Apple and Twentieth Century Fox announced they will soon allow consumers to rent Fox movies through iTunes:
The agreement will allow rentals of Fox's latest DVD releases by downloading a copy from the online iTunes store for a limited time, the Financial Times said. The Wall Street Journal also reported the deal in its online edition.
Fox's corporate parent, News Corp, had no comment. An Apple spokesman could not be reached immediately for comment.
The reports sent shares of Netflix Inc, a leading online DVD rental company, and Blockbuster Inc, the largest U.S. movie rental chain, down nearly 5 percent in morning trade.
Analysts were divided about what impact the Apple-Fox deal would have on the $9 billion U.S. movie rental business, which has seen steady declines in in-store rentals and slowing growth online in the past year.
Pali Research analyst Stacey Widlitz said the deal follows a trend of Hollywood studios selling directly to consumers and "cutting out the middleman."
"It's just a sign the studios feel ... that another distribution channel is where they are choosing to go, and incrementally it hurts Blockbuster and Netflix," Widlitz said.
However, Wedbush Morgan analyst Michael Pachter said the deal probably would expand the universe of online renters.