Apple to start film rentals online

SAN JOSE, Calif. - Apple Inc. is preparing to announce next month the long-rumored launch of a movie rental service through its online iTunes Store, as well as a groundbreaking licensing deal of its anti-piracy technology - moves that could dramatically boost the appeal of digital movie distribution.

News Corp.'s Twentieth Century Fox is one of the first studios that has agreed to make its films available for rent digitally through iTunes, according to a Financial Times report Thursday that cited unnamed sources.

Apple also has agreed to license for the first time its copy-protection platform called FairPlay so the technology would be built into Fox DVD releases, allowing users to easily transfer the movies from the disc to a computer or an iPod for playback.

Representatives at Apple and Fox declined to comment.

Apple has been in talks with major film studios over the past year, and analysts have speculated that it was only a matter of time before licensing deals on online movie rentals would be worked out. The popularity of Apple's online store and iPod media players makes iTunes an attractive distribution outlet, especially as more consumers are expected to latch onto getting their entertainment anywhere.

"The iPod is the most important media player right now, and if you're one of the studios, you're going to want to play with Apple here," said Michael Gartenberg, a Jupiter Research vice president.

Full-length films are available on iTunes - but only for sale so far, and consumer interest in movie downloads has lagged behind music purchases.

"People want to watch movies but not necessarily own them," Gartenberg said. *