In what could be a sign of Sony's increasing desire to take on Apple, it now appears that the company is preparing to launch a video downloads service for its PlayStation Portable, according to a report in the Financial Times.

The report indicates that Sony is planning on an early 2007 debut for the service (which has been designed by Sony Pictures Home Entertainment) but is currently trying to wrap up some deals with online video providers. Amazon.com and film download sites such as Movielink and CinemaNow are apparently in talks with Sony about signing up to provide PSP video downloads.

Many PSP owners have been transferring video and full-length movies onto memory sticks anyway, so if the pricing for video downloads is competitive, this could be enticing to the 20 million or so PSP owners around the world. Furthermore, the cost of memory sticks has been steadily falling. When the PSP was still new to the market, a 1GB memory stick was well over $100. Now a 1GB costs as little as $30 to $40, and consumers can pick up a 4GB memory stick for around $140 or less. That would enable PSP owners to store about 10 feature films at once.

When the service goes into effect, users would visit the portal through a PC, download a video and then transfer it to a PSP. We imagine that if Sony goes through with the plan that this same downloads portal would be accessible via the PS3, although ideally PSP owners would probably like to be able to browse and download directly to the PSP.

Currently, Walt Disney is the only studio that has made its movies available on iTunes. Other studios have not yet joined reportedly because of piracy fears. With the backing of SPHE and potentially Amazon, Movielink, CinemaNow and more, Sony could very well challenge Apple for the video market.

We've contacted Sony for comment/confirmation and will update accordingly.

[UPDATE] Dave Karraker, Sr. Director, Corporate Communications
Sony Computer Entertainment America, has acknowledged to GameDaily BIZ that while a video downloads service is possible for the future, nothing has been announced at this time.

The official statement reads as follows: "Beyond games, PSP and PS3 both provide an exceptional opportunity for the downloading and viewing of all types of entertainment content, including movies, television shows, videos and music. As we have stated in the past, we are exploring a number of options to supply such content, including working very closely with all the entertainment divisions within the Sony family. At this time, we have not confirmed any further news regarding a potential movie download service for the PSP. You can expect to hear more about downloadable content for the PSP and the PS3 in the coming year."