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Sunday, June 10, 2007, 02:45 pm PT (05:45 pm ET)

Apple shooting for autumn launch of film rental service - report

Apple is in advanced talks with Hollywood’s largest movie studios about launching an online film rental service to challenge cable and satellite TV operators, according to a published report.

The Financial Times on Sunday said that the service, due to launch sometime this fall, could be significant for the Cupertino-based electronics maker if it manages to sign up enough studios. The more studios, the more premium film content the company could offer shoppers at its ubiquitous iTunes Store.

Individual films on the iTunes service would fetch $2.99 for a 30-day rental, the financial paper said. Each film download would be governed by digital rights-management software that would allow users to transfer the movie "from a computer to at least one other device such as the video iPod or iPhone."

The software also would prevent movies being copied, the Times said.

One studio executive was quoted as saying the Apple download service would "compete against cable companies and anyone else offering VOD into the home."

For its part, Apple and its chief executive Steve Jobs have long maintained that consumers would rather own than rent their digital content. However, a recent AppleInsider survey suggests that notion may apply more strongly to digital music files (which most users will listen to repeatedly) rather than films (which they may watch only a few times).

Of the approximately 1500 respondents to the survey, only 16.5 percent said they were interested in purchasing digital film copies from iTunes outright. Another 35 percent said they'd prefer to rent their flicks, while the remaining 48 percent said they wouldn't entertain either option until Apple improved the resolution of its iTunes movie downloads.

Experts and analysts believe it's only a matter of time before Apple begins offering its film catalog in high-definition format. The company recently launched Apple TV, which acts as a wireless gateway to deliver a user's iTunes content to their widescreen high-definition television sets.

If recent hints dropped by the company's leadership are of any indication, a film rental model could hit iTunes around the same time. During a recent meeting with analysts from PiperJaffray, members of Apple's management team implied that a film download service was in the works.

"Timing of this is difficult to determine, but we would expect [iTunes video rentals] sometime in 2008," analyst Gene Munster told his clients following get-together.

While speaking this year's Apple shareholder meeting, Jobs also appeared to have been swayed on the matter. When asked about the potential for movie rentals from the iTunes Store, he responded by saying, "one never knows."