Accretive Acquisition Bolsters Client Roster and Enhances Company’s Microsoft Silverlight Capabilities

DUBAI, UNITED ARAB EMIRATES and LONDON — April 8, 2009 — KIT digital, Inc. (OTC BB:KDGL.OB - News), a leading global provider of Internet Protocol-based video enablement technologies, has acquired the assets and assumed certain current liabilities of London-based Narrowstep, Inc., an Internet TV platform company supporting content providers, broadcasters, telcos and other corporations. The acquisition expands KIT digital’s client delivery capabilities — particularly in live-streaming, long-form delivery and delivery using the Microsoft Silverlight technology.

Narrowstep’s proprietary telvOS Internet TV platform specializes in long-form video-on-demand and live streaming for enterprise customers, using Silverlight and its own content delivery network services. KIT digital management estimates Narrowstep’s current, recurring revenues to be approximately $110,000 per month. The acquisition is expected to be immediately accretive and pro forma cash flow positive based on synergies in G&A and variable costs. The transaction includes a transition of Narrowstep’s client relationships to KIT digital, including The Outdoor Channel, The Paralympics, BBVA, and the Red Cross. As part of the transaction, KIT digital will also acquire and integrate Narrowstep’s reseller relationships which include Can Communicate, a UK-based digital agency specializing in creating brand generated content, and Vivocom, a leading provider of IPTV technology and production services based in Spain.

Under the terms of the agreement, KIT digital acquires 100% of Narrowstep’s operating assets and assumes current liabilities in exchange for 25,000 shares of restricted KIT digital common stock. Concurrently with the closing, Granahan McCourt Capital, LLC, a shareholder of Narrowstep, will lend $350,000 to KIT digital in the form of an interest-free convertible note, which will be used to cover technical and operational restructuring charges incurred in the acquisition.

Kaleil Isaza Tuzman, chairman and chief executive officer of KIT digital, said, “The acquisition and integration of Narrowstep expands our IPTV delivery capabilities in a couple of key areas, while delivering an immediate financial contribution without consuming net cash. This further solidifies our position as the leader in the IP-based video platform marketplace, as measured by revenues, operating cash flow, geographic scope, and product suite capabilities. Narrowstep’s roster of enterprise customers and the expertise and capabilities of the Narrowstep team are a welcome addition to the KIT family.”

David C. McCourt, managing principal of Granahan McCourt Capital, LLC, commented, “Granahan McCourt is very supportive of this transaction, and we are happy to be providing low-cost transition financing so that KIT digital can continue to support Narrowstep’s customers and employees through the period of integration between the businesses. Both parties thought it important that KIT digital was provided a small cash cushion in the deal, to effectively transition over Narrowstep’s assets, customers and employees.”

“KIT digital has emerged as the leader in our industry and is the right home for the Narrowstep assets,” added Ellyn Ito, chief administrative officer of Granahan McCourt and restructuring advisor to Narrowstep. “We appreciate KIT’s discipline around cash flow, and believe that the synergies between the two businesses creates additional value in the market and affords the best opportunity for Narrowstep’s shareholders, customers and employees.”

In the context of the transaction, the companies will consolidate staff locations in London and New York.
The transaction has been approved by the board and expects approval from a majority of the shareholders of Narrowstep.

KIT digital’s management team will provide further details of the Narrowstep acquisition on the company’s fourth quarter and year-end 2008 earnings results conference call scheduled for today, Wednesday, April 8, 2009 at 10:30 a.m. Eastern time.

About Narrowstep
Narrowstep, Inc. is a provider of Internet TV services supporting content providers, broadcasters and telecommunications companies. Narrowstep’s proprietary technology platform delivers a TV-like experience available on the Internet. A pioneer in delivering Internet TV, Narrowstep offers the expertise and technology to move, manage and monetize video content across the Internet. Founded in 2002, with over 6 years of experience and industry knowledge, Narrowstep offers the flexibility to provide video capabilities to companies wanting to broadcast to anyone, any place and any time. Narrowstep’s telvOS(TM) suite is the only IPTV platform that can deliver to viewers long-form, full screen programming of true TV-like viewing experience over the Internet. For additional information, please visit http://www.narrowstep.com/.

About KIT digital
KIT digital, Inc. (OTC BB:KDGL.OB - News) is a leading, global provider of proprietary IP-based video enablement technologies and video-centric interactive marketing solutions. Through its end-to-end platform, KIT digital works closely with consumer brands, content providers and telcos to maximize the value of video content via the Internet, mobile networks and IPTV set-top boxes. The KIT VX platform allows clients to publish, manage and distribute digital video content, build online/mobile communities and integrate advertising. KIT offers businesses a full range of interactive marketing solutions and KIT clients can access approximately 100 KIT-syndicated channels and 40,000 KIT-syndicated videos. KIT digital clients include ABC Disney, Associated Press, General Motors, IMG, Kmart, NASDAQ, News Corp, RCS, Telefonica and Verizon. KIT digital has principal offices in Dubai, Melbourne (Australia), Prague, Toronto, New York and London. For additional information, please visit www.kitd.com.

Forward-Looking Statements
This press release contains certain “forward-looking statements” related to the businesses of KIT digital, Inc. which can be identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, including uncertainties relating to product development and commercialization, the ability to obtain or maintain patent and other proprietary intellectual property protection, market acceptance, future capital requirements, regulatory actions or delays, competition in general and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our public filings with the U.S. Securities and Exchange Commission. KIT digital, Inc. is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.