The "video integration unit" will be led by Paul Frampton, head of digital at the Havas-owned network's interactive unit Media Contacts, and Jim McDonald, MPG's head of broadcast.
MPG clients already signed up to the new video unit include Camelot, the BBC and Magners.
Frampton and McDonald will be supported by David Katz, head of trading at Media Contacts, broadcast account director Chris Allen, and account director Gavin Laisby.
The agency plans to build a panel, comprising heads of networks, publishers and content partners, upon which it can draw to advise on new video opportunities spanning the internet, TV, video-on-demand and mobile. However, these talks are still in progress, with no official names yet confirmed.
The move comes in response to the growing popularity of video-on-demand services such as BBC iPlayer and YouTube, as well as the increasing trend among US TV networks to stream content online.
Frampton said: "Media is converging at an extraordinary pace and is now watched on multiple electronic devices and screens virtually everywhere.
"Both Media Contacts' and MPG's innovation in media planning helped to ensure the BBC iPlayer became the most viewed video-on-demand service last month."
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