Distribution has perhaps always been something of the poor relation in European cinema. This is the continent of auteur theory where the vision of a director is paramount. Great cinema is the work of the genius - production is art, distribution is mere business.

For Hollywood, business is its business and so distribution has taken on a far more powerful role.

Digital change, of course, does not entirely negate William Goldman's famous maxim that in film 'nobody knows anything.'

No amount of new technology allows a film-maker to perfectly second guess what the customer might want in the two years or so it takes to get from idea to market.

But there's a sense that not knowing what the customer wants is an exasperation for the studios but a side issue in Europe.

Commercialism can be a dirty word for many Europeans, who fear customer focus means lazy mass entertainment. Such thinking, as we shall see, flies in the face of the recent market developments in which local films have made a serious impact at the box office.

The argument of this report is that digital change for film favours the specialist over the mass market - or at least that the biggest benefits accrue to product focused on a clearly identified demographic, rather than a four-quadrant hit or hope.

And in Europe, the most under-served demographic is the adult market which is more likely to want challenging fare.

This report is intended to provoke debate but it does not run away from the profound difficulties of making digital change technically and economically viable.

It is based, however, on an unapologetically optimistic assumption that customers want a wider choice of European film that the existing analogue industry cannot deliver.

The pessimistic - but if we are honest widely-held view - is that European film is a previous flower that needs protection from the Hollywood hurricane.

Whether one is an optimist or pessimist, it is impossible to ignore a global digital revolution that is already having an impact. It cannot be stopped by policy, law and least of all wishful thinking.

We are come years beyond the danger point of early adoption, where every change was a leap into the unkown.

That is not to say that there are certainties - perhaps we have the advantage of known unknowns rather than being completely in the dark.

As we will see, there are enormous challenges that may be all but impossible to surmount for some. But the technologies on which the future is being built are now generally stable and the US studios have been throwing their weight behind certain developments that, for better or worse, are set to become industry standards.

Wait and see is surely no longer a sensible policy for European film.

Punk cinema

The industry needs to be aware that challenges the status quo are coming not only from the US but from net-native newcomers, for whom the current debate about digital transformation looks like a rearrangement of the deckchairs on the Titanic.

New cameras and post-production software are lowering the entry cost of film-making, even if the costs of talent and demands for ever greater spectacle are not doing the same at the blockbuster end.

In that sense the talk of digital democratisation is certainly true. Today's enthusiast posting content to YouTube content might indeed be tomorrow's feature film director. If film can really become a participation sport, then it is possible to widen film-making beyond the current elite domination in Europe.

Cultural diversisty would then mean something beyond protecting establishment culture from the real or imagined cultural imperialism of Hollywood.

It's not too fanciful to make comparisons to punk rock in the 1970s or perhaps skiffle in the 1950s, in which music became what you made rather than what musicians gave to you.

This report argues that these newcomers will want to create the new world in their own image, rather than relying on the industry to change.

new voices - new audiences

But where the digital era can be really revolutionary is in allowing those films to be seen. New voices are vital but the focus for anyone wishing to understand what's happening needs to be at the other end of the chain - on the end customer.

As mentioned earlier, the fear for many is that such a customer focus is philistine: an appeal for populist, unchallenging film.

Those arguments are given added weight in Europe because of fear that local language film will be swamped by products in English.

Yet widening distribution will allow European cinema, particularly outside its home territories, to challenge the age-old argument that box-office figures show that no one wants to see their work.

The simple tragedy of European film, particularly where a product strays beyond its own national territory, is that fine work is often unseen because of antiquated, artificial limitations.

europe falls behind

This report argues that digital distribution, including digital cinema, should strongly favour the niche film. That is niche in the sense of being aimed a specific audience rather than simply a comment on size or potential.

This is the basis of the 'long tail' theory, developed by Chris Anderson, of Wired. Where distribution costs are radically reduced, minority tastes can be efficiently served, meaning greater choice.

The potential to serve niche or specialist markets promises greater cultural diversity and the ability to efficiently reach clear segments of the audience.

Digital technologies crucially allow the aggregation of interest groups. It brings together enthusiasts. Arthouse cinema, for example, is critically limited by availability and geography.

For a difficult piece of cinema to do anything at the box office requires a huge amount of luck. Audiences need to live within reach of a cinema, hence the concentration in the big cities.

Yet the majority of the potential audience is not within range of a theatre or able to go at screening times.

This is a particularly critical issue for more challenging European film, which draws from an older demographic that is more likely to be time poor.

By efficiently matching product to demand it is possible to overcome the limitations of mass market distribution.

failure to adapt

So why hasn't the digital change been embraced or initial enthusiasm has not been translated into serious action'

This report aims to spell out the current state of online development and looks at the realities of the market and the opportunities on offer.

It argues that European cinema has lost some of the early opportunities to mould digital developments. But it also suggests failing to act decisively now, will cost the industry at all levels in the longer term.

Whether the argument is on the grounds of cultural diversity or from a levelling the distribution playing field with Hollywood for businesses, finding new audiences is essential.

Instead, Europe has neglected opportunties at every level and has failed to address the very real difficulties faced by a fragmented continent and an industry divided by vested interests.

a new world

The industry is of course not a simple homogenous body. The continent has some strong pioneers and a few far-sighted governments and public bodies.

And it should be remembered that film is not unique in its problems. It is finding coming to terms with the realities of new media no easier or harder than other industries.

But from production through to exhibition, much of the continent's film industry is falling behind global competitors in crucial areas. The rollout of D-cinema, for example, has been a painful stop-start affair. (See Chapter 8).

This report argues while there are very real problems with finding workable business models for film, much of the challenge is coming to terms with the inevitable.

A digital revolution is not about taking the ideas and the economics of the old world and simply digitising them. It is about finding new ways of working and potentially new kinds of content.

This is by its nature a work in progress that will need revision and refinement as the months progress. But this is not an issue that will go away.

Disinvention is not an option. indeed be tomorrow's feature film director.