Stephen Fraser practises law in Toronto and Los Angeles with the firm of Fraser - Entertainment Law. Special thanks to Mike Wagman for his assistance with this article.

A lot of attention has been given to DVDs of late. This year alone has seen no shortage of new product and press about the DVD phenomena. DVDs are difficult to ignore, because sales and rentals have accounted for the biggest portion of the revenue pie for the film and television industries for a number of years now.

While the pace at which the DVD has come to dominate the market warrants that attention, the recent news about large-scale returns for DVDs of Shrek 2 and The Incredibles point out the weaknesses inherent in the DVD, if not any media. In fact, too much focus on DVD returns risks losing sight of the larger revolution taking place in the production and distribution of movies and television programming.

At the risk of stating the obvious, DVDs are merely one aspect of an industry shift to digital. With all content broken down into bits, that content can be captured (digital cameras), manipulated (editing and computers), packaged and delivered (distribution) with greater ease and speed than ever before. The possibilities this raises are radical. The changes wrought by the DVD only hint at these possibilities.

Consider 2929 Entertainment's plan to release its films to theaters, DVD and pay-TV simultaneously. With the gradual shrinking of the theatrical-to-video release window, it was only a matter of time before day-and-date release strategies would spread. 2929 owns a theater chain (Landmark), two pay-TV channels (HDNet and HDNet Movies) and has a distribution arm. Headed by Mark Cuban (owner of the Dallas Mavericks) and Todd Wagner, even they would admit that the risks of their strategy are diminished by such vertical integration.

What made 2929's approach shocking was its announcement that director Steven Soderbergh was onboard to make as many as six films for such unified release. This is the same Soderbergh who directs Julia Roberts and Brad Pitt on a regular basis. He is also a director with considerable indie clout. The first film Soderbergh has proposed directing for the 2929 deal is low budget ($2 million to $3 million), with no stars in the cast.

Understandably, some theater owners have become nervous with shrinking release windows and talk of day-and-date releases. It holds the potential of reducing their returns at a time when their industry in North America is still stinging from bankruptcies, consolidation and diminishing audiences. A number of theater chains have refused to run 2929 films, but with the success of its documentary Enron: The Smartest Guys in the Room, some of the resistance has fallen.

The digital revolution has also resulted in a flood of new talent and projects being produced. The amount of content available for distribution has never been greater. Even with the increase in available distribution channels, distributors still have a lot of work to do to reach an audience.