A new two-part report from The Diffusion Group (TDG) shows that 23% of broadband-connected consumers would pay US$10 per download for movies from the iTunes Music Store, while just 14% would be interested in paying $15 each.

TDG founder Michael Greeson speculated in a press release that Apple insisted on charging $10 for all movies, half the cost of other online services, but the studios demanded $20 per download. He thinks that the two agreed to split the difference and will sell movies for $15 each. "All things equal, this appears to make sense," he said.

He also addressed the timing of Apple's entry in this market, which many pundits assume will happen next Tuesday, during the company's scheduled press event in San Francisco. "Although current services such as CinemaNow and Movielink continue to languish," Mr. Greeson said, "Apple is aware that the conditions are now suitable for extending iTunes to include full-length movie downloads. Consumer awareness has improved; video-over-broadband is now viable; studios are now making movies available for online download to DVDs; portable video platforms are improving qualitatively with each new generation; and Apple's brand awareness and credibility are at all time highs."

He concluded: "As well, CinemaNow and Movielink's experience, while insightful, is of limited value to Apple, who continues to enjoy the fruits of being a market-maker in portable digital electronics and online media services."

In addition, he told MarketWatch's Frank Barnako: "Connecting ... to the living room TV is imperative to expanding the online movie market beyond the earlier adopters and to helping move Apple into the living room."

On the Viability of an iTunes Movie Download Service is available from TDG in two parts: part one looks at getting movies onto computers while the second part examines how Apple might enable consumers to play those films back on their TVs. Each one sells for $1,495 for an individual license or $2,490 for an enterprise license.