AOL Moviefone will launch its first "virtual short filmfestival" next week.

It is the kind of deal that some in the film industrybelieve points to potentially lucrative future partnerships with new-media businesses.

AOL's will ask readers to rate competitionfilms from new and up-and-coming directors as well as films that have played inUS festivals, including Sundance and Tribeca.

The event has attracted sponsorhip from Ford's MercuryMilan, rumoured to be worth around $1m.

"Moviefone wants to be an advocate for both great featuresand unsung heroes of the short film world," said Steven Yee, VicePresident and General Manager, Moviefone.

The growing interest in film from telecommunications andonline companies represents a big opportunity for the European film industry,delegates to yesterday's Screen International Home Cinema Summit were told.

Philippe Kern, secretary general of the European FilmCompanies Alliance, said there was now a big demand for content to be delivered online or through mobile devices.

"High broadband penetration in Europe is creating a new marketplacethat seems to be a new opportunity."

He warned independents that opportunities could besquandered however through lack of coordinating action.

"It's hard for the little guys. If Europe wants to takeopportunities it must act on a more collective basis to create a critical mass."

Globally, Korea has been at the forefront of movie tie-ins, boasting the highest proportion of broadband users in the world.

Its telecom companies SK Telecom and KTF have been agressively targeting mobile content.