Studios have, until recently, been cautious about opening up their catalogues to video downloading, allowing consumers to access films only through current online subscription, download-to-rent and download-to-own models. Fears of piracy have prevented Hollywood from taking a share of the internet pie while user-generated content sites such as YouTube and MySpace continue to grow.
But attitudes towards downloading films are changing as studios have seen the success of advertising-supported models. Last week, European DVD rental and movie download company Lovefilm.com launched an initiative in which 100,000 advertiser-sponsored features will be offered for customers to download for free for a limited period. The company will also launch downloads-to-burn of about 100 films in April, priced at $19.27 (£9.99) per film.
In the US, the bulk of free internet video comes from short-form content such as TV programmes, with major networks offering advertiser-sponsored video downloads on their official websites. When users log on to watch a programme, it is previewed with commercials, generating a share of profit for the major networks and TV studios.
A report from Adams Media Research and Screen Digest suggests that movie studios could take a substantial chunk of the downloading market and generate more than $2bn in download-to-own movies by 2011. The report found that following the launch of Apple's video iPod in 2005, downloads of TV programmes - available at $1.99 per episode - took $84m in 2006, while the online rental and purchase of feature films took just $29m in the same year.
However, it suggests this latter figure is low due to the current lack of technology to transmit downloads onto a television. In addition, download-to-burn has yet to be wholly supported by the major studios.
Screen Digest research analyst of broadband and digital media, James Garlick, says: "Many major studios are waiting for a CSS-based format - an encryption protocol currently used in manufactured DVDs - to be integrated into a consumer-burn solution. This will mean special equipment will be needed to download the videos and this isn't expected until later this year."