PhotoChannel Moving Beyond Photos

Launches PNI Digital Media to deliver
music, games and movies for real time production at selected retail locations

VANCOUVER, BC – September 8, 2005 – PhotoChannel Networks Inc. (TSX-V: PNI and OTCBB: PHCHF) (“PhotoChannel”) today announced that it is in the final development of its new Digital Media Platform, aimed at distributing all forms of digital content for in-store production of physical products. More information on PNI Digital Media can be found on PhotoChannel’s new corporate website located at www.pnidigitalmedia.com.

The heart of PhotoChannel’s business has been its enterprise level systems that integrate retailers’ websites, workflow & production processes enabling its retailers to manufacture photo products and deliver them to consumers in as little as one hour. PNI Digital Media will utilize the existing technology and telecommunications infrastructure it has developed for its retailers in delivering photos for in-store production of prints, CD’s and DVD’s to also deliver new forms of digital content for in-store production. The digital content being targeted by PNI Digital Media includes music, games, video and mobile products.

“PhotoChannel’s expertise is in delivering online solutions for retailers to produce products from consumers’ digital content,” said Peter Fitzgerald, Chairman and CEO of PhotoChannel. “Until today, our business has been focused on the delivery of digital images for the production of photos, but our retailers are now asking for much more. With our delivery of a one hour solution, our retailers now have the assets in place to have a significant advantage in the marketplace by being able to merge the online digital content world with in-store production. PNI Digital Media will enable retailers to gain an advantage in the sale of items such as digital music by offering not just music downloads, but the production of music CD’s in-store. Looking forward, PNI Digital Media should alter how retailers manage inventory for their entertainment product lines such as music, movies and games. In certain product segments, the retailer may be able to produce everything in a “just in time” format eliminating the need for inventory all together.”

The PNI Digital Media Platform has entered the final stages of development. Over the last few months, PhotoChannel has accelerated the next generation of its system previously known as the “PhotoChannel Network”. This new system will be sold as the “Digital Media Platform”. Led by Aaron Rallo, PhotoChannel’s CTO, the Company has reinvented its industry leading technology to accommodate the ever changing needs of its retailers through the delivery of dynamic content. Further information on the PNI Digital Media Platform will be announced in the upcoming weeks.
About PhotoChannel
Founded in 1995, PhotoChannel has created and manages the open standard PhotoChannel Network environment. The PhotoChannel system is currently utilized by major photofinishing retailers and wireless carriers to provide their consumers with online image printing and picture messaging services. There are more than 8,000 retail locations worldwide accepting print orders from the PhotoChannel system. For more information please visit www.pnidigitalmedia.com.

Investor Information: (866) 345-0115

WARNING: The TSX Venture Exchange has neither approved nor disapproved the information contained in this release. The Company relies upon litigation protection for "forward-looking" statements.