Cloud video game service OnLive said it plans to begin offering streaming movies and television shows, mounting a challenge to Netflix Inc.

OnLive, a closely watched startup that allows users to play video games stored remotely on servers, said it is in talks with major film and TV studios, and will begin to offer the new content some time next year.

Streaming technology is available to anybody, OnLive Chief Executive Steve Perlman said in an interview. We want to work with the studios. All of these guys want to offer content, we're just here to distribute.

OnLive can deliver any experience that Netflix can, he said. Perlman declined to provide any details about pricing.

OnLive's investors include Time Warner Inc's Warner Bros studio, and AT&T.

OnLive, which launched earlier this year, allows users to pay for games individually, or opt for a $9.99 per month flat-rate plan. The service is accessed via a 5-inch console that connects to a TV.

Netflix's soaring popularity has rankled the major studios, who are looking at ways to limit its growth. In addition to its DVD-by-mail service, Netflix offers a streaming-only subscription plan for shows and movies for $7.99 a month.

Perlman said games are still the main focus of OnLive, because they are offer higher margins than movies.

If gamers opt for OnLive in sufficient numbers, analysts say the service could potentially pose a threat to traditional home consoles such as Microsoft's Xbox 360 and Sony Corp's PlayStation 3.

(Reporting by Gabriel Madway; editing by Gunna Dickson)

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