With the major studios exerting such a profound influence on the worldwide production, distribution, and exhibition of movies, new alternatives have helped open and redefine the movie industry. The digital revolution in movie production is the most recent opportunity to wrest some power away from the Hollywood studios. Substantially cheaper and more accessible than standard film equipment, digital video is a shift from celluloid film; it allows filmmakers to replace expensive and bulky 16-mm and 35-mm film cameras with less expensive, lightweight digital video cameras. For moviemakers, digital video also means seeing camera work instantly instead of waiting for film to be developed and being able to capture additional footage without concern for the high cost of film stock and processing.

By 2002, a number of major directors—including Steven Soderbergh, Spike Lee, Francis Ford Coppola, George Lucas, and Gus Van Sant—began testing the digital video format. British director Mike Figgis achieved the milestone of producing the first fully digital release from a major studio with his film Time Code (2000). But the greatest impact of digital technology is on independent filmmakers. Low-cost digital video opens up the creative process to countless new artists. With digital video camera equipment and computer-based desktop editors, movies can now be made for just a few thousand dollars, a fraction of what the cost would be on film. For example, Paranormal Activity (2007) was made for about $15,000 with digital equipment and went on to be a top box-office feature. Digital cameras are now the norm for independent filmmakers, and many directors at venues like the Sundance Film Festival have upgraded to high-definition digital cameras, which rival film’s visual quality. Ironically, both independent and Hollywood filmmakers have to contend with issues of preserving digital content: Celluloid film stock can last a hundred years, whereas digital formats can be lost as storage formats fail and devices become obsolete.²⁰

Because digital production puts movies in the same format as DVDs and the Internet, independent filmmakers have new distribution venues beyond film festivals or the major studios. For example, Vimeo, YouTube, and Netflix have grown into leading Internet sites for the screening and distribution of short films and film festivals, providing filmmakers with their most valuable asset—an audience. Others have used the Web to sell DVDs directly, sell merchandise, or accept contributions for free movie downloads.