DALLAS — Shares of Blockbuster plunged nearly 17 percent yesterday after a new challenge emerged to the world's largest chain of movie-rental stores: Apple Inc. announced it now offers movie downloads via iTunes.

Customers of iTunes can now download older movies and those just released to DVD, in regular or high-definition format, to watch on their TVs, iPods, iPhones or computers.

A spokeswoman for Blockbuster said the Dallas-based company welcomed Apple CEO Steve Jobs' announcement, made at the Macworld Conference and Expo in San Francisco yesterday.

She said the new service will speed consumer embrace of movie downloads.

Blockbuster bought the Movielink download service last year to add digital service to its store and by-mail offerings.

But investors saw things differently. Blockbuster shares fell 54 cents, or 16.7 percent, to close at $2.69 yesterday.

Apple shares also slipped, losing $9.74, or 5.5 percent, to close at $169.04, as investors seemed underwhelmed by the trendsetting company's latest product, a slim MacBook Air notebook, also unveiled yesterday. In after-hours trading, Apple's shares fell another 3.6 percent, to $163.01.

The six major Hollywood studios are supporting Apple's new service, which began yesterday in the United States and will be rolled out internationally later this year.

Apple's service appears competitively priced — $3.99 for new DVD releases and $2.99 for older movies, plus $1 for either one in high-definition. Users can keep the movie for 30 days but have 24 hours to finish watching it once they start.