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TORONTO, Sept 15 (Reuters) - A few years ago, a successful run on the festival circuit might have propelled a small independent film into a limited art-house run and then onto the shelves of the local video store, where for the most part, it would be forgotten.
The rise of streaming and Video on Demand (VoD) is changing that model, allowing independent filmmakers to skip the studio distribution process and tap directly into new audiences on their computers, smartphones and television sets.
But while direct distribution has taken off in a big way with television programs like "House of Cards" and "Orange is the New Black" from Netflix Inc, many feature filmmakers are still hesitant to give up the cinematic experience.
"That's not ideal for me," said director Ned Benson, when asked how he would feel if his first feature-length film, "The Disappearance of Eleanor Rigby: Him and Her," skipped the theater and went straight to VoD.
"When I was making this film it was more about the theatrical experience and giving people different ways to go (to the) theater and see movies."
Benson will get his wish. After premiering at the 38th annual Toronto International Film Festival last week, his film was acquired by The Weinstein Company, ensuring its release in theaters across the United States, Canada, the United Kingdom and France.
That desire to reach a theatrical audience was echoed by filmmakers interviewed at the Toronto festival, which wrapped up on Sunday. They see direct distribution as the future, but they worry about how it will impact the viewing experience.
"In an ideal world, you know that people are committed to watching something right through to the end," said director Atom Egoyan, who premiered his film "Devil's Knot" at the festival.
"When you have a multitude of things to watch, you might be more prone to breaking that experience or putting it on pause."
Still, with a growing number of viewers skipping the theater and watching online instead, companies like Netflix, Hulu and Vimeo are looking to film festivals to find new content.
In 2009, there were no official representatives of online distributors at the Toronto festival. This year, there were 37, including 18 from Netflix and five each for Hulu and Apple Inc .
"Direct distribution continues to gain momentum every day and it's being driven at all levels," said Kerry Trainor, chief executive of video-sharing service Vimeo.
Vimeo offered a $10,000 advance for a 30-day window of exclusive online rights to all 146 feature films that held their world premiere at Toronto. The deal does not hinder filmmakers from making separate theatrical or television deals.
"We wanted to be as flexible as we could," said Trainor. "It's as much about being a supplemental part of traditional distribution as it is a wholesale replacement - so we wanted our offer to reflect that."
While the company has not yet disclosed any deals out of the offer, Trainor said interest in direct distribution is widespread, with everyone from first-time directors to established production companies looking to the online model.
For Scilla Andreen, a filmmaker and chief executive of IndieFlix.com, which streams festival and art-house films to subscribers, direct distribution is the best way for independent filmmakers to get their work seen and make some money.
"I made IndieFlix out of pure frustration. I wanted to make money for filmmakers," Andreen said, adding that most traditional distribution platforms don't offer much financial benefit to filmmakers.
"I was told all the time, 'You should be grateful that you're getting exposure,'" she said. "But that doesn't help me at all. I can't eat that."
Andreen foresees a day when her company will be able to strike a deal with a major festival like Toronto or Sundance to put its prize-winning films online right afterward to help filmmakers capitalize on awards momentum.
Indeed, the move toward online distribution also has film festivals looking at the role they can play in the new realm, especially as curators in a space where there are virtually limitless options available.
It's a natural role for festival programmers, who have for decades been bringing independent filmmakers and major distributors together in a neatly executed acquisition dance.
"For films without significant marketing budgets, I think that (online distribution) is really important, because it means they can build their own audiences online and build communities that might be interested in seeing these films," said Justin Cutler, senior manager at the Toronto festival's Industry Office.
While going straight to Netflix or Hulu may not be ideal for many filmmakers, younger directors and producers are increasingly comfortable with skipping the theater completely.
"This generation of filmmakers has seen most of its movies on small screens - there's less screen-sized prejudice - which I think is opening up a lot of choice and business models," said Ted Sarandos, chief content officer for Netflix.