The bitrate, or the amount of data processed per second, is drastically lowered. This leads to a loss of detail in high-motion scenes—such as action sequences—where the compression algorithms struggle to keep up with rapid visual changes.
The 500MB movie is a tool, not a standard. It represents the ingenuity of digital compression engineers and the harsh reality of economic necessity. While Hollywood pushes for 8K and Atmos, millions of users simply want a film that finishes downloading before the bus arrives.
Furthermore, the 500MB movie speaks to a change in viewing habits. As consumption shifts from home theaters to smartphones and tablets, the demand for "Ultra HD" decreases. On a six-inch screen, the difference between a 10GB Blu-ray rip and a highly compressed 500MB file is significantly minimized. For many users, the convenience of storing hundreds of movies on a single micro-SD card outweighs the loss of cinematic detail.