Cloud video game service OnLive said it plans to begin offering streaming movies and television shows, mounting a challenge to Netflix.

OnLive allows users to play video games stored remotely on servers, However, the company plans to expand in the movie market next year by offering video content from major film and TV studios.

OnLive's investors include Time Warner Inc's Warner Bros studio, and AT&T.

Onlive's move is expected to challenge Netflix's streaming subscription plan for shows and movies, which costs $7.99 a month.

OnLive, which launched earlier this year, plans to effectively offer the equivalent of an iTunes/Netflix combo for gaming. OnLive currently allows users to pay for games individually (PlayPass plan), or opt for a $9.99 per month flat-rate plan (PlayPack plan). The service is accessed via a 5-inch console that connects to a TV.

Between the new PlayPack and existing PlayPass plans, OnLive has something for every budget and any gamer. Here?s how they work:

* PlayPass plan: largely new-release games available for free demo or 3-day, 5-day or Full purchases. Current prices range from $2.99-$49.99.

* PlayPack plan: recent, classic and indie titles. Access to the full PlayPack library is $9.99/month.

Some games will only be in the PlayPass or PlayPack plan, some will be in both, and over time, PlayPass games added to the PlayPack library as they get older.

The PlayPack plan will be released to all OnLive members on January 15.