Called FilmOn the service offers users video streaming, film rental, and a number of free-to-watch movies.
By using a cluster of net-based computers FilmOn lets people watch broadcast quality movies over a basic broadband connection.
The computer cluster helps shrink the films so the high-quality images can be sent down the narrow pipes.
Media streaming made its debut in the mid 90s with the launch of RealAudio, although it was a number of years before video streaming was perfected.
FilmOn is not confined to a computer; the firm has developed a TV set-top box, and can also stream content to a mobile over a third-generation (3G) phone network.
FilmOn chairman Alki David outlines thinking behind his new video portal
There are also plans to expand community content, and matching up the films a subscriber chooses to those picked by folk with similar taste, which should - in theory - help people discover new movies they might like, but may never have heard of.
Digital Utilities's chief scientist - Richard Crosby - who helped design the network that delivers the video over the net, told the BBC that development of the system had taken nearly 15 years.
"The FilmOn Network Operation Centre makes use of the same grid and cloud technology used by CERN and government agencies."
"The processing power is spread out across the globe, rather than on a single server. We start off with a few servers in select places and as demand picks up, a fresh cluster kicks in."
The evolution of television
"What makes us different from a traditional grid is that the CPU's actually talk to each other across the global network. So it knows where the loads are and where projected loads will occur," he added.
Speaking to the BBC, Ian Nathan, Empire magazine's executive editor, said he thought this kind of service would be popular, although he did have some reservations.
"It's early days yet," he said. "I don't think this is some grand change in the way we do things, but it may well be how we watch things in the future."
"People were sceptical about music downloads, now it's the norm. I think video on demand might curtail the sale of DVDs, much in the way online is killing off CD sales."
"That said, sites like this almost re-emphasise peoples interest in movies, so I cant see it affecting cinema attendances."
"Computers are becoming more like TVs and I think [video on demand] is the rental market of the future," he said. "It will be interesting to see how this affects, say, Sky Movies. They may well have to become a downloadable service to compete."
Said Mr Crosby from Digital Utilities: "We're providing a true television experience, as opposed to a just a computer service.
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