It already offers movies for download and purchase via its universal online iTunes music store. iTunes users can download and buy movies made by The Walt Disney Co. and Viacom Inc.‘s Paramount Pictures.

The library has a collection of more than 200 hundred films on a download-to-own basis for $14.99 per film.

The new rental service would offer movies for $2.99 for a 30-day ‘viewing period’. Technology embedded in the download will then allow the movie files to be moved from a computer to another device, such as an iPod or an iPhone, but will not permit copying.

The Financial Times reported that Walt Disney Company and Paramount are already looking to come on-board, but Universal is still giving second thoughts. The service is likely to be launched this fall, in the US.

Online movie rental companies such as Movielink, CinemaNow and Amazon.com would be its main competition. It would also be a competitor to DVD rental stores and DVD-by-mail service Netflix.