Sony has updated the firmware for the PSP today adding an RSS reader and the ability to play copyright-protected video data on the handheld console paving the way for an on-demand video download service.

Sony states in the latest firmware release available to all PSP owners running 2.0 or above, that some content providers may charge fees for obtaining or using copyright-protected video.

The news could suggest that the company is preparing to launch a streaming video service via the console's internet connection directly to the device to challenge Apple and the iPod video.

Such a service would give Sony a strong lead in the marketplace due to the high amount of units sold into the market and the Wi-Fi connectivity already included in the unit.

The new update also added RSS support to the Internet browser that if used in conjunction with an on-demand service could allow a content provider to push details and video content directly to PSP inboxs every time a user connected to the Internet.

Sony also said it would be allowing copyright-protected video data provided by a content provider or other services to be downloaded directly to a Memory Stick Duo.

Other features of the new firmware is support for WMA (Windows Media Audio) formatted files, however, WMA9 Professional, WMA9 Lossless and copyright-protected WMA files are not supported.