With much of the traditional cinema sector in a state of flux, Venice film festival participants said the industry is looking to a future in which the Internet will play an ever bigger role.
From hosting world film premieres on websites to young directors showcasing their work through the Internet, supporters in Europe say the web should no longer be seen as a money drain of pirated content but as a source of revenue.
"You can create a customer base on the Internet and attract audiences," said Nawid Sarem from Eye on Films, a France-based global network of film festivals and distributors that has teamed up with video-sharing website Dailymotion.
Starting next month Eye on Films and Dailymotion will allow Internet viewers in major markets like Brazil to access free previews and subscription-only streaming of films by first-time directors and independent filmmakers.
"The Internet is not just a tool for mass communication for blockbuster commercial films. Our aim is to convince our distributors that the Internet brings together a multitude of communities of varying interests," Sarem said.
"These are consumers who are not used to going to art house cinemas."
As they prepared to launch the service, Eye on Films and Dailymotion offered a free preview on the web in France for a time slot of eight hours in April of the film "Fear of Falling" by Polish director Bartosz Konopka.
The preview was watched by 5,700 people that night -- far more than any producer could have expected at a cinema premiere for this kind of film.
Seventy percent of the Internet audience were 15- to 35-year-olds.
One of the obstacles to video-on-demand services is that many Internet users are used to watching pirated content for free but Sarem said that distributors can bring in revenue through free previews followed by payment-only streaming.
"We realise we cannot just suddenly offer the same type of content for payment and hope that Internet habits change," he said.
Film streaming is already widespread in the United States but Europe is taking time to catch up, mainly because of regulation and a reluctance by major distribution companies to sign up to a sector seen as potentially risky.
But in a concession to the new media, organisers of what is the world's oldest film festival in Venice this year for the first time offered pay-per-view streaming of 10 of the feature films and 13 of the short films.
The festival said that the experiment of the 500-seat "virtual theatre online" was "to promote and support new films, and in particular young authors... by exploiting the potential offered by modern web technology".
Hollywod veteran Ridley Scott harnessed that potential to find new talent in an initiative also held in Venice this year called "Your Film Festival" in which young directors were invited to submit their work through You Tube.
Internet users could vote on the submissions and a shortlist of 10 finalists from around the world were brought to Venice for the festival where Spain's David Victori was announced as the winner with his short film "The Guilt".
Victori's film about a man racked with guilt after his wife's murder has attracted more than 160,000 views online and the prize gives him $500,000 (400,000 euros) for his next film and a chance to work with Scott as a producer.
"I think YouTube is helping aspiring film-makers just by giving them a platform on which their films can be seen," said Sean Wilson from the United States, one of the runners-up and co-director of the short films "88:88".
Sarem stressed the idea was not to sideline cinemas altogether though.
"We hope that the distribution of films in cinemas and the 'cinema experience' will continue," he said. "This is not about spoiling cinema but about making these works more accessible to the biggest possible audience."
