How has digital technology changed the film industry?

Digital cinema refers to the use of digital technology to distribute and project motion picture. The final movie can be distributed via hard drives, DVDs or satellite and projected using a digital projector instead of a conventional film projector. Digital cinema is distinct from high-definition television and in particular, is not dependent on using television or HDTV standards, aspect ratios, or frame rates. Digital projectors capable of 2K resolution began deploying in 2005, and in 2006, the pace has accelerated. HDTV and pre-recorded HD disks could put pressure on movite theaters to offer something to compete with the home HD experience.

Production:
Film is scanned from camera-original film negatives into a digital format on a scanner or high-resolution telecine. Data from digital motion picture cameras may be converted to a convenient image file format for work in a facility. All of the files are 'conformed' to match an edit list created by the film editor, and are then color corrected under the direction of the film's staff. The end result of post-production is a digital intermediate used to record the motion picture to film and/or for the digital cinema release.

Distribution :
Digital Cinema Distribution (DCD) is the process of transmitting the DCP to theater servers via different methods that may include: hard drives, LTO data tapes, DVD-ROMS, or satellite.
Each method of distribution faces its own unique challenges and there is currently much debate regarding preferred methods. There are three types of distribution

1. Physical media delivery
   Digital content is currently distributed on hard drive for feature content and DVD for trailer content. Other potential physical media include LTO3 tape or HD DVDs, BluRay Discs and other similarly emerging high density media.
2. Network delivery
   Digital files can be delivered to theater servers via shared or dedicated network connections.
3. Satellite delivery
   Content can be sent in a multicast transmission to theatres via satellite. The received files have to be verified and missing or corrupted portions would have to be rebroadcast and appropriate FEC would need to be used.

Wikipedia
Exhibition:
Cinema is becoming less popular due to people watching films in the comfort of their own homes.
It is much easier watching a film at home at your own convenience stopping the film if nesessary.
The development of DVD's, picture quality at home and sound can also be better than what it is at the cinema nowadays, films are avaliable on high-definition making them seem a lot more realistic. People generally wait until the film is out on DVD to watch as going to the cinema is so expensive these days. I believe that people are visiting the cinema less and less and digital cinema technologies are increasing and becoming more readily avaliable making the home cinema experience a lot better and more appealing.