Apple and 20th Century Fox studio are to announce a deal that will allow consumers to rent the studio's films through iTunes, media reports say.
It is said Fox would sell DVDs with Apple's Fair Play DRM protection
They will have a limited time to watch films downloaded from the iTunes store, a source told the Financial Times.
If the reports are true, this looks like a new assault on the video and movie market, says BBC News technology correspondent Rory Cellan-Jones.
Apple shares traded above $200 for the first time on Wednesday.
The rumours about Apple's products and software to be unveiled at the company's major event of the year, MacWorld 2008 in San Francisco on 14 January, are swirling around, our correspondent says.
Video sales on iTunes have been sluggish and the Apple TV - a set-top box linking the computer to your television - has failed to win a place in millions of living-rooms.
It looks like video could be a new key theme for Steve Jobs' Apple
Besides, the big players in television and in Hollywood have been wary of doing deals with Apple, after seeing the position of strength that Steve Jobs' company has built up in the music business.
So the negotiations with the studios over movie rentals on iTunes have reportedly been tortuous.
Now it looks as though Fox, owned by News Corp, has decided Apple is the only game in town when it comes to getting movies onto new platforms, our correspondent says.
Particularly interesting is the idea that Fox would sell DVDs with Apple's Fair Play DRM protection, making it possible to put a movie onto an iPod.
Of course, millions of people have already found ways of doing that, but this time, it would be legal.
Apple and Fox will be hoping this will have the same impact on consumers as the arrival of the iTunes music store, which encouraged some of the millions who were swapping songs on the internet illegally to start paying for music online, our correspondent says.