Sources told Reuters that the service, which Verizon plans to launch in 2012, would not only rival Netflix but could potentially dig into cable television as well.
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Verizon told FOX Business that it does "not comment on rumors or speculation" and has no further comment.
However, this would not be Verizon's first foray into television, as it already operates FIOS TV. The sources said the streaming service would be separate from FIOS.
The news is potentially grim for Netflix, which has faced a series of devastations this year, including losing nearly a million subscribers and having its stock price plunge to new two-year lows since it raised prices in July and initially launched Qwikster.
Those late-summer decisions erased the company’s incredible 435% rally from early 2010 and prompted the company to warn in November that it will likely face a loss in 2012 unless it can “repair the damage” to its brand and “reverse negative subscriber growth.”