Sony has been in talks with popular shopping site Amazon.com, MovieLink and CinemaNow to offer PSP owners digital downloads of movies. The service is due to launch early next year.

According to a report in the Financial Times movies would be first downloaded to your home computer and then transferred via USB to the memory stick. This move could spell the end of the UMD format for movies as major studios such as Paramount, Warner Bros. and Universal have been reassessing their options after disappointing sales.

The download service would be run by Sony Pictures Home Entertainment and would be the company's first serious commitment to downloads of third-party content.

Microsoft had earlier revealed plans for their own HD movie and television download service on XBox Live- among their supporters are Paramount, CBS and MTV.