Facing deeper competition and consistent requests during negotiations, Apple has bowed to demands from the film studios and agreed to higher prices for film downloads through iTunes, opening the door to an expansion of available content.

As first reported by Electronista, Pali Research analyst Richard Greenfield believes NewsCorp's Twentieth Century Fox is close to striking a deal with Apple to offer digital copies of its major motion pictures through iTunes.

Greenfield expects the deal to bear fruit with new film titles being made online through the service in "early 2008", so as not to interfere with this season's DVD sales.

Apple has clinched the deal by agreeing to allow studios to sell films for more than the $15 per title price that company was originally bargaining for. Only Disney, MGM, Paramount and Lionsgate have agreed to release their titles through iTunes at that price.

Greenfield also speculates that film studios may in future sell conventional DVDs of their films that also carry pre-encoded versions of the flicks which can be imported into iTunes for playback on devices. These titles will cost $3-$4 more per title than versions without this.

"While we suspect FOX will be the first studio other than Disney to fully embrace iTunes, we believe others will quickly follow suit," the analyst wrote.

The analyst pointed to increased competition and growing consumer desire for the facility to access content in this way as drivers for the deal, but warned the studios will be unprepared to cannibalise DVD sales in order to popularise online services, at least at this stage in industry development.