The widespread perception the studio had caved into the demands of North Korean cyberterrorists extended even to US President Barack Obama, who criticised Sony for giving in to intimidation at the same time as he announced the US "will respond proportionally" against the reclusive state.

Sony reacted with a statement saying the comedy, which has James Franco and Seth Rogan as two Americans who are co-opted by the CIA to assassinate North Korean leader Kim Jong-un, was only withdrawn from its release on Christmas Day after most of the country's theatre owners decided not to screen it. That followed threats of a September 11-style attack on cinemas by the hackers, who the FBI have identified as coming from North Korea.

While Sony's statement said it was "actively surveying alternatives to enable us to release the movie on a different platform", that was widely seen as a slow reaction intended to salvage its tarnished reputation, when an earlier decision to release the movie online would have frustrated the hackers' objectives.

The devastating hack has seen a batch of movies and a trove of material, including the salaries of executives and stars, damaging emails, credit card details, unproduced scripts and health information, dumped online.

While the Australian distribution arm would not comment, local cinema executives have confirmed The Interview will no longer be released here on January 22.

For one of the most prominent Australian directors working in Hollywood, Phillip Noyce, cancelling the movie's release was inevitable.

"It was disappointing but not surprising," he says. "The potential future lawsuits if anything did go wrong around the movie's release would far outweigh the hit Sony will take from killing their own movie."

In the Australian cinema industry, as in Hollywood, executives and filmmakers have been stunned by the hackers' success.

"For it to appear that a foreign entity is having an impact on what we can and can't see at the cinema is astonishing," says Benjamin Zeccola, the executive director of Palace Cinemas.

A US entertainment website has estimated that scrapping the release will cost Sony $US90 million ($110 million), requiring it to write down the production budget of $US45 million plus another $US45 million in marketing spending. The studio had estimated The Interview would take a handsome $US210 million at the worldwide box office.

While that may have been optimistic given the dismal reviews - Variety called it "an alleged satire that's about as funny as a communist food shortage" and The Hollywood Reporter saw it as "intensely sophomoric and rampantly uneven" - there are far wider ramifications.

Already a class action has been launched by two former Sony employees, claiming the studio was negligent by ignoring warnings that its computer system was prone to attack. There have been reports of employees being targeted for identity theft and personal information for sale on the black market.

With the entire email inboxes of Sony president Steven Mosko and co-chairman Amy Pascal dumped online, one filmmaker said everyone in Hollywood was reviewing their own emails and assessing their vulnerability to hacking.

"Thelawsuits so far launched by former Sony employees are possibly the tip of the iceberg given the [huge volume] of key personal information stolen by the hackers," Noyce says.

Even before the President's comments, the studio had been widely criticised for poor decision-making - with claims that it badly misjudged the risk of making The Interview, put the desires of Rogen and Franco ahead of any cultural sensitivity and was slow to react to the hack.

Politicians and filmmakers, from both the right and left, have condemned the studio for caving in to the hackers' demands, opening the door for other vested interests to target edgy movies.

One company quickly scrapped a planned thriller set in North Korea, Pyongyang, starring Steve Carell.

While nowhere near as serious, there are many precedents for vested interests targeting controversial films, including some with Australian connections.

In 2009, Chinese hackers repeatedly targeted the Melbourne International Film Festival's website to protest against its screening of the Uighur documentary The 10 Conditions of Love.

Last year, Julian Assange's vigorous campaign against the WikiLeaks drama The Fifth Estate, from inside the Ecuadorean embassy in London, contributed to its failure in cinemas.

Sony's decision is widely seen as raising the stakes for future movies on controversial subjects.

"Cancelling the release has obviously made the whole business more vulnerable to future threats," Noyce says.

"Any criminal attack can attract copycats," Zeccola says. "For [The Interview to be cancelled], I believe the threats must have been highly credible in the US."

While some believe Sony's decision will make it harder for politically risky movies to get made - even comedies such as The Interview - Zeccola thinks it might have the opposite effect.

"Any attempt to suppress art and storytelling usually creates great fodder for more stories," he says.