The nation's largest cable TV provider already rents movies and TV shows, but by selling content through set-top boxes, it will expand a market that remains a small fraction of home entertainment spending in the U.S.
The new service could also potentially take a bite out of digital sales at Apple Inc.'s iTunes and Amazon.com Inc.'s Instant Video Store, partly because users wouldn't need an extra device like an Apple TV box or video game console to watch their purchases on their big screen TVs.
Under the plan, the 20 million subscribers of Comcast Corp.'s digital Xfinity TV service will initially be able to select from a few hundred titles that include new releases, family fare and fan favourites, said the person, who spoke on condition of anonymity because they were not authorized to speak publicly about deal with the movie studios that have not been finalized. The list is expected to expand quickly over time.
After buying, users will be able to stream them limitlessly from their set-top box, or download the video to computers and mobile devices.
Comcast already has the infrastructure to stream movies and TV shows on-demand over mobile devices. It also currently allows subscribers to download certain videos for consumption when outside of Wi-Fi service.
The new service could offer those willing to spend $10 to $20 apiece for access to new-release films a couple of weeks before Blu-ray discs are made available for sale. Several studios like 20th Century Fox and Warner Bros. regularly make new releases available for sale digitally before physical discs hit retailers.
Purchases would be recorded in a digital locker that subscribers could access from a computer even if they drop TV service in the future, the person said. However, if consumers build up a digital collection, it could also offer a reason for customers to keep on subscribing for easy access.
Major Hollywood studios are supportive of the plan because it offers yet another outlet for digital sales, according to two other people familiar with the matter who spoke on condition of anonymity because they were not authorized to talk about the pending deals. Universal Pictures, the studio owned by Comcast, is expected to be involved at launch.
According to industry group The Digital Entertainment Group, digital sales of movies and TV shows in the U.S. amounted to $764.5 million in the first nine months of the year.
While that's up 49 per cent from a year ago, it's about half the amount people spend on video-on-demand rentals and just 6 per cent of the $12.6 billion spent on home entertainment overall.