Phenomedia, Germany's Largest Content Provider, Contracts USA Video Interactive for Streaming Media Services.

Business/Technology Editors and Entertainment Writers

MYSTIC, Conn.--(BUSINESS WIRE)--June 1, 2001

USA Video Interactive (OTCBB: USVO; CDNX: US; www.usvo.com ) announced today that Phenomedia, Germany's largest creator of entertainment content for PC's, video game systems, the Internet, interactive television and mobile device platforms, has contracted USA Video Interactive to provide streaming media services for its customers and will start by streaming content for Phenomedia's client, Ferrero. Ferrero, a leading chocolate company in Germany, has launched a series of creative on-line games to promote its products and USVO is streaming one of the commercials embedded in these games. The contract is for three years and can be amended or cancelled on a monthly basis after a three-month minimum contract period.

"USA Video has been very attentive to our needs, we are very happy to be working with them on this project", said Bodo Thevissen, Project Manager for Phenomedia.

"We are happy to be working with international consumer products companies like Phenomedia and Ferrero," said Edwin Molina, President and CEO of USVO. "It is a great use of our streaming technologies and certainly demonstrates one of the many ways we can help our clients attract new customers by leveraging the power of the Internet."

About Phenomedia

Phenomedia of Bochum, Germany creates entertainment content for interactive television, the Internet and mobile device platforms. Phenomedia has been strengthening its role as a key supplier in the dynamically growing market of interactive entertainment through investments and acquisitions in Germany and abroad, and was the first publicly traded entertainment software company on the Neuer Exchange (symbol: PNM).

Phenomedia also created the Moorhuhn online games championships, which have attracted hundreds of thousands of players from throughout Europe. The championship solidified Phenomedia's role in designing extremely entertaining games as highly effective promotional tools. Another example is the world smash hit, Catch the Sperm, which can be downloaded from www.catchthesperm.com. Phenomedia recently co-founded MobileScopeAG in Dusseldorf to develop software - and game software in particular - for mobile devices. Some of Phenomedia's other clients include Deutsche Telekom, Mercedes-Benz, Panasonic, Sony Music Publishing, and RTL New Media. Phenomedia's website is located at www.phenomedia.com.

About USA Video Interactive

USA Video Interactive is an international designer and supplier of high-tech Internet streaming video and video-on-demand systems, services and innovative end-to-end solutions. Its StreamHQ(TM) media delivery services are focused on creating revenues for customers and reducing their Internet costs. StreamHQ(TM) encompasses the entire media experience from source to viewing, including content production; content encoding; asset management; media and application hosting; multi-mode content distribution; and transaction data capture, reporting and analysis. StreamHQ(TM)'s design leverages the capabilities of the Internet while bypassing its latencies, with high availability, reliability, flexibility, scalability and cost-effectiveness. USVO holds the pioneering patent for store-and-forward video, filed in 1990 and issued by the United States Patent and Trademark Office on July 14, 1992. It has been cited by at least 145 other patents. USVO holds similar patents in England, France, Spain, Italy and Germany, and has patents pending in Canada and Japan. The USVO patented video technology gives users full-motion video; the flexibility of standard, VCR-like controls; and the convenience of a standard internet-browser format for access. It provides video images significantly faster and at a higher degree of resolution than with previously available methods; significantly overcomes bandwidth restrictions; and eliminates the blockiness and slowness of current technologies. USVO is developing patented Wavelet compression technology that will further enhance the company's ability to deliver unique capabilities as part of StreamHQ(TM). For more information, visit www.usvo.com

USA Video Interactive Corporate Headquarters Office: 70 Essex Street; Mystic, CT 06355; [phone]; [phone]. Canada Office: 837 West Hastings Street; Suite #507; Vancouver, B.C. V6C 3N6. Trading symbol on the OTCBB: USVO; Trading symbol on The Canadian Venture Exchange: US. Standard & Poors Listed. CUSIP 902924208. The Canadian Venture Exchange (CDNX) has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. For more information contact: Tony Castagno, Media Relations, 860-572-1560; Kevin Yorio, Investor Relations, 860-572-1560; [e-mail]

This press release may contain forward-looking statements. Actual results may differ materially from those projected in any forward-looking statement. Investors are cautioned that such forward-looking statements involve risk and uncertainties, which may cause actual results to differ from those described.