Just recently, Microsoft was accused of being the main culprit behind the Blu-ray & HD DVD disc war in an aim to cause both formats to fail and potentially bring consumers to HD digital downloads.  However, even if this is the case and consumers turn to online HD downloads, Microsoft may face the same problem it had competing with iTunes for music, as Steve Jobs has unveiled its new movie rental service at the Macworld keynote, which includes titles in high definition.

Going by the announcement, Apple will provide a free software update to enable iTunes Movie Rentals to be transferred to the iPhone and iPod series.  It will include movies from at least 6 major studios and some others and will launch 1,000 titles by the end of February.  Further titles will be added 30 days after the DVD release.  New releases will be available for US$3.99, with earlier titles for US$2.99.  High Definition versions where available will be priced $1 more.  Once the movie is downloaded, it expires 24 hours after the first viewing and consumers have up to 30 days after downloading to watch it. 

It is unclear at this time whether its high definition titles will be encoded in 720p or 1080p or what the hardware requirements will be.  For example, if it does not require HDCP capable graphics cards and monitors to view, this would give it a significant competitive advantage over both HD disc formats for PC viewing.  One benefit is that it will do away with the need for a Blu-ray or HD DVD optical drive to play the HD titles.  However, the 30 day waiting period after the DVD release for the iTunes release may put some who want to watch the movies the moment they are released in the shops.