The service will reportedly launch with the availability of "King Kong" on April 10, and let users watch the films on their laptops, home computers or hand-held devices.
Films will be available to download the same day the DVD is released, the companies said. Consumers who use the service will get the film in three formats: two digital files available for instant download -- one for a PC or laptop and one for a portable device -- and a DVD copy sent by mail.
Initially, the service will serve up 35 Universal films, including "Pride And Prejudice," "The Bourne Supremacy," "Love Actually," "Nanny McPhee" and "Bridget Jones." They will be priced from £19.99 ($35) for the latest releases to £9.99 ($17.50) for older films.
"New films will be available at midnight on the day of release -- meaning consumers could be watching a DVD on a hand-held device on their train journey to work before stores have opened," CNN reports.
Eventually all 6,500 movies in Universal catalogue could be made available for downloading. Film downloads will reportedly take between 40 minutes and an hour.
Meanwhile, Apple and some of its potential partners appear to be researching an iTunes feature film download service, and analysts have said the company may be close to making an announcement in that department.
It has also been reported that online mega-retailer Amazon.com is gearing up for a similar service launch.