Apple Computer, whose iPod personal music player and iTunes digital music store dominate the legal music downloads business, is this week expected to unveil a service for downloading films.

Although the company is maintaining its usual silence, Apple has sent out invitations, marked “It’s Showtime”, for an event in San Francisco on Tuesday.

A move by Apple into digital film downloads would be another step towards a showdown for dominance among big internet’s companies in what is expected to be a huge market one day.

Last week, joined the rush with the announcement of its Unbox service, which will allow consumers to download thousands of television shows and films. Google, Time Warner’s AOL, News Corp divisions, including MySpace, studio-backed ventures such as MovieLink and smaller internet players such as video-sharing site Guba all sell or plan to sell films via the web.

Thomas McInerney, chief executive of Guba, said: “Video is the new motif for the internet and there are already thousands of video sites. There is probably only room for a limited number of players and the dominant ones are likely to be established in the next six to 12 months.”

The question is whether Apple will be a trigger for wider usage of digital film services.

So far, the availability of films for viewing on computers or portable devices has made little impact when compared with the market for selling and renting physical DVDs – worth more than $20bn a year in the US alone and dominated by large retailers, particularly Wal-Mart.

High-speed broadband internet connections make it easier to download films although most are illegally copied versions through file-sharing networks.

Indeed, an internet search for “movie downloads” brings up a plethora of websites offering such services. Yet the paucity of guidance about which ones are legal downloads, which provide illegal versions of films, as well as confusion about whether sites are fronts for credit card frauds or other dodgy operations, makes many people hesitate to use them.

The high pricing on legitimate digital sites is another issue. Pricing is generally the same as for physical DVDs, reflecting concerns among retailers that they are not undercut. Amazon, for example, offers physical DVDs for less than some of its digital versions, even though consumers are not able to burn digital films on to blank DVDs.

Richard Greenfield, analyst at Pali Research, said: “Restrictions on use should drive a cheaper price to the consumer, not the same or higher pricing. The studios need to accelerate the attractiveness of digital delivery to prevent illegal [networks] from capturing too much market share.”

Additional reporting by Kevin Allison

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