LAS VEGAS -- 2929 Entertainment moguls Mark Cuban and Todd Wagner did not attend this week's annual ShoWest exhibitor convention. Even though they own the indie Landmark Theatre chain, they steered clear of what is clearly a hostile environment.

"Who knows what they'd do to us," Wagner said on the phone from New York.

Wagner and his dot-com billionaire partner are the whipping boys of the theater business. They represent what exhibitors fear most: the collapsing of the theatrical release window. Viacom chairman Sumner Redstone, who started his career as an exhibitor in Boston and still religiously checks the weekend boxoffice grosses, summed up the prevailing mood when he said, "Any exhibitor playing pictures under simultaneous release circumstances would be committing suicide."

So far, only a few small experiments in alternative distribution models have been conducted. That's because at this stage, no one is willing to risk any serious money. The most high-profile forays into altering the movie release paradigm are Cuban and Wagner's day-and-date January release of Steven Soderbergh's no-frills digital mystery "Bubble" in theaters, on cable channel HDNet and on DVD, and Google Video's January online streaming of Ben Rekhi's digital thriller "Waterborne" for free, followed by downloads at $3.99 a pop and a February DVD release. The net results on both films have been decidedly mixed. For now, theater owners can relax.

In fact, this week National Association of Theatre Owners president and CEO John Fithian openly gloated over "Bubble's" failure to launch, calling simultaneous release experiments "radically misguided." He pointed out that the average window between theatrical and DVD narrowed only four days between 2004 and '05, to four months and 16 days. "The reality is the window is not changing," Fithian said. "The vast majority of Hollywood knows this windows model works."

With a cast of amateur actors and no visual scope, "Bubble" was "difficult to sell in a traditional manner and make the numbers work," Wagner admits. "Bubble" yielded a flurry of business stories hailing a new era in film distribution but microscopic boxoffice. Banned by the major theater chains, "Bubble" opened in 32 theaters, including 19 Landmark screens, and grossed only $200,000.

The media interest in the movie was a double-edged sword, driving more attention to the new release paradigm than want-to-see for the movie. Soderbergh's name alone wasn't enough to lure moviegoers. Even his 2002 $2 million faux documentary "Full Frontal," starring Julia Roberts and Brad Pitt, earned $2.5 million. "A lot of the advance word read that 'Bubble' was a weird little film that no one would go to see," said Eamonn Bowles, president of 2929 distributor Magnolia Pictures. He compares "Bubble" to art films like Gus Van Sant's "Last Days," which grossed $450,000.

As far as Wagner is concerned, "Bubble," which cost $1.6 million, was a hit thanks to its success on HDNet, presales to foreign territories and DVD sales, including Landmark theater lobbies. Magnolia Home Entertainment shipped 100,000 units, Wagner says, and while he can't report final numbers, he is pleased with the DVD's sell-through performance. "The revenue on 'Bubble' far exceeded what we would have gotten with a traditional window," Bowles says. "If 'Bubble' had waited six months to go out on DVD, it would not have anywhere near the sales we are having with day-and-date."

Most surprising, "Bubble" was a sleeper hit in hotels, where it was the third-biggest seller last month. "That's part of the model," Wagner says. "Consumers had a chance to make an impulse buy. They read about 'Bubble' and were able to click a button. We're continuing to learn about avenues that have not been exploited up to now. We have opportunities to rethink how we bring content to consumers. New business makes all boats rise. And we are not alone."

It doesn't matter how "Bubble" did anyway, says Wagner, who met with Soderbergh in New York on Wednesday to discuss the fate of "Bubble" and the filmmaker's plans. The two men are determined to push forward with the filmmaker's next film, which is scheduled to start production in April. Details are forthcoming. And in the spring, Magnolia will open the jazz documentary "Herbie Hancock: Possibilities" and the HDNet Films comedy "One Last Thing," about a dying teen whose final wish is to meet a supermodel, day-and-date with their video release. Wagner also is in talks with another name director interested in performing a day-and-date experiment with a higher-budget picture. Several mini-majors also have approached Wagner about alternative release plans.

Meanwhile, Bay Area indie filmmaker Rekhi, 27, embarked on his own risky experiment in alternative distribution when he passed up a low-six-figure offer for a limited theatrical and DVD release for "Waterborne," his high-definition bioterrorism thriller. After a disappointing experience with conventional distribution of his first feature, "Bomb the System," Rekhi felt strongly that filmmakers face an uphill climb in an industry rigged in favor of the distributors. "They're going to make money while you're in the hole," he says. "The only way to dig your way out is through foreign presales. It takes five to 10 years to make back your money."

After winning the audience award at last year's South by Southwest Film Festival, Rekhi showed "Waterborne" at the Google Campus screening series. After three months of negotiations with one distributor, at the eleventh hour Rekhi jumped at the chance to become Google Video's first online movie release. "I wanted to take the risk because I could afford to stick my neck out," he says. "I wanted to break new ground -- this was a once-in-a-lifetime opportunity."

Confident that he would make his money back through foreign presales and DVD, Rekhi took the shot. Google's Larry Page announced "Waterborne" as its first online movie release at January's Consumer Electronics Show. Google allowed Rekhi to collaborate with them on how to charge for the video. They agreed to free stream it for 2 1/2 weeks, followed by free trailers and downloads selling for $3.99 for high-def and 99 cents for low-def. Google split proceeds 70/30 with the filmmaker.

"The awareness was tremendous. We were not a name movie with studio marketing behind it," says Rekhi, who set up Web sites and a MySpace blog for the movie and pushed a huge Internet viral campaign. The movie got 25,000 views in the first 2 1/2 weeks, more than 1,000 a day. It was released in Rekhi's local theater in San Jose for one week in December. "More people saw it in one day on Google than saw it in one week in theaters," he says. "We had an average of 100 downloads a day. We were making money. The trailer had 75,000 hits. Online distribution benefits both the filmmaker and the consumer and reduces costs."

But then Google Video told the filmmaker that their numbers were wrong. "They told me last week that there was a glitch in their accounting," he says. "A design flaw. They said they never misled me, that they were giving me estimates that were not accurate. What had been 3,000 downloads went down to 300. It was shocking and depressing. It was one-tenth of what I thought it was."

Because the Google Video decision was made so late, a day-and-date DVD release wasn't possible, so the DVD date was set at six weeks after its Google launch, Feb. 21. Rekhi says 22,000 units were shipped. "It's hard to see a direct impact on how the online premiere affected DVD sales. Awareness is hard to gauge. You have to spend money to make money."

Rekhi is obviously disappointed. Yet the young filmmaker is glad he took the leap into the unknown. "Over time, Google will address these issues," he says. "It was exciting to work with Google to try and help indie filmmakers find a democratic distribution process. I feel like I made the right decision. I took a stand to hold on to my rights to the film, online, TV, foreign sales. Too long the power equation has been in the other court. Distributors put your back up against the wall and own your films for 20 years. That we can empower ourselves and circumvent that distribution method is amazing. People are looking for content. I only believe that the online distribution model will get bigger and better."

Anne Thompson can be reached at athompson@hollywoodreporter.com.