Disney, Fox, Paramount, Sony, Universal, Warner: along one aisle of September's World Airline Entertainment Association (Waea) convention in Toronto, the majors were looking to sell their movies to the world's most captive audience.

Extreme long-haul flights (Los Angeles to Singapore, for instance, takes 18-and-a-half hours) are increasingly the norm. Strapped in with nowhere else to look, passengers are watching three or more films in one flight. That is often more than many see in a year at the cinema. As the second distribution window, in-flight entertainment (IFE) is a prestigious niche market.

Airlines have been showing movies since the 1940s. But the IFE world is undergoing a transformation that at once lags behind, parallels and leads the portable digital revolution shaping consumer electronics and home entertainment.

As in the greater entertainment universe, the agents of change are the shift to digital media, both in terms of hardware and software and the portability of electronic entertainment devices; a third factor, exclusive to IFE, is seat-back viewing.

Airlines are essentially individual exhibitors purchasing rights for given territories based on the location of their headquarters.

A rights holder selling the German rights to a film will be able to sell those rights to Lufthansa or any other German carrier, regardless of where they fly. Other companies act for the airlines, programming film selections for smaller carriers. With 20-30 new titles on offer every month, a larger airline requires a full-time staff to process the film selection.

There are the majors and there are the independent distributors, although their size does not necessarily dictate the scale of the movies they license.

Los Angeles-based film executive Betsy Hamlin co-launched Jetstream Pictures in 2005. Her first title was (bravely) Crash, for which she brokered an international IFE sale through Syndicate Films. Hamlin says the presence of independent distributors such as Jetstream in the field allows more opportunity for arthouse producers to sell into the IFE market.

Jetstream reflects the rise of well-financed independent producers, such as Crash's Bob Yari, and the shift of the majors from content creation to distribution. Production company Hyde Park Entertainment sold Premonition to Sony Pictures for domestic but held onto international rights. So Sony will handle in-flight sales to North America-based airlines while Jetstream is handling international sales for Hyde Park.

Hamlin says a savvy rights holder will hold back airline rights from each territorial deal because they can generate more revenue as a bundle through an IFE distribution deal.

An airline tends to reflect the regional tastes seen in theatrical releases. A south-east Asian airline is likely to buy action titles while a European airline will buy more drama. 'Common sense dictates that you stay away from films that scare passengers or that deal with politically, socially or religiously controversial subjects, such as abortion,' says Hamlin.

That a film entitled Crash is even shown on an airplane says something about the changes in the sky. Virgin Atlantic set an industry benchmark by offering the jet-set terror-ride Snakes On A Plane in its original theatrical format.

Further down the supply chain, independent distributors will license dubbing tracks from theatrical distributors internationally. For example, Jetstream approached Aurum for the Spanish-language dubbing track of The Hunting Party and Eagle for an Italian dub-track for The Hoax.

Some airlines cater to a broad range of tastes: Dubai-based carrier Emirates has more than 180 features, from Hollywood, Bollywood, Nollywood, Arabia and east Asia available in economy. Some, such as US regional carrier Alaska Airlines, offer entertainment on a usage basis via personal entertainment devices for hire. Either way, consumption of movies two miles up in the air is going sky high.

Patrick Brannelly, Emirates' vice-president of passenger communications and visual services, says: 'Per unit we're probably paying less but the volumes have increased. Today we're spending considerably more in Hollywood per aircraft than we were a decade ago.'

Julian Levin, executive vice-president of digital exhibition and non-theatrical sales and distribution at Twentieth Century Fox, cannot divulge his share of the IFE market but it is clear from the glamorous Waea convention accommodation and, indeed, his presence, that the majors see IFE as a solid business.

Both agree seat-back screens have altered IFE radically. Sophisticated audience-tracking technology allows an airline to measure in real-time the exact usage of each passenger. The data, fed into a central processor at the airline's headquarters, provides an instantaneous Nielsen-rating and allows the company to forecast demand.

The technology and practice present an interesting case study for the industry, given the thorny issue of online monitoring and audience-tracking.

Levin says technology will shape the structure of deals. 'The system infrastructure will log what each passenger watched and for how long and that could have an impact on how licensing would work. It's an issue of shelf space and actual usage. We could have a mix of licensing and revenue-sharing. All these issues are under discussion.'

Flying Theatres - a brief chronology of movies in the air

1921 - In Chicago, aeromarine Airways shows films promoting the city aboard an 11-passenger hydroplane during sight-seeing flights.

1925 - In London, passengers aboard a converted First World War bomber watch a short film, The Lost World, during a 30-minute flight.

1941 - In New York City, Veronica Lake makes a live appearance following the screening of her film aboard a specialised US Navy cargo plane.

1948 - Pan American's Clipper screens Stage Coach for transatlantic passengers with a projector in the aisle. Stewardesses serve refreshments during reel changes. Audio is problematic as headphones are not yet introduced.

1961 - Trans World Airlines screens By Love Possessed to launch the first standardised in-flight movie system using an enclosed 16mm projector (with a single extra-large reel to avoid reel changes) and audio headsets.

1962 - Pakistan International is the first non-US carrier to adopt the same system.

Late 1960s - The introduction of Super 8mm film cassettes simplifies the projection process. Flight attendants rather than ground crew can accomplish the task while the format's portability allows for an increase in onboard selection.

Late 1970s - The introduction of video-cassette players and video projectors further streamlines the process and expands the library dramatically. The percentage of screening failures drops to single digits.

1980s - The LCD screen marks the dawn of personal seat-back entertainment. The first screen is 2.5 inches diagonally.

1992 - Emirates becomes the first airline to offer seat-back viewing in its entire fleet.

1990s - The advent of DVD, improved screens, overhead video projection and noise-cancelling headphones.

2000 - High-capacity hard-drives store hundreds of individual titles, ranging from movies to television programmes to music clips