NICASIO, Calif. - Oliver Stone stared in disbelief. Here he was, sitting in a velvet seat in George Lucas' private screening room, listening to the Star Wars director foretell the death of film.

To Stone, director of such films as Platoon and JFK, Lucas' vision of digital moviemaking sounded like blasphemy. Around him, other A-list directors, including Steven Spielberg, Francis Ford Coppola and Robert Zemeckis - fidgeted as Lucas challenged a century of tradition, warning his colleagues to embrace the future or be left behind.

Lucas' blunt message stands at the center of a schism in Hollywood over the fate of film in the film business. New high-definition video cameras and digital editing equipment are challenging the longtime supremacy of film. They are cheaper and more flexible. But they also frighten directors and cinematographers who understand every nuance of film.

A creative misstep can tarnish a career, so many of those established in the film industry blanch at the thought of showing their inexperience with the latest technology. A colossal mistake seen by millions of fans might imply that they are passe storytellers, easily replaced by younger, cheaper and more tech-savvy rivals.

"Film is what we do. It's what we use," Stone sniped at Lucas. "You'll be known as the man who killed cinema."

Lucas rolled his eyes as Stone waxed about the poetry of celluloid and the coldness of pixels.

Finally, according to those who were there, Lucas interrupted.

"Just watch."

Raising a hand, Lucas cued his demonstration and told his audience what they would see: identical clips - each stored on different formats - from the animated movie Monsters, Inc.

One was completely electronic: compiled by a computer, stored on digital tape and shown through a digital projector. Looking less like a motion picture and more like an open window onto a real world, the monsters gabbed in crisp clarity and rich tones.

Next came a traditional film reel that spent four weeks in a mall theater. With each showing, heat from the projector and dust in the air had faded and degraded the images. The difference was jarring. Radically out of focus, the film reel cast an image on the screen that jiggled and popped, as if an earthquake were rocking the projector.

Lights came up as the demonstration ended. No one spoke for several seconds.

Debate within the industry is not nearly so quiet.

For directors such as Lucas, the choice is obvious. Breaking new ground for major motion pictures, his Star Wars: Episode II - Attack of the Clones was shot entirely with high-definition digital cameras, edited with digital equipment and, in a few dozen theaters, distributed and projected digitally.

Spotting the change, a growing number of filmmakers have been testing the digital waters. From students and independent filmmakers capturing low-budget works on digital video to established directors such as Michael Mann testing high-definition cameras in Ali, they are curious about the new tools and fearful of being left behind.

But after nearly a century of using film, much of Hollywood's old guard is reluctant to shift gears, a reticence that speaks to a powerful culture of fear among some of the industry's most elite directors.

"Film is rather like the magic lantern. There's a sense of mystery, because you don't know what's going into the magic black-box camera until you send the film to the lab," says cinematographer Roger Deakins, director of photography for Ron Howard's film A Beautiful Mind.

"With digital, it's all very businesslike," Deakins says. "We're not businessmen. We're artists and magicians."

Despite significant advances in the art and science of film since the first roll of flexible celluloid was produced in 1889, the basic process remains the same: Chemicals layered on the surface of the film react when they are exposed to light, changing into hues that match the light's wavelength.

Digital cameras, which began to appear in the mid-1990s, use powerful computer chips that convert light into electronic pulses, which they translate into data and store on videotape.

Advocates insist that the technology cuts costs, partly by eliminating key parts of the moviemaking process. An example would be the time-honored - and time-consuming - ritual of handling "dailies."

When a day of shooting wraps, the crew sends the footage to a processing lab. After the film negatives have been developed, the reel is returned to the set. The director and often the crew gather inside a screening room. Then they cross their fingers.

What they want to see up on the screen and what the camera captured aren't always the same. Perhaps the spotlights burned too brightly and washed out the image. Maybe the director didn't spot the catering truck parked in the background. If someone loaded the film into the camera incorrectly, the reel might be blank.

"With film, you get 60 percent of what you want," director Robert Rodriguez said. "In film, cinematography is the art of guessing."

Each mistake, each reshoot, eats up time and money. The shoot-and-pray cycle is nearly erased with digital cameras because the images can be viewed as they are recorded.

By replacing film in the cameras with videotape and speeding the flow of work, Lucas saved at least $3 million in production costs on Attack of the Clones, producer Rick McCallum said.

The need to cut production costs led News Corp.-owned 20th Century Fox Television and the executive team behind the series The Education of Max Bickford to take the digital plunge.

The tactic worked, says producer Rod Halcomb, who estimated that the crew saved as much as $25,000 per episode in post-production and filming costs, though CBS dropped the series after its first year.

"Digital technology is the director's friend, just in principle. Because of it, directors can come closer to realizing what's in their minds," director Ron Howard said. "I'm open to it. I'm just not open to using it until all the bugs are worked out."

Managing the problems of a digital set remains a daunting task, since such "bugs" can eat up much of the savings that the digital process promises.

One of the most difficult artistic hurdles is manipulating the look of the footage. Film blurs colors together around their edges, but digital cameras achieve a clarity that strikes some as harsh.

For filmmakers such as Rodriguez, that clarity is appropriate for stylized action films. While recently shooting actor Johnny Depp in Once Upon a Time in Mexico, the director relied solely on digital cameras.

The tools picked up every detail and uncovered the unexpected.

"I always thought Johnny Depp's eyes were black," Rodriguez says. "On the playback monitor, I realized they are really a light caramel color. If the eyes are the window of the soul, what are we doing shooting film and blurring that window?"

Several days after seeing the digital demonstration at Lucas' ranch, Stone called an executive at Industrial Light & Magic.

The firm had been responsible for figuring out how to make the connection between the digital camera and the post-production effects work on the latest Star Wars film and has close ties to several camera manufacturers.

"Listen, I know you're going to shoot me for this," Stone said to the executive. "But I'm starting work on a new project. Do you know where I can get ahold of some high-def cameras?"

P.J. Huffstutter and Jon Healey are reporters for the Los Angeles Times, a Tribune Publishing newspaper.