Nelvana Launches New Media Division To Lead Companys Development Of Interactive Products For Internet

Market Wire, March, 2000

NELVANA Limited (Nelvana) (TSE:NTV) today announced the launch of Nelvana New Media, a strategic new division which will focus on developing new applications, products and delivery channels for Nelvanas valuable character portfolio.

Nelvana New Media will create an entertaining childrens web destination and produce interactive games based upon the Companys rapidly growing family of classic and contemporary characters for both CD-ROM and Internet distribution. Nelvana New Media will explore opportunities to capitalize on the growing Internet distribution channels by seeking new methods of delivering content. Nelvana will also explore opportunities to support the tremendous merchandising potential of the Companys book-based character brands, including Franklin, Maggie and the Ferocious Beast and Rupert, to name a few.

Havas Interactive

In making the announcement, Nelvana has entered into an agreement with Havas Interactive, the worlds leading publisher of entertainment and educational software, to distribute CD-ROM titles based on Nelvanas book-based character portfolio. Nelvana New Media will create at least two CD-ROM products each year at Nelvanas Toronto production facility, to be marketed and distributed to major territories by Havas Interactive. The first two CD-ROM titles, to be based on Nelvanas popular Franklin character, will be available in time for Christmas 2000.

Our extensive character portfolio and technological capabilities put us in an excellent position to benefit from the convergence of production, distribution, broadcasting and merchandising over the Internet, says Patrick Loubert, Co-Chief Executive Officer of Nelvana Limited.

We are delighted to align ourselves with Nelvana, said Peter Doctorow, president of Knowledge Adventure . We are confident that the combination of Nelvanas popular childrens properties and our companys leadership in the interactive marketplace will result in strong retail sales for our upcoming software launches.

Nelvana New Media is an initiative that solidifies the future success of the Company, adds Michael Hirsh, Nelvana Limiteds Co-Chief Executive Officer. The new division will use its expertise to benefit from this new avenue of programming and merchandising revenue.

New General Manager

In launching Nelvana New Media, the Company has appointed Miklos Tomka as General Manager of the new operation. A former Bain & Company consultant and MBA graduate of INSEAD, Tomka has several years of strategy experience in the technology sector, including consulting to e-commerce companies. In his new position, he will be responsible for exploring, evaluating and developing new internet-based technologies, the developing relationships with advertisers, sponsors and portals and evaluating potential investment and acquisition opportunities.

Worlds First Flash Animation Production

Nelvana New Media will begin production shortly of When Quads Wont Leave, the worlds first TV series produced entirely in Macromedia Flash, the award-winning technology for animation on the Internet. The half-hour prime time Nelvana series, to be aired on Canadas Teletoon, is the creation of John Callahan, whose widely-published cartoons have garnered praise and recognition for the artists humorous and candid portrayal of his own life in a wheelchair.

Rob Burgess, President and Chief Executive Officer of San Francisco-based Macromedia, Inc. says: Our Flash technology is found in nearly 200 million computers around the world -- its the leading choice for online animated content. By creating a show in Flash, Nelvana makes a cutting edge product that can be broadcast conventionally but is also ready for web delivery. In addition to Flash tests, Nelvana New Media hopes to engage in broadband tests of its online entertainment during the second half of 2000.

Nelvana New Media has also signed an agreement for the production of its web sites and related online materials with Snap Media Corp. of Toronto. Snap is a leading web content company that creates cutting edge interactive products. Snap will provide primary design and implementation services to Nelvana for the creation of Nelvanas family Internet sites and will work with Nelvana on exciting new opportunities in interactive experiences and online distribution.

Web Site Development

Nelvana New Media expects to launch its newly-designed premiere family destination on the web in the summer of 2000. Initially, www.nelvana.com will focus on Nelvanas classic and enduring character brands, with interactive stories, games, postcards, email and other customized entertainment experiences for children and families. The site will grow to include all of Nelvanas childrens brands, from preschool to adult prime time titles and will also offer branded merchandise from Nelvanas licensees in its own online store. As a part of Nelvanas efforts to promote Franklin and Franklin at Sears, the Company is developing an online interactive childrens village featuring the popular turtle.