Sky set to offer films and sport on demand

The company has denied that the move is in response to the major expansion of video-on-demand services by cable firms Telewest and NTL, which was reported by Media Week last week.

A Sky spokesman said: "This isn't a response to what other companies are doing.

"It's a response to our customers. Consumers are enjoying the ability to take control over their viewing and this has been at the heart of Sky's success to date."

Sky hopes that its move will prevent customer churn and help it reach its target of 10 million customers by 2010.

Later this year, those customers qualifying for the services will have access to around 200 movies, including new films.

Interviews and trailers for films are also being launched.

Sky Sports content direct to PC, including match highlights, interviews and archive footage, is also on the way this year.

The services will be viewable on a TV set but they require a compatible PC and a broadband connection. Not only does the move give Sky a stronger position in the booming area of broadband content, it will be a blow to the cable companies' hopes of challenging its dominant position in the market with the addition of VOD services, as well as posing yet another challenge to traditional TV spot advertising.

Asked if it also potentially put a question mark over the long term future of satellite, Sky was keen to stress that it still believed the platform was the best way to provide programmes.

The spokesman added: "We've always defined ourselves as technology agnostic.

"We're not a technology company. We're an entertainment company."