According to a report appearing in the Financial Times, Sony is presently holding talks with Amazon.com, MovieLink, and CinemaNow with a view to introducing a digital download content service to its PlayStation Portable users early in 2007.

The report outlines that any finalised deal will see feature films downloaded to a compatible PC before being transferred onto a Memory Stick for playback via the PSP handheld console. Despite Sony’s continued backing of its UMD movies, the possibility of a digital download service on the PlayStation Portable could well spell the end for the Japanese electronics giant’s floundering Universal Media Disc format—especially as distributors such as Warner Bros. Universal, and Paramount Pictures are all in the process of re-evaluating the potential and worth of UMD following its relatively lacklustre performance in a cutthroat format marketplace.

Sony’s planned digital movie downloads come hot on the heels of Microsoft’s Video Marketplace, which launched in November and offers TV and movie downloads (in SD and HD) via the existing Xbox Live service.