PROBLEMS AT ACCLAIM
March 17, 2000

Acclaim Entertainment announced today that it expects net revenue and earnings for the second quarter ending February 29, 2000 and for fiscal year 2000 will fall below analysts' expectations. The Company anticipates reporting results for the fiscal second quarter during the second week of April.

The Company stated that due to the slowdown in the rate of sales growth of the main hardware consoles, the previous strategy emphasizing on Nintendo software and a decrease in sales of its video game software, net revenues for the quarter will fall below last year's comparable period. At the same time the Company's commitment to producing software for all of the next generation consoles has increased current research and development spending by 35%. The combination of these factors are anticipated to result in a loss for the quarter of approximately $20 million, and for the year, net revenues are forecast to be approximately 30% below fiscal 1999 net revenues resulting in a net loss of approximately $50 million.

"Our industry is in the midst of a major transition, as manufacturers, retailers, and game players await the next generation of powerful new video game consoles," said Gregory Fischbach, Co-Chairman and CEO of Acclaim. "Although the effects of this transition are being felt throughout the industry, Acclaim has been particularly affected, due to our prior emphasis on the Nintendo 64 platform. Product demand has declined in our first two fiscal quarters, and we do not expect a rebound until the fall, when Sony releases its Playstation 2 console. Significant levels of sales for this and other new consoles are at least six months away, and we will not see the benefits for another nine to twelve months after those sales begin.

"We are also feeling the impact of discounting at retail outlets and lower inventory targets for current products, and we are incurring a substantial increase in research and development investment in building new engines and tools. We intend to be ready with games for all current and future major video game consoles, including Sony's PlayStation 2, Nintendo's Dolphin, and Microsoft's recently-announced X-Box. As a result, our research and development budget for fiscal 2000 is up by more than 50% as compared to last year.

"This transition has created serious challenges, but we are taking aggressive steps to meet them and to build our business for the long term. We have begun a complete review of expenses, to ensure that overall expense levels remain consistent with revenue levels.

"We have the financial resources to continue to build for the long term. Acclaim has a number of strong brands, as well as a structure to develop new brands through increased responsiveness to consumer preferences. In short, while we face near-term difficulties, we are positive about our long term outlook. We join consumers and retailers in eagerly awaiting the next generation of video game consoles and software and intend to be a major player in this important growth arena."