Updated 2:05 PM ET January 22, 2001

By DAVID GERMAIN, AP Movie Writer

PARK CITY, Utah (AP) - Filmmaker Kate Davis had good reason for shooting her documentary "Southern Comfort" on digital video rather than film: Her subject was dying of ovarian cancer.

Shooting digitally, Davis was able to start right away instead of waiting to line up financing for much costlier celluloid.

"I would have missed so many events had I stopped to raise money for film," said Davis, whose movie is being shown at the Sundance Film Festival.

Almost one-fourth of the festival's 107 films this year were shot digitally, about double the number from last year.

Digital production is opening doors at all levels of movie-making, from blockbusters to small independent features. While elaborate digital effects have become commonplace in studio movies, digital cameras are revolutionizing low-budget filmmaking with their ease and economics.

In addition to lower costs for digital tape and cameras, the virtual home studio - where filmmakers can edit movies on personal computers - is now arriving.

On "Southern Comfort," using a handheld digital camera that cost $4,000, Davis was able to eliminate many trappings of traditional filmmaking. She shot mostly with natural light and often was alone with her subjects, operating the camera herself.

That created a sense of intimacy in "Southern Comfort," which chronicles the romance between female-to-male transsexual Robert Eads and male-to-female transsexual Lola Cola. Eads died in 1999, toward the end of Davis' year-long shoot.

"At the breakfast table one morning, Robert says to (Lola), `You're the most beautiful woman in the world,"' Davis said. "She turned to me and said, `I wish I had that on tape.' She had forgotten, and I had to remind her, it was on tape."

Another film at Sundance this year, "Donnie Darko," is laced with digitally produced visual effects, a rarity in independent cinema. In "Waking Life," digital animation is superimposed over real imagery.

Digital images, once derided by purists as cheesy, have improved greatly. Proponents say that with top cameras and post-production editing, digital video can duplicate the quality of film.

Acceptance of the new technology took a leap forward when Sony and Panavision developed high-end digital cameras that George Lucas used to shoot his next "Star Wars" episode. The camera was designed to match the caliber of 24-frame-per-second film.

"George Lucas leading the initiative adds a certain imprimatur. It creates an environment of acceptance," said Ian Calderon, Sundance director of digital initiatives.

Sundance is running panel discussions on digital filmmaking and set up a digital center where Panavision, Sony and other companies are showing the technology. Panavision has 50 cameras that filmmakers can rent for $6,000 a week.

LucasFilms estimates the digital shoot saved about $3 million in film costs, said John Galt, Panavision senior vice president for advanced digital imaging. A foot of film costs about $1 to buy and process, compared with 1.5 cents for digital tape, he said.

That allows filmmakers to record more footage, giving them greater flexibility in the editing room. And with digital tapes that run up to an hour, directors can keep the cameras running longer than with 10-minute celluloid reels.

"We got more honest and layered performances" shooting on digital, said director Jordan Melamed, whose film "Manic" is showing at Sundance. The movie stars Don Cheadle as a psychiatrist working with teens in a mental ward.

"We could keep the cameras rolling, let the actors improvise and get an authenticity we couldn't have gotten with film."

There are drawbacks, however.

The digital age potentially opens a floodgate for bad filmmaking. Many digital films submitted to Sundance lacked one of the basics of moviemaking: a good story, said Geoffrey Gilmore, festival co-director.

"It was almost too easy. They got it done, they went for it, when what they really needed to work on was script development," Gilmore said. "Digital filmmaking for me can lower the bar."

Then there are celluloid purists, filmmakers who shun the ease of digital equipment. Pat Healy never considered going digital for his 20-minute short film "Mullitt," a Sundance entry shot on 35mm film.

"I love the craft and creativity of filmmaking, and something about computers and digital technology feels less creative and more removed," Healy said. "It's not that video is not art. But to me, film is oil painting and video is like clay or watercolors. Film is what I'm interested in."