Although the company has not yet confirmed speculation, it has sent out invitations to a media event in San Francisco tomorrow, marked "It's Showtime, with a design featuring the company's iconic logo accompanied by klieg lights often used at Hollywood premieres.
A move to offer film content would strengthen Apple's position as the leading supplier of digital entertainment as rivals including Microsoft and MySpace target customers with new products.
Apple is expected to introduce new iPods into its range, including a video iPod with a larger screen than the current 2.5-inch display to accommodate the new movie downloads.
Apple's service could turn out to be a major rival to the newly launched Amazon Unbox, which announced a major deal with the BBC last week for a service offering thousands of BBC programmes.
The deal was struck with BBC Worldwide and will offer content including, drama, science fiction, documentaries and news.
Unbox will also include film downloads from Hollywood studios, including 20th Century Fox and Warner Bros, and US TV shows from networks such as CBS and Fox, which can be downloaded and watched on personal computers or MP3 players.
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