Faced with the challenge of distributing digital product in the digital realm, the American film industry is acutely aware of its increasing vulnerability to piracy and is currently considering two solutions to protect its copyrights—a legislative solution (e.g., the Digital Millennium Copyright Act of 1998) and a technical solution (e.g., digital watermarking). We suggest that a better way of dealing with piracy is an economic solution, such as neutralizing piracy by reengineering the supply chain across all three sectors of the motion picture industry: distribution, exhibition, production. In distribution, the industry can make legitimate downloading of high-quality movie files easier and cheaper (than pirating) by strategically locating “e-Blockbusters” (i.e., digital movie libraries) at or near Internet service provider (ISP) sites and making them attractive through feasible pricing schemes. In exhibition, innovative digital theaters could offer virtual reality viewing experiences and flexible windowing systems that maximize revenue for each feature film. In production, work would be done primarily or entirely in the digital domain. Digital film reservoirs would provide universal naming and indexing functions for easy access, reuse, and extension, and the industry would achieve a new diversity of quality and quantity. In addition, dynamic cross-media convergence can be expected as a function of the complementarities created by content digitization. To prosper in the new digital economy, the motion picture industry must closely collaborate with the information industry to achieve a new supply chain rather than competing with it to the detriment of both.