Cult classics take on the blockbusters as audiences switch on to internet downloads

Is the Hollywood blockbuster finally eating itself? As cult movies attract a new audience who download more obscure films from the internet, so the marketing machine of the major studios is being called into question.

Every weekend in summer, multi-million-dollar would-be smashes go head to head. But by Monday morning, when the box-office figures are announced, movies that may have taken years to make are either crowned champions, as has just happened with The Dark Knight, or instantly dismissed – the sad fate of Speed Racer.

But a new generation of movie-download sites is offering fans an alternative to the summer blockbuster. Just as iTunes has transformed the record industry, so internet film download services – such as cinemanow.com in the US and vizumi.com in Britain – are beginning to have an impact on Hollywood, offering fans an unprecedented level of choice.

Industry figures are beginning to argue that Hollywood has got its marketing strategy all wrong. Observers say the now familiar battle for the box-office No 1 slot leaves far more losers than winners and may even damage the industry as a whole.

"I think the industry made a huge mistake when it made media stars out of the studios and reported their grosses [gross revenues taken at cinemas]," David Weitzner, from the University of Southern California's School of Cinematic Arts, said. "I think reporting grosses to the public is stupid. Nobody has any sense of the economics of this business. It's a dumb thing and it has cost us dearly."

Professor Weitzner is merely echoing a refrain that has been heard frequently over the past decade from many of Hollywood's biggest names. George Lucas complained about what he calls the "Irving Thalberg complex", the tendency to treat money-making studio executives as heroes rather than to acknowledge the contribution of the artists who actually created the films.

In an interview with the Los Angeles Times in the 1990s, Steven Spielberg, said: "When I first started, films opened quietly. There weren't full-page ads touting the three-day box office in the trade press. It just didn't seem as frantic as today ... I would love it if studios stopped boasting about how much money their movies made."

There was a certain irony in Spielberg – the man who helped launch the summer smash when he made Jaws in the 1970s – crying foul. However, the situation is arguably now even worse. The boasting from the studios has grown louder. There is an increasing sense that they are buying, bullying and hyping their way to the top of the box-office.

Sometimes, such massive publicity may make a twisted kind of business sense. If you have a dud movie, you can create so much din around it that it will attract a big audience over that all-important opening weekend before word spreads that it's a turkey.

As Hollywood stifles choice by placing so much emphasis on blockbusters, there is evidence that audiences are searching out movies in other ways. new distribution models have given an extra lease of life to movies that might otherwise have languished in obscurity, such as the 1946 romantic drama Heartbeat (pictured above). First, there was video. Then came DVD. Now, we're beginning to be able to download films. Films of every kind have benefited – the best horror pics, the creakiest B-movies, literary adaptations and old studio classics. It is Hollywood's version of the "long tail" – where the web fuels endless small cults that add up to a massive audience.

Ironically, the studios have always felt aggrieved about new distribution models, citing the risk of piracy and fretting about their own loss of control. In the 1970s, Jack Valenti, head of the Motion Picture Association of America – Hollywood's lobbying organisation – warned that video would spell disaster for the film industry. In reality, within a few years, video began to generate more money for Hollywood than theatrical exhibition.

No one knows how today's new distribution models will work in practice. All the evidence suggests that home entertainment will become yet more sophisticated. In response, Hollywood will offer even more extravagant spectacles to lure audiences into cinemas. There is no hint that the weekend box-office battle for supremacy will be fought any less fiercely.

However, Hollywood has a 100-year history. The one consolation is that those who want to look beyond The Dark Knight and Kung Fu Panda should find it easier than ever before to delve into that history.