Proving the speculation to be right, Apple chief executive Steve Jobs has unveiled an iPod media player which is capable of playing video.

At an event in San José, California the company also showed off a download service where consumers can buy music videos and five television shows owned by Disney, as well as six short movies from Pixar, an animation studio headed up by Jobs. All downloads will cost $1.99.

The introduction of a video iPod had been much anticipated and was the centre of rumours ever since Apple sent out invitations to the event a week ago.

The video iPod features a TFT screen with a resolution of 320 by 240 pixels. The iTunes video downloads will be formatted for this resolution. A typical computer monitor today has a resolution of at least 800 by 600 pixels and the average television has 640 by 480 pixels.

The new player is thinner and slightly wider than the current iPod. It comes in a 30Gb model selling at $299 and a $60Gb one for $399. They will be shipping to stores by next week, said Jobs.

Users will be able to play video downloads on television by connecting it with their iPods via a special video cable. The video downloads also will play in the iTunes media player.

At the event Jobs called the introduction of the video download service a breakthrough. Movie and television studios have been reluctant to make their content available in a downloadable format because of piracy concerns, he said.

"We are beyond thrilled about this," Jobs said about the video download service. "Sometimes that first step is the hardest one and we have just taken it."

The video download content will be governed by the Fair Play digital rights management technology which is also used for music purchased through Apple's iTunes store.

Consumers will be allowed to play the content on up to five computers and an unlimited number of iPods. Burning the file to a CD or DVD is not blocked.

Disney will make available five of its television shows for download, including Desperate Housewives and Lost.

"This is a first giant step in terms of making content available to more people in more places," said Disney chief executive Robert Iger at the Apple event.

Apple also presented an updated version of the iMac. While the design of the consumer desktop computer has not changed much, the latest model features a built-in camera and comes with a remote control.

The remote allows the owner to control the device from across the room though an application called Front Row. It effectively turns a computer into a media device that plays music, displays photos and shows movies, including content downloaded from the iTunes store.

The iMac is available in a 17in and 20in version, selling for $1299 and $1699 respectively, and is scheduled for availability by the middle of next week.