The Lord of the Rings topped DVD charts

File-sharing and CD/DVD piracy will only have a limited impact on digital film sales, said Informa Media.

Instead Hollywood will actually thrive on the internet through legitimate online sales, the group's report adds.

Although the study estimates losses to the film industry of $460m (�275m) in 2010, it predicts legitimate global film sales will soar.

Legal movie sales via the internet will outstrip the losses from piracy, raking in $3.49bn (�2.1bn) by 2010, said the group in its report Film on the Internet.

According to the group's research, about 1% of the current 1.5m broadband users connected to a pirate peer-to-peer network are actively downloading at least one film at any one time.

Crackdown

This will lose the film industry $92m (�55m) in 2003, said Informa Media, reaching the $460m figure in just seven years.

In other predictions for 2010, Informa Media said North America would still sell the most movies online, accounting for 41.9% of the global total.

DVD sales would be reduced from 97% to 75% of the digital film sales market by 2010.

Among the online formats, digital downloads are expected to be the most successful. Streaming is less attractive because users have to be online while watching, whereas downloading allows users to watch the film file at leisure.

The group predicts subscription services will be a success, particularly to sites which offer a wide range of independent films.

The Motion Picture Association of America (MPAA) recently launched an advertising campaign to fight piracy.

They have also issued a ban on "screeners", the DVDs of Oscar-nominated films issued to Oscar voters.

Hundreds of stars and filmmakers are protesting against the ban, saying it will curb the chances of independent films because the screeners are sometimes the only chance for their films to be seen.