LOS ANGELES (Reuters) - Movie executives will gather this week on the French Riviera for the Cannes film festival, and despite the dark cloud of recession hanging over the world's largest film market, players seem somewhat sunny.
Festival attendees from mostly independent film companies say the global credit crunch means fewer people are headed to Cannes and fewer deals buying and selling films for theaters, television, DVD and other outlets may get done.
"Everyone has concerns. It's a good time for theatrical revenue, but not such a good time in the DVD arena. You'll find companies being careful," said Michael Barker, co-president of Sony Pictures Classics. "That is not to say deals won't be made, because deals will be made."
But with less money for financing and distributing movies, market players said the films that do get produced may be better because only quality stories will get funds, and once made they will face fewer rivals at box offices.
High on the list of industry concerns will be new 3D movies, digital projection and Web-based video-on-demand. But first on everybody's mind will be the economy.
Industry players will be looking to see if key markets in Europe, North America, Asia and other territories will rebound from last November's American Film Market in Los Angeles.
Cannes and AFM are two of the world's major movie markets, and in 2008 as banks teetered on the brink of collapse, AFM was filled with uncertainty and a general business malaise.
AFM reported slightly more than 1500 registered buyers. Attendance from Asia was down 10 percent, from North America by 14 percent, while participation from European Union countries slipped a marginal 1 percent.
David Garrett, London-based president of producer and distributor Summit International, said the amount of dealmaking at Cannes by companies in any region would depend largely on how that territory was impacted by the credit crisis.
"In many respects, the film market is a microcosm of the global economy, so of course conditions are more difficult. But that simply means greater demand on everyone to be razor sharp in the way they conduct business," Garrett said.
Despite strength at movie theater box offices -- ticket sales are up 16 percent year-to-date versus 2008 in the United States and Canada -- the industry continues to face problems.
Sales of DVDs remain slow. U.S.-based Digital Entertainment Group said consumer spending on all forms of home entertainment -- DVD, new Blu-ray discs, and digital downloads -- was off 5 percent in the first quarter of 2009 compared to last year.
That decline hurts film companies because they fund and distribute movies based, in part, on expected DVD sales.
Moreover, the recession has sharply curtailed spending on advertising, so television stations have less money to spend licensing movies that will air on their networks. In fact, many local TV stations are spending money on locally-made programs.
"We're competing for fewer slots ... so there is less room for us, whether that's because of local production, or a result of TV channels not being able to sell ads," said Helen Kim, president of Mandate International.
Still, there seems to be a sense that the business climate may be getting better, and while companies may be taking fewer support staff, decisionmakers will attend Cannes -- as usual.
"(Cannes) will not be the most buoyant market, but I get the feeling by the time we get to AFM at the end of this year, things will have stabilized," said Summit's Garrett.
Editing by Jill Serjeant and Eric Walsh