HandHeld Entertainment Launches ZTV Beta: A New Video Download Store for ZVUE Users; ZTV Beta Has Free and Pay 'n' Play Download Options for Video Lovers with ZVUEs.

SAN FRANCISCO & LAS VEGAS -- ZTV Will Expand in Mid-2006 to Include a Video Subscription Service Called ZVISION

HandHeld Entertainment(TM) today announced the beta launch of ZTV(TM), an online video download store designed specifically for users of the company's ZVUE(TM) portable media players.

Today's announcement was made from Las Vegas, home of the annual Consumer Electronics trade show, where HandHeld Entertainment is exhibiting January 5-8 in booth #70454 of the Sands Convention Center.

The beta version of ZTV is found online at www.zvue.com where lovers of digital video on the go can find hundreds of free video selections in a dozen genres, as well as hundreds of Pay 'n' Play(TM) video selections available for online purchase from $0.99 to $1.99 per downloaded video. HandHeld Entertainment also announced plans today to expand ZTV in mid-2006 with a video subscription service known as ZVISION(TM). Additional details on ZVISION will be revealed by the company at a future date.

"We've been announcing video content agreements for the past 12 months, which has allowed HandHeld Entertainment to accumulate one of the largest online libraries of portable video content in the world," said Jeff Oscodar, president and chief executive officer of HandHeld Entertainment. "Initially, this content has been particularly targeted for our ZVUE users, but that is changing.

"We believe that the two greatest challenges to helping portable video players become a widespread phenomenon are 1) being able to provide fun and easy-to-use solutions for taking video on-the-go at an affordable price, and 2) delivering compelling and easy-to-get video content in the formats and at the prices that people want. Today's unveiling of ZTV, coupled with our growing family of ZVUE portable media players, provide a complete portable video solution that does just that."

Since January 2005, HandHeld Entertainment has entered agreements with more than a dozen media companies, ranging from video partners such as LikeTV and Fun Little Movies to music partners such as Real Networks and eMusic. As a result, ZVUE users have had access to an online music library of more than 1.5 million songs (similar in size to iTunes), as well as a growing library of free and pay-per-view/pay-per-download (PPV/PPD) video content that now totals approximately 4,000 titles, making it one of the largest online video libraries in the world.

"We're just getting started on building our library of video content," Oscodar said, "and we intend to continue growing ZTV to create what we believe will become the premier site for portable video downloads on the Internet. This store of downloadable videos will include free, pay-per-download (PPD) and subscription pricing with videos available for any ZVUE user anywhere."

ZTV Genres and Partners Summary

Initially, ZTV delivers video content in more than 20 combined genres, specifically:

Action                  Comedy                 Instructional
Adventure               Commercials            Movies
Animation               Documentaries          Music Videos
Anime                   Drama                  Politics
Artistic                Educational            Religious
Children's              Entertainment          Sports, and
Classics                Humor                  Western

Free downloadable videos from HandHeld Entertainment's ZTV come from a variety of sources, including Like Television, StoryPipe and Undergroundfilm, just to name a few. Free downloadable videos from ZTV can be found online at http://www.zvue.com/downloads/free.php.

Pay-per-download videos from HandHeld Entertainment's ZTV come from a variety of sources, including Fun Little Movies, Sunflower Entertainment and Worldvision Cinema, just to name a few. Downloadable PPD videos from ZTV can be found online at http://storefront.theplatform.com/GetStorefrontEvent.event? pid=2muK7knvXsOSY8zogJb-MjJELtfBSksl&page=1. (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists)

Earlier this week, HandHeld Entertainment announced two new "Third Generation" landscape-format ZVUEs (known as the WiFi ZVUE and the ZVUE 400), estimated to have retail prices of less than $300 and $225, respectively.

"Our new WiFi ZVUE will be the ideal complement to ZTV," Oscodar said. "As long as the WiFi ZVUE can detect an open Internet connection, our users will be able to download digital videos directly from the Internet without having to be connected to a PC."

All ZVUEs can play video content saved as Windows Media Video (with DRM) and MPEG4 with DRM and Windows Media Audio (with DRM) and MP3 audio files, as well as display JPEG images.

Credentialed journalists and analysts interested in meeting with HandHeld Entertainment during or after CES may contact either Russell Page at 801-787-8435 or [e-mail] or David Politis at 801-556-8184 or [e-mail], respectively.

About HandHeld Entertainment

HandHeld Entertainment is the world's first portable digital entertainment company to offer mass-market portable media players at mass-market prices via mass-market distribution at more than 1,500 retail locations across the United States. Portable video lovers can visit ZTV, HandHeld Entertainment's video content store at www.zvue.com, to buy pay-per-download videos or download thousands of free media titles. For more information, visit www.hheld.com or call 415-495-6470.

HandHeld Entertainment, ZVUE, ZTV, Pay 'n' Play and ZVISION, are trademarks of HandHeld Entertainment. All other trademarks are property of their respective owners.