The future of movies on the internet and mobile phones lies in allowing users to download films to keep, a report has said.
Mobile phones could be the future of film downloads
The Screen Digest report stated the fledgling industry poses a threat to the traditional film business.
It suggested a key factor for film's future will be flexible Digital Rights Management (DRM), which controls how users can view content.
Many digital movie downloads are offered for a rental period only.
However several companies are now able to offer film downloads to users on a permanent basis, having signed deals with the major Hollywood studios.
The report said the film industry needs to learn lessons from the music business, which was caught off-guard by the advent of digital music downloading, losing money to illegal music websites.
By making movies available to download and own, services would be able to charge a higher price and see a better profit margin, the report said.
"Digital download-to-own is the new holy grail of the film and TV industry as it fights to respond to the twin challenges of piracy and new market entrants," said Ben Keen, chief analyst of Screen Digest.
"However, the consumer must be at the centre of all new strategies and DRM systems that are not sufficiently flexible are doomed to failure," he added.