Market consolidation, the collapse of pay-TV prices and reductions in state subsidies are just three reasons why co-production markets are booming.

They may have started as the poor man's film market - there being no movies to see - but the importance of co-production markets is growing as sources of production finance shrink; to the point where it is difficult for even established film-makers to find money to make their films.

The model was established 20 years ago, when the Rotterdam International Film Festival launched CineMart as an alternative to the established circuit of film markets.

While buyers and producers at Cannes, Mifed and the AFM are eager to discuss future projects, there was no established forum for such discussion. Rotterdam saw an opportunity to create an event out of these hypothetical films.

Every year, CineMart invites a select number of producers to a five-day event to present their feature projects to potential co-producers, bankers, funds, sales agents, distributors and TV buyers.

The CineMart template has been exported and adapted around the world, most prominently at the No Borders Co-production Market, which completed its eighth event at the IFP Market in New York in September, and the Pusan Promotion Plan (PPP) at Korea's Pusan International Film Festival, which wrapped its fifth edition in November.

The operative phrase is "a select number of producers". Just as a film festival's stature rests on the taste of its programmers, the same is true of a co-production market. "The heart of CineMart is project selection," says Ido Abram, who has headed the event for five years. "Quality is the most important criterion. Financial viability is next."

While success stories were slow in coming in the early years, CineMart's wall of fame is looking pretty impressive these days. There was Breaking The Waves in 1995 and Boys Don't Cry in 1996 and Central Station in 1997. In 2001, there was the Mexican smash-hit The Crime Of Father Amaro and Peter Mullan's Venice winner The Magdalene Sisters. The 2002 event featured Tian Zhuangzhuang's Springtime In A Small Town, Fruit Chan's Public Toilet and Catherine Breillat's Sex Is Comedy.

Demonstrating its financial impact, PPP points to Aktan Abdyklakov's Un Certain regard hit The Chimp which found a co-production partner in Bitters End of Japan; Fruit Chan's Locarno prize-winner Little Cheung finding investment from NHK and Canal Plus; and Viet Linh Nguyen's There Once Was A Time When, which saw Kodak Asia cover half its budget in 2000 as well as the film premiere this year in the main Pusan festival.

Measuring effectiveness is a slow process, so results may be better demonstrated in terms of projects continuing to move on from development into production - and have their quality affirmed by later attendance at major international film festivals.

Other films that the PPP has helped become high-profile include Lee Chang Dong's Venice 2002 prize-winner Oasis, Liu Bingjian's Cannes Director's Fortnight drama Cry Woman, Berlin Silver Bear-winner Betelnut Beauty and Wang Xiaoshuai's Beijing Bicycle.

Frances Higson, who produced Peter Mullan's debut Orphans, was hard at work on financing his second film when she applied to attend CineMart 2001. "I was following any leads wherever because I knew that Peter was keen to shoot the film that year".

She was desperate to get the $4.4m (£2.8m) budget in place. When she arrived in Rotterdam, she had $786,000 (£500,000) from Scottish Screen and a promise from the Film Council's New Cinema Fund; but the Council's Paul Trijbits would not commit hard cash until he saw a finance plan that made sense.

Higson paints a picture of a producer's dream come true. "It was fantastic. I had 40 or 50 meetings set up for me over five days." At the end, there was a bidding war for Italian rights. And Exception (then known as Wild Bunch) had taken on world sales duties.

"In Cannes," says Higson, "you're a poor relative going around the doors of grand hotels begging. Whereas at CineMart, they create an arena so that you can sell your film to the best of your ability. It's like they're your producer's representative."

And buyers are equally impressed by the structure. Charlotte Mickie, managing director, international motion picture sales, Alliance Atlantis Entertainment Group, says that because co-production markets are "'curated', there's a level of project and filmmaker that is desirable."

Europeans are even more enthusiastic about the likes of CineMart and PPP. Wouter Barendrecht, co-chairman of Fortissimo Film Sales attended CineMart 2002 last January, holding world rights to Springtime, which had shot but needed further cash to complete post-production. He secured French investors and then watched the film win the inaugural San Marco prize at Venice this September.

Barendrecht says, "Coproduction markets are very useful as education for young filmmakers, and industry people new to the international scene. These are not projects that have been around the block."

As the co-production market concept gains increasing status, similar events are rapidly taking shape, including Pitch Point at Berlin and the HAF in Hong Kong and such hybrids as Immersion, a forum for Canadian filmmakers to meet European co-production partners.

Cinemart's Abram, who attended Immersion 2002 in November, is happy to take some credit for the proliferation. He's unconcerned by competition. "These days it's so difficult to finance art house films, the more possibilities of making these films, the better. If co-production markets can contribute to that, how can I object' We're seeing acclaimed filmmakers coming to us instead of our begging them to come."

Patrick Frater contributed to this article