IM Global chief Stuart Ford was in Tokyo visiting buyers when the news about Gaga broke. "I think the announcement's been interpreted as a more drastic change of strategy than may actually be the case," he says. "The Gaga brand is an important one in Japanese cinema and I think its parent company will keep it very active releasing both locally produced films as well as US acquisitions.

"The structuring of how those acquisitions are financed may take a more risk-averse form than before but I'd be surprised if the Gaga label doesn't ultimately remain an active presence on the acquisitions circuit."

Jonathan Deckter, Lakeshore Entertainment's senior vice-president of international sales, says: "Gaga was a long-term valuable partner to Lakeshore, so we are certainly concerned it will no longer be buying films, however we believe strongly in the management team and believe it will remain a force in Japanese distribution."

Deckter is upbeat. "Calling the current market conditions a crisis is an overstatement," he argues. "International markets are cyclical - three years ago, Korean cinema was all the rage in the Japanese market and that lasted 12-18 months. At its high point, one buyer reportedly paid $7m for a film.

"Next came the trend of Japanese local productions - in 2006 local product accounted for about 55% of the box office with the remainder going to imported films. In 2007 the trend showed signs of slowing, with imported films accounting for approximately 55% of the box office. In short, Japanese consumers are still going to the cinemas; we just have to be more targeted as to what we present to the marketplace.

"The good news is that the consumer pricing on DVDs (in Japan) is still among the highest in the world with new releases being sold for the equivalent of $35. Rental prices are also relatively high compared to the US. Now the Blu Ray versus HD DVD battle is over, we can all focus on growing this marketplace.

"There are still companies which are aggressive buyers like Movie Eye, with which we've done a great deal of business with in the past year. Additionally, because the past two markets have lacked the usual number of big projects, most distributors have relatively empty slates starting Q2 '09, which leads me to believe there will be active buying during Cannes.

"Studio-level commercial films will always sell. The pricing level might have changed, but that's part of the adjustments we have to make in each market. In the past year we've brought five films to the market and to date we've sold four of them and are currently in negotiations on the fifth."

"The Japanese market is a vital and important territory for all sellers," says Kimmel International chief Mark Lindsay. "The Japanese buyers have become more selective and they are making more local productions. But if you have the right project and elements, they are buying. For example, we sold our Cannes Competition title, Charlie Kaufman's Synecdoche, New York, last year at Cannes to Asmik Ace Entertainment."