Virgin America, which has touted its entertainment offerings since taking off in 2007, will significantly overhaul its Red in-flight entertainment system late next year.

The upgrade is notable for Hollywood given that San Francisco-based Virgin has been busy brokering content deals and launching its own production shingle, Virgin Produced, whose execs will play a key role in programming Red, as part of the relaunch.

Red will also evolve more into a lucrative platform for studios and TV networks, as well as gamemakers and record labels, as a platform to sell entertainment through VOD, but also as a promotional tool.

Virgin America claims usage of Red has increased 20% a year since 2008.

New system’s biggest change will come in the size of its seatback-based touchscreens, which will grow from its current nine inches and feature high-definition displays. The airline’s monitors were already 25% larger than in-flight entertainment screens on domestic coach flights.

The screens will let users connect their personal electronic devices like laptops, tablets and cell phones, enabling the airline and also content providers even more options to sell video and audio programming as downloads. It rents 25 movies for $8 each during flights, but will charge $5 to $7 for a movie and about $2 for a TV show once the new system bows.

Virgin execs say there are plans to quadruple the amount of videos it currently offers through the hardware. It will also continue to offer WiFi on board Virgin’s planes. Airline was the first domestic carrier to offer fleetwide WiFi in 2009.

Entertainment options currently include live satellite TV, cached specialty channels, more than 35 on-demand films and premium TV shows from cablers like HBO and a 3,000 MP3 music library. All flights will feature refreshed channels this fall.

“The idea behind Red has always been to reinvent the flight experience, by offering travelers more options, more control, more content and more interactivity,” said David Cush, president and CEO of Virgin America. “Our travelers want connectivity yes, but they also want access to more media content and services that will improve their trip. We want to give our travelers more options instead of fewer.”

Lufthansa Systems’ BoardConnect platform is being used to power the new Red screens, which will be installed on all of Virgin America’s planes. It currently offers a fleet of 40 planes which is expected to grow to 57 by late 2013.

The updated Red system already is being tested on one of Virgin’s Airbus A320’s named #nerdbird.

System was unveiled at the Airline Passenger Experience Assn. Expo in Seattle on Tuesday.