BT has completed a deal with NBC Universal to provide on-demand content for the telco's BT Vision television service set to launch later this year.

Under the deal, Universal movies such as King Kong and Jarhead, as well as selected NBC TV content, will be made available to BT at the same time that the DVD version hits the shops.

From 31 July, consumers who buy a film from the BT Vision online store will receive two digital copies - one for a PC and one for a portable device - plus a DVD sent through the post.

The move is being seen as a challenge to digital satellite TV providers such as Sky, since most movies will be available several months before they air on pay-TV.

BT Vision represents an aggressive move into home entertainment by the telco. The service, due to launch in the autumn, is expected to combine a Freeview receiver with video on demand and other services.

Sky launched its own 'free' broadband product last week, and NTL Telewest this week announced its 'quad play' bundle of services including 'free' digital cable TV.

Universal already has similar download deals with LoveFilm, AOL and Wippit.