Citing studio bosses, the report said that YouTube would charge up to five dollars per film -- roughly the same amount that viewers of cable and satellite TV spend to view pay-per-view movies.

Google first unveiled its online movie ambitions by streaming a handful of titles from the Sundance Film Festival in January. It also announced plans earlier this year for a Google TV service which would be built into televisions and set-top boxes and provide a unique search and content system for TV viewers.

The Financial Times report said that talks have been continuing for "several months" but have "taken on greater urgency in recent weeks," and that the new service could debut before the end of the year.

Hollywood studios are reportedly excited about extending their online reach as they seek to combat the growing problem of pirated movies online and also replace the dwindling revenues from DVD sales.