Microsoft's Xbox 360 movie download service already has deals in place with a number of major studios including Paramount, National Geographic, MTV and Warner Bros.
Variety claims that Sony has been in talks with all the major movie distributors and that "sources at numerous major studios confirmed… that while they have all talked to Sony, none have yet made a deal."
The report adds that "Sony is thinking about offering more than the same features as Xbox Live" with PS3 movie downloads.
"In addition to standard movie rentals, it's talking to potential partners about allowing users to transfer movie downloads to the PSP.
Legally ripping Blu-rays
Sony Computer Entertainment is also looking to work "with the company's own Blu-ray disc format so that users might be able to transfer a copy off the hi-def DVD onto a PS3 or PSP (similar to the "digital copy" for iPods that some studios are starting to offer on DVDs)."
PS3 owners should not get overly excited however, as we don't expect to see movie downloads to PSP or Blu-ray transfers to PS3 or PSP until 2010 at the earliest.