Online retailer Amazon has launched a new download service for movies and TV shows, pre-empting the expected launch of a similar service by Apple this week.

The announcement of the service, called Amazon Unbox, is set to fuel further competition between the two firms. Apple is expected to announce the launch of a movie download service on Tuesday as part of its iTunes service, which already allows users to download TV shows.

Amazon Unbox will not be compatible with Apple's iPod. The service is solely compatible with Microsoft Windows XP and not with Macs or older versions of Windows.

The launch of Amazon Unbox follows AOL's launch of a similar service last month. Amazon Unbox will offer content from several Hollywood Studios including 20th Century Fox, Warner Bros and Lions Gate Entertainment. Several major American TV networks have also signed up with CBS, Fox and Comedy Central all providing content. In all, 30 studios and networks will provide content for the service.

Users of the service will be able to download permanent copies of movies directly to their PC at prices ranging from $7.99 to $14.99, with temporary movie rental costing $3.99. TV shows will be $1.99 to download per episode.

Television programs will be available to customers within a day of the episode airing on terrestrial TV, while customers must watch rented movies within 30 days of purchase and within 24 hours of initially pressing the play button.

The service will allow users to view the movies on their PC or to transfer them to another computer. The service will not, however, allow for movies or TV shows to be burned onto recordable DVDs. Prior to these recent moves downloadable films were only available for rental purposes through sites such as Movielink and CinemaNow. Last spring, both companies announced they would offer a permanent download service.

Amazon owns movie website imdb.com, which attracted 18.7m unique visitors in July, and also offers downloadable books online. The announcement of the Amazon Unbox launch was made after the market closed and the company's share price ended the day down $1.07 at $29.73 on the Nasdaq. Extended trading following the announcement saw the price rise by $0.23, up nearly one per cent. Shares of Apple closed at $72.80 and fell $0.03 in extended trade.

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