Online movie downloading is becoming a serious business for Hollywood studios in the US and Western Europe, according to a report from analyst Screen Digest.

But the authors warn that the fragmented approach to new media distribution could sall growth.

Download to own will not only benefit the studios but also those making the hardware to play movies, such as Microsoft, Apple and Sony, according to the study called Online Movie Strategies: Competitive Review and Market Outlook.

By 2011, it predicts the market will be worth $720m in the US and $572m iin Western Europe. That equates to 3% of all movie home entertainment revenues in the US and Europe.

Report author and senior analyst Arash Amel said: 'It is becoming
increasingly apparent that people want to watch films they've downloaded
on their large screen TVs and home entertainment systems. To do that, they
need a new device, such as an Apple TV, an Xbox, a PS3 or a plain old media
extender, which can link their broadband connection to the TV set. At
present, there simply isn't adequate penetration of these devices.'

At the same time studios are pursuing their own separate approaches to downloads in areas such as release dates.

Such decisions are taken by balancing the potential of online with the desire to protect DVD and shore up relationships with DVD sales outlets such as supermarket.