As reported by Think Secret, according to a "highly placed industry executive" CEO Steve Jobs is currently in talks with major movie distributors regarding a possible iTunes movie distribution system for full-length videos. According to this source, talks are getting rather serious and a deal is becoming closer and closer to reality, more so than ever before. The hold up as of now is a major conflict between the distributors and Jobs on a method of payment. Jobs currently wants to keep a payment implementation similar to that of the existing scheme of pay as you go.
The movie distributors however in direct conflict with this seemingly very successful payment system favor a limited subscription based scheme similar to that used by current movie content distribution services such as Netflix. Such a scheme basically includes a system in which you pay a monthly fee in exchange for an unlimited number of rentals. It is this major factor in a media content distribution deal between Apple and movie distributors such as Starz that is holding up a possible deal. As it stands now, both sides are very unwilling to budge and make even a compromise.
This controversy comes at a time where Apple is supposedly preparing a video dedicated iPod as previously rumored. Only time will tell whether or not these bumps in the road are smoothed out in time for an alleged April 1st (Apples 30th Anniversary) product announcement.
News source: Think Secret