Sky has announced a joint venture with Sony Computer Entertainment Europe to develop a download service for the PSP portable games player. The news came as BSkyB announced revenues up 10% last year, although profits were down 9%, reflecting their continuing investment in broadband and telephone services.

The new initiative will allow more than 2 million PlayStation Portable owners in the United Kingdom and Ireland to download videos to their handheld devices. Due to launch in early 2008, it will be the first official PSP video download service in Europe. The platform will offer programming spanning sports, entertainment, movies, music and animation from both Sky and third-party channel partners.

Videos will be downloadable to the PSP either directly through a wireless internet link or through a connection to a personal computer. Programmes will be made available on a pay-per-view subscription basis.

“Sky and Sony Computer Entertainment Europe have complementary strengths in content, marketing and technology,” said James Murdoch the chief executive officer of BSkyB. “Together, we’re ideally placed to make portable, on-demand TV a reality.”

The announcement comes shortly after Sony announced a new lighter and slimmer version of the PSP that can also be connected to a television set. Further details may be forthcoming at the Leipzig Games Convention in August.

Sky revenues were up 10% over the last year to over £4.5 billion. Profits were down 9% but still represent a healthy £0.5 billion.

The satellite television company has been investing in broadband. It made a net operating loss of £169 million on its residential broadband services but now has over 700,000 broadband customers.

“This year has been one of enormous importance and change for us, with the launch of our broadband and talk services transforming our business and our future prospects fundamentally,” said James Murdoch.