Steve Jobs, the company's chief executive, said that Apple would also deliver a device in the first quarter of 2007 to let consumers stream movies, music, photos, podcasts and television shows from the web to their home entertainment systems.

Code-named iTV, the device will cost $299. Analysts said on Tuesday that it could solve the entertainment industry's dilemma of bridging the gap between the living room television and the computer.

Apple's eagerly anticipated movie service will sell new releases from the Disney, Pixar, Touchstone and Miramax studios for $12.99 if pre-ordered or bought during the first week available. Normally, new releases will cost $14.99 and other feature-length films will cost $9.99.
   
Jobs said that about 75 films are now available on iTunes, and that they take about 30 minutes each to download for users with high-speed internet connections.

Consumers can view the movies on their iPods and computers, and eventually on televisions with the upcoming iTV player.
   
"In less than one year we've grown from offering just five TV shows to offering over 220 TV shows, and we hope to do the same with movies," Jobs said.

"iTunes is selling over 1 million videos a week, and we hope to match that with movies in less than a year," he added.
   
New iPods

Jobs, a Disney director and one of the company's largest individual shareholders, also introduced new versions of the iPod with brighter screens and longer battery life as Apple looks to expand its dominant position in digital music.
   
Analysts have said it was only a matter of time before Apple started selling full-length movie downloads via iTunes, which has already sold 1.5 billion songs and more than 45 million TV shows.

Longtime Apple watcher and analyst Tim Bajarin of Creative Strategies said: "Any of the other studios would be crazy not to jump on this."