Press Release July 17, 2007

HandHeld Entertainment Announces Release of the ZVUE 260

Easy to use, value-priced MP3 video player plays videos, music and displays images and will be available for purchase at Walmart.com later today

Priced at less than $100, HandHeld Entertainment’s ZVUE 260 MP3 Video Player features a built-in speaker and a sleek and thin design ready to play out of the box with a “starter” 1 GB (Gigabyte) SD (secure-digital) memory card, sufficient memory for up to six hours of video playback or approximately 500 MP3 songs. The value-priced ZVUE 260 has a 2.5-inch backlit screen that supports videos at resolutions of up to 320X240 pixels. For more information, visit www.hheld.com and www.zvue.com.

SAN FRANCISCO – July 17, 2007 – HandHeld Entertainment™ (NASDAQ: ZVUE), a global digital entertainment company, today announced the release of the ZVUE™ 260, its third generation, value-priced MP3 video player.

Called “iPod-esque” by leading technology news outlet Engadget when the product was first announced at the 2007 Consumer Electronics Show in January 2007, the ZVUE 260 will be available for purchase at Walmart.com later today with a manufacturer’s suggested retail price (MSRP) of less than $100.

The ZVUE 260 is a full-featured personal media player (PMP) featuring a built-in speaker and a sleek and thin design that ships ready to play out of the box with a “starter” 1 GB (Gigabyte) SD (secure-digital) memory card, sufficient memory for up to six hours of video playback or approximately 500 MP3 songs.

As with previous ZVUE video players, the ZVUE 260 utilizes external SD memory cards (currently available at up to 8 GB), giving users expandability at lower prices than comparable static memory units and greater durability than hard drive-based players.

With the latest version of the ZAPP™ Media Manager software, the ZVUE 260 is one of the easiest to use video and MP3 players on the market today. ZAPP automatically detects media files on a computer so users can easily select, organize and transfer videos, music and photos to their players. The ZAPP program also makes it easy to download and transfer content from HandHeld Entertainment’s premium and user-generated content (UGC) Web properties, including ZVUE.com™, Putfile.com™, Holylemon.com™, UnOriginal.co.uk™, YourDailyMedia.com™, Dorks.com™ and FunMansion.com™.

“At under $100, the ZVUE 260 gives digital media consumers access to a high quality, yet value-priced, PMP that is exciting to own,” said Jeff Oscodar, president and CEO of HandHeld Entertainment. “In addition to our players, HandHeld provides one of the most extensive content offerings in the market on our network of Web sites, with premium and free content available for users to download to their ZVUE 260 using our ZAPP program for use anytime, anywhere. We want entertainment to be as accessible to our customers as possible.”

HandHeld’s Web properties currently offer more than 525,000 videos, including premium content such as music videos, anime features, television shows, movies, cartoons, independent films, documentaries, and news, entertainment and sports programs from our content partners including Sony BMG, Showtime, IMG Media, Canadian Broadcast Corporation and National Lampoon, as well as free user-generated and user-submitted video selections and other media. Through HandHeld’s partnerships with eMusic and Rhapsody, owners of the ZVUE 260 can also select from millions of songs that can be played on a PMP (see http://www.zvue.com/html/music.php).

Additional specifications of the ZVUE 260 include:

• A 2.5-inch active matrix, full-color TFT LCD backlit screen;
• Video support of up to 30 frames per second (fps) at resolutions of up to 320X240 pixels;
• Audio support for the following file formats for audio playback: MP3, WMA (with DRM), OGG and MP2;
• Picture support for the following file formats for image playback: JPG and BMP;
• Video support for the following file formats for video playback: XviD, MPEG-4 and WMV (with DRM);
• 4.16- (height) x 2.56- (width) x 0.5-inches (depth); and
• Approximately 3.93 ounces.
• A 90-day limited Manufacturer Warranty;

About HandHeld Entertainment, Inc.

HandHeld Entertainment (NASDAQ: ZVUE) is a global digital entertainment company. Its network of Web sites (Putfile.com, Holylemon.com, UnOriginal.co.uk, YourDailyMedia.com, Dorks.com, FunMansion.com and ZVUE.com) now houses more than 525,000 user-generated and premium videos available for purchase or free viewing, as well as millions of free user-submitted photos and other media. Its ZVUE portable media players are mass-market priced and currently available for purchase online and in more than 2,200 Wal-Mart stores throughout the U.S. For more information, visit www.hheld.com.

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995

This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of various factors including the ability of the company to successfully commercialize its new technologies as well as risk factors set forth from time to time in HandHeld Entertainment’s filings with the United States Securities and Exchange Commission, including Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K and other reports filed by the company with the SEC. The company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. As a result, investors should not place undue reliance on these forward-looking statements.

MEDIA CONTACTS AT POLITIS COMMUNICATIONS FOR HANDHELD ENTERTAINMENT:

David Politis, Politis Communications, 801-523-3730 (wk), 801-556-8184 (cell), dpolitis@politis.com or
Jonathan Bacon, Politis Communications, 801-523-3730 (wk), 801-660-7820 (cell), 801-523-3750 (fax), jbacon@politis.com.

INVESTOR CONTACT AT THE BLUESHIRT GROUP FOR HANDHELD ENTERTAINMENT:

Scott Wilson, The Blueshirt Group, 415-489-2188, scott@blueshirtgroup.com

HandHeld Entertainment, Putfile.com, YourDailyMedia.com, FunMansion.com, Dorks.com, UnOriginal.co.uk, Holylemon.com, ZVUE.com and ZVUE are trademarks of HandHeld Entertainment. All other trademarks are property of their respective owners.