HandHeld Entertainment Acquires YourDailyMedia.com for $1.06 Million; HandHeld’s Network of Web Sites Now Attracts as Many as 5 Million Unique Visitors Per Month

SAN FRANCISCO – Dec. 18, 2006 – HandHeld Entertainmentä (NASDAQ: ZVUE, ZVUEW) today announced it has 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).

Launched in June 2005, YourDailyMedia.com contains a growing library of more than 4,500 “edgy” user-generated and user-submitted videos and thousands of other media selections, including photos, games, jokes and more. YourDailyMedia.com attracts more than 1.8 million unique visitors per month and generated more than 5.8 million page views in November.

In the past 35 days, HandHeld Entertainment has acquired three leading Web site properties focused on delivering funny and humorous videos and other forms of media to customers for free. In combination, these three sites – YourDailyMedia.com, Dorks.com™ and FunMansion.com™, along with the Free STUFF! section of ZVUE.com™ – are expected to attract more than 5 million unique visitors in December.

“The acquisition of YourDailyMedia.com is a great addition to our growing online network of comedy/humorous Web sites that contain lots of user-generated and user-submitted videos and other media,” said Jeff Oscodar, president and chief executive officer of HandHeld Entertainment. “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. But we do not intend to rest on our laurels.

“We have already begun executing our plans to maximize these assets through improved and accelerated advertising and marketing efforts, cross-promotional opportunities and building one of the best networks for online comedy in the world. We will continue to look for opportunities to maximize shareholder and customer value through our complete personal media solutions, whether that’s for owners of our ZVUE™ personal media players, owners of other brands of PMPs or cell phones, or for users of our premium media Web site, ZVUE.com, or any of our free Web sites, such as YourDailyMedia.com.”

Representative of the edgy user-generated and user-submitted videos posted recently on YourDailyMedia.com are the following:
· Skater on Fire at Skater on Fire,
· The Best Trick Shot at The Best Trick Shot,
· No Smoking in the Bog at No Smoking in the Bog, and
· Lamborghini Murcielago vs Lamp Post at Lamborghini Murcielago vs Lamp Post.

“As I came to understand HandHeld Entertainment’s vision, I thought it was absolutely brilliant, and I knew YourDailyMedia.com should be a key component that vision,” said Scott Worsnop, founder of YourDailyMedia.com. “My initial goal was to build a site that people everywhere would think of as their daily media fix for fun and edgy videos and other stuff. By becoming part of HandHeld’s online comedy network, I’m confident that we will be able to grow our reach and penetration to comedy lovers everywhere.”

With the acquisition of YourDailyMedia.com, HandHeld Entertainment now has nearly 11,000 videos available to its users through its network of Web sites. These include premium music videos, anime features, television shows, movies, cartoons, independent films, documentaries, news, entertainment and sports programs from companies ranging from Sony BMG to IMG Media and from Canadian Broadcast Corp. to Fun Little Movies, as well as free user-generated and user-submitted video selections and other forms of media.

In addition, HandHeld Entertainment announced last week the launch of ZAPP™ media manager, a software product used for managing digital videos, music and photos on personal computers, ZVUE personal media players, other PMP brand players, as well as on cell phones and portable digital assistants (PDAs) that support Windows Mobile 5.0. ZAPP is available for free at www.zvue.com/players/zapp.php.