We produce more movies to play to audiences than ever before. The way we reach this audience may be changing, but we still need to have consumers for our films or the equation doesn't work."
Richard Fox, vice-president, international, at Warner Bros, was articulating the obvious but all too often forgotten truth about the digitally powered transformation of today's entertainment businesses: new technologies may help find customers but they cannot make them like what they see.
That is not to undervalue the contribution of the internet and other digital changes. "Digital distribution is exciting, and internet-based VoD (video-on-demand) and EST (electronic sell-through) help in the marketing of small films and help give customers exactly what they want," said Fox.
Efficient distribution cannot, however, ensure that a customer likes what he or she is given. But the development of the international market alongside digital change offers the prospect of reducing the guesswork, said Fox.
There has been a temptation to see the success of local films in their home markets as a rejection of studio films but, to an extent, the expansion has been driven by studios using local markets as testing grounds to see what customers really want.
It has been a change for the studios, said Fox. "Over these past seven years, we [Warner Bros] have participated in the production and distribution of over 230 films outside the US, including almost 90 in Europe... So while, globalisation is a reality, we are careful not to leave any of our own cultural imprint on these films."
In other words, Warner Bros and other studios do not regard the US blockbuster and local film as competitors, but rather believe there is a symbiotic relationship between them - "outsiders on the inside", as Fox put it.
For all the exciting opportunities for the digital market, it is market reach that counts. "If a film does well in its own market, we would consider taking it to other countries. If we do take a film beyond its borders, it's an added bonus for everyone. We are excited by discovering talent that has the potential to break out of the local market into film-making without borders."
The business model
The internet has become the pre-eminent way to reach a mass audience on a global scale, as the emergence of sites such as YouTube has shown. Finding business models to make a profit, however, is a further challenge.
The film industry has been built on the notion of a premium rate for a premium product. That has already been challenged by the internet, by user-generated content (UGC) sites and perhaps most of all by piracy.
Peter Bazalgette, chief creative officer at Endemol, producer of the Big Brother reality TV phenomenon, told the conference that demand for premium services that mimic the "real-world" media was far from clear. In fact, audiences are moving towards free content with advertising.
"Two years ago, Big Brother video-on-demand was made available and around 25,000 people subscribed," he said. "Then in 2006 there was a free download with advertising and the figure shot up to 25 million."
Perhaps the biggest change has been in the amount of user-generated content. "For us there is a great prize. We used to have a creative team of seven or eight, but now we have massive teams. We take the UGC people send in, analyse it, take it to Los Angeles and make professional content. It's great for us," said Bazalgette.
The cost of change
Viacom UK chief executive Michiel Bakker sees the trend more in terms of the need to put interaction with the audience at the heart of business strategy - and that will cost.
"We get 92% of our revenue from TV revenues, traditional sources," he said. "It will cost a lot of money to make the change to new media, but it has to be done. I still don't think we have done enough."
There is also a cultural change necessary: "You do not get your message across by just sticking a website on at the end of a show. I'm not saying our research teams have not been working incredibly hard getting feedback from the public, but we need to do better."
Bakker said Viacom has developed a greater dialogue with audiences: "It's like digital speed-dating." But he pointed out that Viacom has not waited too long to take advantage of new media services. "Use of these technologies... are still very much at the experimental stage," he said.
There has been an assumption that film is simply awaiting a critical mass of broadband-enabled homes. New devices may follow the iPod in taking film down the same model that transformed the music business, although film may prove a different issue, and not just because there is a greater level of competition than music experienced.
Brad Duea, president of Napster, one of the pioneers of file-sharing music downloads, is in no hurry to shift to film.
Again there is a big difference between audio and visual products on a small screen. Napster, once the poster boy of the illegal file-sharing era, has since become a mainstream business. It has found that music lends itself to legal adaptation of sharing technology. Napster, for example, allows customers to listen to a song three times before purchase - but Duea does not see a simple replication for film.
The are no plans imminent to offer film downloads, for cultural and technical reasons, and because the advertising-funded free-content business model works much better with music.
Marketing and content mix
But as far as films are concerned, the internet is changing marketing strategies.
Jamie Kantrowitz is senior vice-president of content and marketing in Europe for MySpace, which has pioneered the idea of "entertainment communities".
The NewsCorp-owned MySpace believes it is possible for marketing and content to combine, with MySpace users taking content and putting it on their spaces, thereby making it their own. It has famously worked as a concept on films such as Snakes On A Plane, for which customers were encouraged to create trailers - although the film's mediocre box office demonstrates the limitations.
But the customer content on a site can become a form of advertising in itself. This is about the demands consumers have for control. The clips shown become viral videos, passed from person to person in a widening circle.
Which neatly ties back to Richard Fox's argument that the new media revolution changes the relationship with the customer but firmly remains a matter of talent.
Additional reporting by Rob Shepherd, Lisa Campbell and Susan Thompson.