XBOX REDUCES EUROPEAN PRICE TO €299/£199

LONDON, 18th April 2002 - Microsoft today announced that the European price
of its Xbox video game system will be reduced to an estimated street price of
€299/£199, effective from 26th April 2002.

“We are making a clear statement today - we mean business in Europe,” said
Sandy Duncan, Vice President, Xbox Europe. “The phenomenally positive response
to Xbox through reviews, awards and game sales has demonstrated that consumers
love Xbox. We want to make sure that price is not the obstacle to the Xbox
experience.”

A similar price reduction was also announced in Australia bringing the price
of the system there to A$399.00.

Since its debut Xbox has been identified in head-to-head comparisons by game
enthusiasts as the best gaming experience available. Xbox enjoys one of the
highest attach rates of any video game console - the attach rate in the UK was
2.8 after two weeks on the market according to ChartTrack. In the US, according
to NPDFunworldSM, the definitive source for toy and video games industry sales
data, attach rate is 3.9, the highest of any next generation console after four
months in the market.

In less than five months since its original debut in America, more than 20
games have already sold over 100,000 units each world-wide. Halo alone has
already sold more than one million units world-wide, with the distinction of
having achieved that mark faster than any other next generation game. It has
also garnered some of the strongest European reviews ever for a video game, with
publications like Edge calling it “the most important launch game for any
console ever.” With this price reduction, Microsoft makes Xbox the clear choice
for all customers.

“This is a long-term, strategic move that will benefit our retail partners,
our third-party publishing partners and ultimately the gamer,” said Duncan.
“Xbox has always been amazing value for money, and now it is even more so - we
are providing the right console at the right price. The most powerful video game
system on earth, and the only one with a built-in hard drive and broadband
adapter, is now without a doubt the best value available. The playing field in
Europe has been levelled, making it even easier for customers to enjoy the power
of Xbox.”

“Xbox enjoyed a great launch in Europe - fantastic product and fantastic
games,” said David Gardner, VP, Electronic Arts. “It’s great they’re making a
move that will enable more customers to enjoy Xbox. Plus, this is great for
publishers as our games, such as FIFA World Cup 2002 and the Xbox-exclusive
Buffy the Vampire Slayer, now have the potential to reach an even wider audience
in Europe.”

“This is a great move for Xbox,” said Lisa Morgan, Commercial Director, The
GAME Group plc. “Xbox sales have been good but now there’s an even greater sales
potential for us. We will benefit from increased hardware sales, which in turn
results in increased peripheral and games sales. Feedback from our customers on
Xbox has been extremely positive - if there has been one limiting factor it has
been price. We’re glad Microsoft has made an aggressive move to remove the price
barrier and put this fantastic console into more European homes in a quicker
timeframe. This is going to benefit the industry as well as customers.”

Customers who have already purchased an Xbox at the original price will be
rewarded for their early adoption with a special thank-you package. Details are
posted on

www.xbox.com/uk.

Xbox (http://www.xbox.com/)
is Microsoft’s future-generation video game system that delivers never before
seen gameplay experiences. With more than three times the graphics performance
of the latest generation of game consoles, Xbox empowers game designers with the
technology to realise their vision of great games that are challenging,
exhilarating and fun. Xbox is now available in Europe for an estimated street
price of €479/£299 (€299/£199 from 26th April).