So, the music industry sorta missed the boat a while back and is desperately trying to claw it's way back to profitability. The digital "revolution" came along, the major labels didn't change their distribution structure and guess what? They paid the price... and they all paid the price, from the labels all the way down to the artists. Now, what can Hollywood do to avoid the same fate? P2P file sharing, VOD, IPTV and the like are all starting to chip away at the business and some people, like Mark Cuban and his 2929 Entertainment, are trying to shake things up by doing simultaneous releases online, in theater and on DVD. However, the studio's aren't biting, they're pretty much operating the same way as when 'moving pictures' first added sound.
Under the current theatrical distribution system, the theaters tend to only screen big budget movies. The reason they do this is because they need to ensure that they can sell enough tickets to pay for the cost of screening the film. A movie that only screens once or twice just doesn't make much economical sense. However, what would happen if we could eliminate the cost of shipping the film... and eliminate the time it takes to get to the theatre... and the cost to make it... what if we could just eliminate ALL of that and deliver it to the theaters instantly, on demand. What if we could send movies to the theater digitally?
In my opinion, digital cinema is going to change up everything for indie filmmakers, especially horror filmmakers. There's such a huge fan base for horror and, quite frankly, you don't need a massive budget to be good. A few days ago, I stumbled across the website of a company called International Datacasting, check out their site here. They specialize in products, systems, and service for broadband multimedia content distribution via satellite. Once of their products is digital cinema. Here's a schematic of how their system works...
Essentially, they take any sort of digital media and broadcast it, through a satellite system, to any destination, in a high quality format. Now, what would happen if theatres had this technology? Well... imagine a low-budget horror night in the cineplex where the theatre shows three trailers and the audience could vote on which one they want to see through text messaging, then which ever film gets the most votes would screen instantly. It would be a whole new market for low-budget filmmakers. You could upload your film to a central site and theatres across the world could opt to pick it up and screen it anywhere. No transferring to film, no shipping reels, no distribution costs. Just upload and screen it anywhere. What would this mean to the theatres? Infinite amounts of more product and choice at lower screening costs. All of a sudden, you could screen whatever your audience wants. If there's enough people that want to watch low-budget horror, screen low-budget horror. If people want to watch live sports, screen live sports. If people want to watch "Pirates of the Carribean VI", screen it. What would this mean to the studios? Well... obviously nothing good in the short term.
The studios, essentially, have what's called an oligopoly on a product, which means they're in a market that's dominated by only a select few. They can control what goes out by talking with each other, figuring out release schedules and not interfering with each other. This could be called collusion, which "takes place within an industry when rival companies cooperate for their mutual benefit." Having said that, there's no reason that they can't adjust their business plan and compete in this new marketplace. Maybe they could cater to a wider variety of people by making more product? All you'd have to do is spread your money around a little. Spend less per project and make more films. It may mean that all the above-the-line guys have to work a little harder and it may also mean that the studios would need more producers, directors, writers, etc... a big shift from the current system, to say the least.
I could write a book about this... but to some up, digital cinema would help the movie theaters, by offering more product at lower costs. It would help filmmakers because it opens up a new, more efficient, lower cost form of distribution into theatres. It would benifit film-goers, as it would offer them more choice. ...but it would hurt the studios in the short term.
So, we're not there yet, but we will... one day.