In the 1980's CDs sounded the death knell for vinyl. A guy I know bought the last record pressing plant in Australia and established Corduroy Records. Everyone said he was mad. Then along came techno and DJs everywhere wanted to spin and scratch and mix it up. He couldn't keep up with demand, even though techno was his least favourite form of music. Something similar will happen to film.
Read 'The Long Tail' by Chris Anderson, former editor of Wired Magazine. This medium- the internet- allows people to sell to the tail, not just to the mainstream. Let the digi-folks have the mainstream. Retail shops have finite floor space and they have to cater to the mainstream. The film tail is wagging online with a whole lot of smaller companies, facilitated by internet distribution, doing reasonably well. Those with the imagination, like Nick at Corduroy Records, will go far in their niche, however tiny it is.