Matsushita Electric Industrial Co. will launch its first digital film production company, Progressive Pictures Co., on October 1. Company president Hidenori Ishii is a former vice president of Japan Victor Entertainment US, with extensive experience in the film industry.

Capitalised at $1.68m (Y200m), the Tokyo-based company will produce films with local partners initially for theatrical release and eventually for online services. Progressive Pictures also has plans to recruit producers and directors from Hollywood and Europe.

With the growing popularity of broadband communications and digital media networks in Japan more home entertainment products are expected to go digital, leading to an increased demand for digital software, including films.

Although the digital film business will initially account for only small portion of Matsushita's revenue, which has projected annual sales of $40bn (Y8 trillion), Progressive plans to ramp up quickly, with the launch of a digital film transmission system in the works.

The company will soon begin testing the system, which allows filmmakers to digitally transmit images to multiple locations. This will make it possible for a Hollywood producer to work in real-time with a director and crew in Tokyo.

Progressive will also produce music video clips and other digital materials for HD television, called Hi-Vision in Japan.