Sony has begun working on a new video download for their PlayStation Portable handheld entertainment console. In an effort to improve lagging sales of their handheld console, the movie download service is expected to be launched in the first quarter of 2007.

The PSP is well acquainted with move playback. As one of its major features, the PSP is able to play movies via UMD or Memory Stick. UMD movies, however, turned out to be a large failure for Sony forcing the company to explore other options.

The new service will allow users to download movies onto their PC and from there transfer them onto a MemoryStick. In order to help spur growth of the service, Sony will also be releasing a 4GB memory stick, which is expected to be able to hold around 10 movies. Sony is currently attempting to work out alliances with Amazon, Movielink, and Cinemanow in order to use their large libraries of titles for their service.