We love short films, but we also follow the larger film industry and how the web is changing how we watch films.

Much has been said over the last few days about the bleak year for theatrical films with year-end box office sales down 3.8% compared to last year and attendance down 4.7% (Box Office Mojo). But there’s been less coverage of a bigger problem looming over the film industry—one that would be hard to blame on a bad year—the growing scarcity of original stories coming from Hollywood.

And if that isn’t frightening enough, the success of The Lion King 3D is already kicking off what may become a new creative low—re-releases. The Lion King 3D, at a cost to Disney of less than $10M, took in nearly $100M—not a bad ROI for a struggling industry. Titanic, Beauty and the Beast, and Star Wars, all planned for 2012 releases, may mark the dawn of an era of blockbuster re-releases as Hollywood longs for its glory days.

WHY IS THIS HAPPENING? Read on to find out.

At first, you might think box office numbers are down because of all these unoriginal films. But that’s actually backwards. In fact, unoriginal movies are being made BECAUSE numbers are down. Let me explain: Hollywood filmmaking is an investment business – studios give money to filmmakers hoping to make more money back. Now put yourself in the shoes of an investor. When times are good, you have extra cash flowing in, and you can invest in riskier investments where many fail but a few hit big.

But when times are tight, one failed investment can sink you, so you’re more inclined to turn to safer investments. And in movies, the safest investment you can make is in either a sequel or a story built from an existing franchise with a large fan base. In other words, making a sequel is Hollywood’s way of playing it safe. Because right now, original stories are just too risky.

How difficult is it to get an original story made in Hollywood today? Even director Christopher Nolan (The Dark Knight) had a difficult time getting Inception made (The Day the Movies Died by Mark Harris). That’s how hard it is.

Now I hate to say “Hollywood” like it’s one entity because in reality it’s made up of people, some of whom are very talented and inventive people who want to tell great, original stories. But like many other industries facing the speed and transformative power of the web, its size and bureaucracy have made the film industry slow to recognize and react to change.

Despite all the prophecies, this won’t mark the end of Hollywood or the film industry as we know it. In fact, filmmaking is more important now than ever. Roger Ebert said it best in his recent article on the current state of the industry that, “Americans love the movies as much as ever. It’s the theaters that are losing their charm.” It only takes a few minutes with Facebook, Kickstarter, and Vimeo to see that movies and storytelling are fast becoming the preferred way of understanding this complex world.

To someone like me, who wants to tell stories for a living, or someone like my compatriot, Jason, who watches stories for a living, all this change means looking broader. Theatrical may no longer be the place to bring a grand vision to the public. Those “risky” original stories are more and more being told elsewhere on television and in new media formats like branded and interactive films.

I once dreamed of making a feature film. Now I’m building an app. Look beyond the standard model.

We can’t know what making and watching films will look like in 10 years, but whatever becomes the dominant model, it’s likely to make its first appearance in a short film. Always a testing ground, short films are where the most interesting new models are being explored today. Filmmakers like Spike Jonze and Chris Milk are experimenting with new formats and distribution models with shorts like We Were Once a Fairy Tale, I’m Here, and The Wilderness Downtown.

We’re in the hazy stage where the old structures are falling and new ones are yet to be built. The landscape is open. Go explore it.

‘Short of the Week’ has been serving up epic bite-sized films to over 1 million filmmakers and fans since 2007. We seek to discover and promote the greatest and most innovative storytellers from around the world.