The service has been developed by Sony Pictures Home Entertainment and will allow users to download movies via a computer and store them on MemoryStick cards for viewing on the PSP (PlayStation Portable) handheld games device, said the Financial Times.
Amazon.com and existing movie download sites such as Movielink and CinemaNow are in talks with Sony to use the service, which will launch in the first quarter of 2007, the newspaper reported in its online edition.
Sony is also working on a service that would allow downloads directly to the PSP, said The Wall Street Journal's online edition.
Spokespersons for both Sony and Sony Computer Entertainment in Tokyo deferred requests for comment to the company's US offices, which were closed.
Sony has already tried to expand the PlayStation Portable's uses beyond gaming to movies. It began offering movies on the small discs used by the PSP but sales have been low and the movies never caught on among many users.
The PlayStation Portable was launched in late 2004 and initially enjoyed strong sales. By the end of March 2005 shipments had reached 3 million units and jumped to over 14 million units in the year from April 2005. But things soon started going wrong for the new device and sales began dropping. In the current year, from April 2006 to March 2007, Sony initially expected sales to drop to 12 million units but in October revised its forecast to 9 million units.
The successful launch of a movie-download service could help flagging sales of PSP hardware and give Sony something to begin to challenge Apple's iTunes Store, where iPod owners can download video clips, TV shows and some movies. Sony doesn't offer a video version of its Walkman music player leaving it unable to compete with Apple on the video front.