What's the story with online movie rentals?

If you go in to a DVD rental shop this week in search of the newly released Bourne Ultimatumto while away a couple of winter hours, you'll be asked to shell out as much as €5.25 for a copy.

Quite how charging a third of the full retail price of the DVD - it is currently for sale on CDwow.ie for €16 - for a single night's rental can be justified is impossible to say, although it's hard to escape the notion that we're being ripped off.

However, the days of having to pay such high prices may be numbered. In recent years, we have seen the growth of online movie rental services which can save movie fans a substantial amount both on the cost of actual rental - packages start from €7.99, although that does limit you to just two DVDs a month - and on the late fees imposed if (or in the case of Pricewatch, when) you don't bring them back on time.

While mail delivery can certainly prove better value than the high street, the best deals should soon be widely available directly on the internet. Movie downloads for all will come a step closer later this month when Apple formally announces a long-anticipated partnership with News Corp's 20th Century Fox.

The deal will make more blockbuster movies available for short-term download for significantly less than the cost of full-price rentals.

Before you tear up your video-shop membership card, it should be noted that this service is unlikely to be accessible to Irish viewers in the short term. As with Apple's previous announcements concerning movie and television-show availability, the deal is likely to be accessible only in the US, as content agreements allowing multi-region distribution are rare.

One online service which is available to Irish consumers is Microsoft's Live Marketplace Video Store video-on-demand platform, which was launched last month. Although it currently offers less than 50 Warner Bros titles, including The Matrix, 300and the Harry Potterseries, Microsoft is confident it will be in a position to give users a much wider variety as the year progresses.

At present Xbox 360 owners can rent full-length standard-definition movies for €3 and high-definition movies for €4.50. With a 3MB broadband connection, standard-definition films will take around an hour to download, while downloading high-definition equivalents currently takes up to four hours.

The pricing structure is not cheap, particularly as the films can only be watched once, but it does offer an interesting glimpse of the future.

The internet has completely changed the way the entertainment industry does business, and according to the Writer's Guild of America - which is currently on strike in search of a piece of the online cash pie - streaming video will generate more than €3 billion in additional revenue over the next three years.

The Alliance of Motion Picture and Television Producers (AMPTP), which controls the purse-strings and which is resolutely refusing to concede to the striking writers' demands, claims there is no guarantee of money from online content and has, somewhat disingenuously, described the internet as a mere promotional tool with no proven value. However, if that were the case, would Viacom, a major partner in the AMPTP, really be suing YouTube for $1 billion (€680 million), claiming that its unauthorised showing of 160,000 programme clips attracted more than 1.5 billion online viewers?

The online movie market did take a knock just before Christmas when Wal-Mart, which has 40 per cent of the physical DVD market in the US, announced it was pulling the plug on its download service.

It had been selling 3,000 movie titles and TV episodes, but its digital rights management software (DRM) prevented downloaded movies from being watched on more than one computer or, critically, on iPods, which limited its audience considerably, and it failed to capture the public's imagination.

Almost all the main industry players, including rental companies such as Blockbuster and Netflix and online retailers such as Amazon, are, like Apple and Walmart, currently trying to work out how to maintain their lucrative profits from DVD rentals and sales in the face of illegal downloads, which are becoming more reliable and easier to access.

Many thousands of Irish people are taking advantage of high-speed broadband access to download movies and TV shows illegally before they even reach these shores.

Shaun (not his real name) has illegally downloaded around 50 movies, from It's a Wonderful Lifeto The Simpsons Moviein the last 12 months and is completely unrepentant. He has a 500GB hard disk hooked up to his TV with software installed which allows him to watch the downloads in his sitting room, and he is confident he will never buy or rent a DVD again.

"A lot of the films I have downloaded, I've already seen in the cinema, so in one sense I've already paid for them. Others are already being shown on the TV and I don't really see how downloading them is any different from recording them off Sky or RTÉ," he says.

"Is it piracy? Of course it is. Am I breaking copyright law? Of course I am. But I spend a lot of money bringing my kids to the cinema, so I don't feel bad about downloading movies as well. Who am I really harming? An industry which has been ripping people off and charging over the odds for years?"