The last picture show? Soderbergh's baby is set to revolutionise movie releases

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To anyone in the business of making and selling movies, tomorrow is a day to be approached with trembling, if not outright dread.

The naysayers and alarmists with whom Hollywood abounds, say it could be the beginning of the end of the film industry as we know it. Or, to believe the visionaries and dreamers who are equally plentiful in Hollywood, it could be an exciting departure into an almost unlimited digital entertainment future.

Today,Steven Soderbergh, the multi-accoladed director of Traffic, Erin Brockovich and sex, lies and videotape, releases his new movie, a low-budget, experimental feature called Bubble, set in and around an Ohio doll factory.

Soderbergh, for all his mainstream success, has ventured into experimental film-making many times. But Bubble will not just be released in a handful of arthouse cinemas, as were Soderbergh experiments such as Full Frontal or Schizopolis. It will be released almost simultaneously in cinemas, on pay-per-view television and on DVD, the first feature to take such a leap into the commercial unknown.

Conventional wisdom in Hollywood has always held that films need space to maximise the length of their theatrical run before being released in other forms. And theatrical exhibition represents real money, close to $10bn (£5.6bn) in revenue each year from the United States and Canada alone.

The gap between cinema release and DVD launch of any title has been growing smaller, but nobody had dared cut the gap to zero.

John Fithian, head of the National Association of Theatre Owners, believes Bubble represents a "death threat" to the concept of theatrical exhibition. The director M Night Shyamalan, whose films include The Sixth Sense, has said he would rather give up making films than resign himself to a world where people can choose to watch them at home on television from day one.

Directors polled by the Los Angeles Times last weekend came out with mixed feelings, everything from anger (Jonathan Demme accusing the industry of "devouring itself" in the name of DVD revenues) to denial (Tim Burton calling the very idea of day and date releasing "absurd").

But some were resigned to it. "The businessman in me understands it," Sydney Pollack, the producer-director, said. "But the lover of movies in me wants to hang on to the movie house as a collective experience with the audience."

Nobody could accuse Soderbergh of being anything other than a movie-lover, yet he is rushing into the day and date concept at full throttle. Bubble is, in fact, just the first of six low-budget films he plans to shoot on digital stock and release in the same way.

All six will be handled by a company called 2929 Entertainment, run by a couple of former internet entrepreneurs who are trying to push digital entertainment to the limit. Todd Wagner and Mark Cuban do not merely see the end of the cinema-DVD divide as inevitable. They also see it as a potentially positive development for everyone.

Giving consumers what they want can never be a bad thing, they say. Making entertainment instantly available in a variety of forms might actually end up being good for every part of the industry. "The consumer is in charge," Wagner said. "You decide what you want and we will try to make it happen."

Simultaneous releasing holds undeniable attractions. The shift from celluloid to digital film also gets rid of many distribution headaches. As things stand, Wagner said, it costs distributors about $2,000 per reel of film to ship copies of new features to cinemas, "money spent on nothing", in his view, given the new technologies available.

Just as Soderbergh has developed a reputation over the years as something of a guerrilla film-maker, Wagner and Cuban can be regarded as guerrilla movie pioneers. They do not have even a fraction of the market capital of the world's leading media conglomerates. But they have worked out a way to follow the same vertical integration model those conglomerates use to control every aspect of the entertainment industry from scripts to breakfast cereal marketing tie-ins.

They believe they could revolutionise the film industry from the ground up. It seems almost certain that the entertainment business is on the threshold of a major realignment, as it was when television hit it big after the Second World War, or when video arrived in the early 1980s.

Wagner and Cuban have, admittedly, picked a sensitive time. North American cinemas have just had their worst year in memory, with box-office receipts down 5 per cent from 2004 to 2005 despite rising ticket prices. In cinema admissions, the year-on-year decline was close to 11 per cent. There is a creeping feeling that the multiplex experience - with its ever-mounting expense, impersonal service and overpriced popcorn- is outliving its usefulness.

Not everyone thinks this is necessarily a bad thing. It is not difficult to envisage a future where commercial screens get bigger again and devote themselves to big "event" movies such as Harry Potter or King Kong.

Art houses may grow in strength as niche marketing via the internet becomes more sophisticated. Advocates say it would only be the mediocre schlock in the middle that goes straight to DVD, missed by nobody. Realists in the business understand change is inevitable, that the trick is to embrace it rather than run scared. "The bottom line is, if you make good movies, people will come," the producer, Mike Medavoy, said. "That's true no matter how the technology changes. With digital coming in, with new forms of animation, with new cameras, with new distractions in gaming and the internet, all of that is certainly going to change the way we consume and look at film. But it's still going to be about characters who tell a good story. That's not going to change."