Whither the blockbuster?

Slate's Edward Jay Epstein writes a great article about the changing economics of Hollywood blockbusters. (This also includes a link to some interesting money statistics placed here). A swathe of changes in technology, selling patterns and viewing patterns "add up to a growing disconnect between the money poured into advertising for a large theatrical gross and the earnings realized in the markets that the studios depend on for their money." The bottom line is that the digital revolution, and especially the inexorable rise of the DVD, is undermining the whole 3,000-screen blockbuster release, pushed by a massive advertising blitz. Thirty years on from Jaws, the first "blockbuster" to set up the current system, is it time for Hollywood to update its strategy?