DVS Licenses DVD Technology to Zoran; "Win Win" Deal Lets DVS Leverage Its Technology, Strengthen Marketplace Ties.

LOS GATOS, Calif.--(BUSINESS WIRE)--July 30, 1998--Digital Video Systems, Inc. (NASDAQ:DVID) has entered into a licensing agreement with Zoran Corporation (NASDAQ:ZRAN) to share its DVD (Digital Video/Versatile Disc) player technology.

"To maintain a competitive presence in today's global marketplace, companies are increasingly sharing information and ideas," said Edward Miller, Chief Executive Officer of Digital Video Systems. "This agreement with Zoran Corporation is a striking example of how this process can work to the mutual benefit of both companies. Zoran gets the missing pieces it needs to create DVD players, and DVS in turn gets additional funding to support the production of DVD ROMs and players which incorporate DVS' technology. It's a win-win situation for everyone and we look forward to establishing other mutually beneficial licensing efforts in the future."

In the agreement, Zoran acquires license rights to all DVD player technology co-developed by Zoran and DVS. With thelicense, Zoran will be able to offer complete DVD solutions to OEM's who manufacture and market DVD players, greatly simplifying the design cycle. By combining the DVS Intelligent Loader drive with the Zoran MPEG-2 video and Dolby Digital solution, all the necessary components will be available for DVD player OEMs. This includes the DVD player operating systems as well as hardware designs (featuring Zoran's Vaddis series of MPEG-2 video and Dolby Digital decoder chips).

Zoran is a leading supplier of MPEG based integrated circuits, IC cores and software for digital video and audio applications, enabled by compression, for the PC and consumer multimedia markets. Digital Video Systems currently designs, manufactures and distributes a line of DVD-ROM drives through its wholly-owned subsidiary, DVS Korea Co., Ltd.

About DVS

Digital Video Systems is a DVD technology based company that develops and markets DVD-ROM drives, DVD players including subassemblies and components, Video on Demand Network products, CD based Video Engine products, and MPEG encoding and authoring products, for the consumer products, commercial video and computer peripherals markets, also under development are the DVD Intelligent Loader and the DVD Video Engine. Established in 1992, DVS is a publicly held company based in Los Gatos, California, with a branch office in Taipei and subsidiaries in Hong Kong, South Korea and Panyu Municipality, Guangdong Province, China. DVS recently acquired the DVD-ROM manufacturing capabilities and technology from Hyundai Electronics Industries Company, Ltd. DVS recently formed two wholly owned subsidiaries, DVS-Korea and DVS-Bermuda, to manage the new DVD-ROM manufacturing, technology and European sales. DVS is a trademark of Digital Video Systems, Inc.

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the private Securities Litigation Reform Act of 1995 that involve various risks and uncertainties, including, without limitation, statements with respect to DVS's strategy, proposed sales of DVS's products, markets, and the development of DVS's products. DVS's actual results may differ materially from those described in those forward-looking statements due to a number of factors, including, but not limited to, the risks of competition and the enforceability of the Company's intellectual property rights, risks relating to the development and market acceptance of other products of DVS risks relating to the planned expansion of the business of DVS and the conduct of business by DVS in foreign countries, which factors and others described in documents that DVS files from time to time with the Securities and Exchange Commission, including its Current Report on Form 10-K dated July 14, 1998.

    CONTACT: Digital Video Systems, Inc.
              John Smuda (CFO), 408/874-8226
              [e-mail]