and agencies, 7,500 radio stations, and nearly 900 television broadcast facilities with innovative delivery and management solutions for short- and long-form audio and video content. More information is available at www.dgsystems.com.

This release contains forward-looking statements relating to the company, including the expansion of its digital distribution network, and the demand among certain clients for digital audio and video delivery services. These forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to DG Systems' business are set forth in the company's Form 10-K filed with the Securities and Exchange Commission on March 28, 2002.

About Microsoft

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and Internet technologies for personal and business computing. The company offers a wide range of products and services designed to empower people through great software -- any time, any place and on any device.

Microsoft, MSN, Windows, Hotmail and Outlook are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.