(FORTUNE Magazine) – FADE IN: This month's Academy Awards will celebrate the magic of moviemaking. Shortly thereafter, barring an unexpected settlement, the film industry will shout "Cut!" as actors and writers go on strike. Instead of hissing the villains, here's a proposal for an idea for a treatment of a concept (as they say in Hollywood): Make your own movies.

CUT TO: Digital video (DV) is putting sophisticated moviemaking tools--including nearly professional-quality digital videocameras and powerful PCs with high-end video-editing software--into the hands of consumers at matinee prices. This means that people with a passion for storytelling can now make their own broadcast-quality movies and documentaries at home. These aren't jerky home movies of little Oswald's birthday party. This is serious filmmaking, with scripts, storyboards, high-quality video, special effects, soundtracks, and other professional film features--only with digital video instead of film. And even if you're simply (yawn!) interested in making better home movies, there are lots of new tools to help.

DISSOLVE TO: Digital video has captured the imaginations of such established filmmakers as Spike Lee, Wim Wenders, Wayne Wang, and even George Lucas. Digital video submissions to last month's Sundance film festival were up more than 25% and included many filmless films made with the equipment that consumers can buy at the local electronics store.

True, the real magic of moviemaking arises from the people in front of and behind the camera, not from the camera itself. But having the right tools helps. The fancier the movies you want to make, the steeper the learning curve. So you may want to start simple and cheap before going to Act II.

CUT TO: The camera. Digital videocamcorders offer performance superior to all but the most expensive analog cameras (VHS, S-VHS, 8mm, and Hi8). If you already have one of those analog camcorders, consider upgrading to one of the mini-DV digital camcorders as soon as you can afford one. The picture quality is nearly twice as sharp as VHS and 8mm camcorders. And because digital cameras and computers speak basically the same language, there is no loss of picture quality when moving video files between the camera and the PC, as there is with analog cameras.

Almost any mini-DV camera will work, and some of them cost as little as $800. At that price you may have to give up some fancy controls and features, but, hey, great artists suffer. Don't even think about getting a mini-DV camcorder that lacks a Firewire (also known as IEEE 1394 or i-Link) port for high-speed two-way communication between the camera and the PC. Most mini-DV cameras have Firewire.

The majority of the low-cost models also have a single image-capturing chip, called a CCD. If you can afford it, try to get one with a progressive-scan CCD, like the Canon Elura2 MC (for $1,799, the MC includes a memory card, useful for capturing still images). Progressive-scan chips offer better image quality than the interlaced chips found on most other models.

Serious amateurs and professionals will choose cameras with three CCDs. The extra chips push the cost of 3CCD cameras north of $2,000--but they also yield superior color richness, sharpness, and depth, so much so that they are often compared with professional videocams costing $20,000 and more. Favorites in this category include the Sony DCR-VX2000 mini-DV camcorder ($2,200 to $2,999) and the Canon XL1 ($3,300 to $4,499; prices vary widely, so it pays to shop around). The Canon allows interchangeable lenses; the Sony does not. Other 3CCD cameras that offer similar features at lower cost include the Sony DSR-PD150 (about $2,300) and the Canon GL1 (about $2,100). In my talks with professional digital videographers, the Sony and Canon brands were mentioned most often. For really serious amateur filmmaking, consider Sony's PD-150 ($4,000), which allows for wide-screen shooting.

Quick tips: Zoom lenses and image stabilization are handy camera features, but "optical zoom" and "optical stabilization" are key. Digital zoom and digital stabilization are inferior.

CUT TO: The computer. Basically, any Pentium III or PowerMac G3 computer has the horsepower to edit video, but the more powerful the processor, the faster the computer will be at rendering file conversions and special effects. Video editing is one of the main reasons for moving up to a Pentium 4, AMD Athlon, or PowerMac G4 machine. Get the most memory and biggest hard drive you can afford. An hour's worth of DV-format video eats up about 13 gigabytes of hard-disk space.

The easiest and cheapest way to get started is with an Apple iMac. Even the bottom-end $899 iMac comes standard with iMovie-editing software and a Firewire port. In fact, every Apple computer sold today has all the processing horsepower and tools needed to edit movies. The new high-end 733-MHz Macintosh G4 desktop computer also includes a program called iDVD, which, coupled with Apple's new Superdrive, allows you to burn your movies onto blank DVD disks and send them to friends and agents.

It's not quite so easy with a Windows-based PC, although several PC makers offer digital movie packages, like the Dell Dimension with Dell Movie Studio ($1,629 and up). The package includes MGI Videowave III video-editing software and a card that adds Firewire support.

If you get very serious about DV, consider moving up to a workstation like the Dell Precision. Workstations are high-end computers optimized for specialized applications and peripherals, like multiple processors, professional video-capture and -editing cards, and huge hard-disk arrays. The workstations themselves don't cost much more than regular consumer PCs, but the extra equipment adds up. Loaded with fancy video-capture and -edit cards, which cost $800 and up--way up--Dell Precision workstations have been used for special effects in movies like The Matrix.

WIPE TO: The software. Apple's iMovie and MGI's Videowave 3.5 are great beginner systems but don't offer the full range of features that a serious filmmaker would want. (Microsoft's Movie Maker comes free with Windows ME, neither of which can be recommended.) The next step up is powerful but complex programs like Apple's Final Cut Pro ($999), Adobe Premiere ($549), and Digital Origin's EditDV ($599, or $799 with a Firewire card).

CUT TO: For many, writing a screenplay seems the ticket to play in the Hollywood lottery; Creative Artists Agency alone receives more than 10,000 unsolicited screenplays a year--and purchases fewer than 100. One way to improve the odds is to use a screenwriting program that makes it easy to produce scripts in an industry standard format. The two leading packages are Final Draft ($249) and Movie Magic Screenwriter 2000 ($269). Screenwriter (www.screenplay.com) is my favorite because of its wide range of features, including an array of sample templates and the ability to allow writers to collaborate over the Internet. The program helps novices learn to create screenplays, and it frees veteran screenwriters from the mechanics, allowing them to concentrate on the story. Like Final Draft, Movie Magic has a voice synthesis feature that reads dialogue aloud, although some screenwriters, like Lawrence Wright (The Siege) tell me they find voice synthesis to be creepy.

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