Sony is preparing to launch an online video store for the PlayStation 3 in a move to bring it into the market currently inhabited by contenders such as Microsoft’s Xbox Live and Apple TV, according to reports from film industry executives close to the deal.

The store will be similar to Microsoft’s Xbox Live video service, which offers 350 movies and more than 5,000 episodes of TV shows, including episodes of the likes of “Lost” and “Desperate Housewives” the day after they are aired. Details on the service are sketchy at this stage, with film industry executives simply saying that Sony has approached them in recent weeks and a deal is being hammered out.

Peter Dille, senior VP of marketing for SCEA, is the only Sony source to have come close to commenting on the move on the Inside PlayStation blog last week, saying "Many of you have been hearing rumblings about a video service that will allow you to download full-length TV shows and movies via PlayStation Network for North America. While I don’t have any new announcements here for the PlayStation Nation, it’s already been confirmed that we’ll be offering a video service for PS3 in a way that separates the service from others you’ve seen or used.

"Ultimately the goal of the PlayStation Network service will be to break through the overwhelming clutter of digital media to give you the TV, movies and gaming content you want. More on this very soon..."

One detail of the service that has been rumoured is that it will be on an open standard, unlike Microsoft or Apple’s closed services. This means that the Sony video system will not just be confined to the PlayStation 3, or simply other Sony products (like the PlayStation Portable.) This marks a sea-change from Sony, showing that corporation chairman and chief executive Sir Howard Stringer is making headway into de-compartmentalizing the company.

The company has been much famed for having divisions that refuse to work with one another, with the gaming division reportedly being one of the more aloof of Sony’s children. It reportedly shot down the idea of a video service for PlayStation in the past, even though Sony’s movie arm was willing to go ahead with the move. If the video service is open it will also show that Sony is becoming less arrogant about its products, realising that not everybody wants to enter into a closed system anymore… And certainly not one operated by Sony.

The firm has already suffered defeats in realms such as digital content distribution, the decimation of Walkman by the iPod and iTunes, the undermining of the PlayStation’s position in the gaming market by Microsoft and later Nintendo; and the failure of platforms such as Movielink and Sony Connect. By moving to an open platform Sony could be hoping to recapture market share.

That being said, the current market for movies and TV shows distributed online isn’t that big - according to Convergence Consulting Group, U.S. consumers spent $95 million for movies online last year, compared with $23.4 billion to rent and buy DVDs. That being said, this is the long game that the players are settling in for as they refine their products early: market researcher Parks Associates projects that internet video will grow to about $6.4 billion in revenue by 2010 from advertising, as well as paid downloads or rentals.

The project is reportedly being pushed by Tim Schaaf, who was hired into the newly created position of senior vice president of software development in December 2006. Schaaf comes from Apple, and this sort of business is what he knows well.

Sony has a lot of ground to make up against the likes of Microsoft, who have been quick to point out that while Sony is developing its platform the Xbox Live version is on the market and making money and headway already. That being said, the Blu-ray win has proved that Sony still has what it takes to win in the market and the sense now is of Sony’s video gaming division making its fight back after nearly two years on the back foot.