Lights out for Netflix

Apple and 20th Century Fox studio have inked an agreement that enables consumers to rent Fox DVDs on iTunes.

Once paid for and downloaded, the digital video will be available for a limited period of time, reports the Financial Times.

The move places Apple squarely in Netflix territory, but the online DVD rental service is expected to pose little threat against iTunes' mass appeal.

"Fox and potentially other ­studios are coming around to the idea that there is nobody out there to challenge iTunes," said Jonathan Weitz of IBB Consulting.

In January, Netflix launched an online video streaming service. The move was promising but left undeveloped. Today the service is critiqued for users' inability to download films (unless they are hacked), for its incompatibility with Mac users, and for lack of a standalone business plan.

Streaming movies are available only to customers subscribed to a mail-in DVD rental plan, and the selection has remained stagnant.

In addition to enabling users to download Fox rentals from iTunes, Apple plans to extend its FairPlay DRM system beyond proprietary products. Fox DVD releases will come with FairPlay file protection, which enables the content to be legally transferred to computers or video iPods.

This may increase user awareness of the iTunes/Fox rental service and encourage others to buy video iPods.

The deal, along with prospective costs for the rental service, is expected to be announced at the Macworld show on January 14th.