Recent Acquisitions Put HandHeld Entertainment One Year Ahead of Plan by Attracting 5.5 Million Unique Visitors to Network of Web Sites in December

HandHeld Entertainment surpasses traffic goals announced during November 14, 2006 investor conference call; company also announces that it is on track to achieve other goals stated in the call

“We said we would attract three to five million visitors to our Web sites by the end of 2007 and we accomplished that goal by the end of 2006,” said Jeff Oscodar, president and chief executive officer of HandHeld Entertainment™ (NASDAQ: ZVUE, ZVUEW). “In December, our network of Web sites was viewed by more than 5.5 million unique visitors. We established that goal for the company during our November 14 investor call, but with our mid-December acquisition of YourDailyMedia.com we have already hit that milestone a full year ahead of schedule.”

HandHeld Entertainment announced on December 18 that it had acquired YourDailyMedia.com™ for $1.06 million ($200,000 in cash payable in January 2007, $60,000 in cash payable during the next 12 months and a five-year $800,000 note which can be converted into 186,306 shares of HandHeld Entertainment’s common stock).

“During a five-week period from November through the middle of December, HandHeld Entertainment acquired three leading Web site properties focused on delivering funny and humorous videos and other forms of media,” Oscodar said. “In combination, these three sites – YourDailyMedia.com, Dorks.com™ and FunMansion.com™, along with the Free STUFF! section of ZVUE.com™ and ZVUE.com – attracted more than 5.5 million unique visitors in December. We now have a solid foundation in the comedy space, a foundation that makes HandHeld Entertainment’s online comedy network one of the largest in the world in terms of unique visitors and page views.

“We have more than 11,000 downloadable videos available on our network of Web sites, including more than 6,000 free user-generated videos and nearly 5,000 additional premium videos available on ZVUE.com. That, plus more than 7,000 additional premium video selections under contract, gives us a significant online library of downloadable and streaming videos available for free or for sale. These videos are not limited to PC viewing; they can also be downloaded and viewed on many portable devices, such as our own ZVUE™ personal media players, as well as on portable media players supporting (with Windows Media Player 10) or a portable device running Windows Mobile 5.0.”

According to HandHeld Entertainment, the company has also achieved several other objectives outlined in its November 14 investor call, including
· Creation of a HandHeld Entertainment network of Web sites focused on humorous user-generated videos (two of which are already generating advertising revenue, with the third Web site slated to begin doing so shortly);
· Delivery of ZVUE MP3 players to selected Wal-Mart and InMotion Entertainment stores throughout the United States preloaded with 30 of the top songs of 2006;
· Initial deliveries of ZVUE 250 personal media players to selected Wal-Mart stores throughout the U.S.; and
· A headcount reduction to 30 full-time equivalents (FTEs) down from 55 FTEs, excluding personnel assumed through acquisitions.

“We’re pleased with our progress and we’re looking forward to continuing to execute on our plan,” Oscodar said.

About the ZVUE
HandHeld Entertainment’s ZVUE line of portable media players is available today in approximately 2,000 Wal-Mart stores throughout the United States. The SRP $99 (US) ZVUE plays videos and MP3 files and also allows users to view digital pictures from a digital camera or home video from a camcorder. HandHeld Entertainment also recently began shipping the ZVUE MP3 player, an MP3 player pre-loaded with 30 of the top songs of 2006.