A few years ago, we couldn't have pictured Apple entering the video-on-demand business. But a new Financial Times report says just that: Apple is in advanced talks with Hollywood's largest movie studios about launching an online film rental service to challenge cable and satellite TV operators.

"Apple already sells films that can be downloaded and owned, and has distribution deals with Walt Disney and Paramount. Other studios have shied from tie-ups with Apple because of concerns that digital downloading may hit DVD sales."

As the article correctly asserts, Hollywood studios should be more enthusiastic about joining its video-on-demand service, since films downloaded to rent are unlikely to affect DVD sales.

Hollywood studios in video talks with Apple [Financial Times]