Learn Russian: По сравнению с плёнкой цифровой файл не теряет качество. - Compared to film, a digital file does not lose quality.

It is governed by the compound preposition по сравнению с (compared to / in comparison with). The с (with) at the end of this phrase dictates that the following noun must take the Instrumental case.

Since there is a negation (не теряет), shouldn't качество be in the Genitive case (качества)?

You can definitely use the Genitive here (не теряет качества). While traditional grammar rules often prefer the Genitive for the direct object of a negated verb (the 'Genitive of Negation'), modern Russian frequently uses the Accusative (качество) instead, especially in everyday speech. Both are completely correct here.

Does плёнка only mean 'film' in the photography sense?

In this context, it refers to analog photographic or cinematic film. However, the core meaning of плёнка is a thin layer, film, or membrane. You will also see it used for things like plastic wrap (пищевая плёнка) or audio cassette tape.

Why do we use the imperfective verb теряет instead of a perfective equivalent?

The sentence describes a general, ongoing characteristic of digital files: as a rule, they do not lose quality over time or when copied. We use the imperfective aspect (терять) to express this continuous, universal truth rather than a single, completed action.