Dark indie film market sees faint light at Sundance

By Bob Tourtellotte and Michelle Nichols

PARK CITY, Utah, Jan 19 (Reuters) - After a dismal 2008, the forecast for independent films appears somewhat brighter as a glut of movies works its way through art house theaters, executives said on Monday at the Sundance Film Festival.

But good times are still distant, perhaps as far off as 2010, and improvements won't come without changes such as lower star salaries and reduced production and marketing costs.

Executives hope Internet distribution can stem the tide of slowing DVD sales, but remain uncertain about exactly how to use the Web, to release films or simply to promote them.

"The sky did fall. It's fallen a lot," Mark Gill, chief executive of independent producer The Film Department, said in a panel at Sundance, the top gathering for U.S. independent filmmakers held in this mountain town east of Salt Lake City.

"I think in 12 to 18 months we will be down to about 350 theatrical releases, which will give room to breath," he said.

Panel members noted that in recent weeks, the box office success of art house movies such as gay-themed "Milk," ($20 million) and Indian love story "Slumdog Millionaire" ($44 million) have demonstrated a healthy appetite for well-made movies that fall outside mainstream Hollywood fare.

Both are still playing in theaters and expected to increase their total ticket sales. Also, movies like independently made vampire romance "Twilight" ($185 million) can still catch fire at box offices and cross over from niche to mass markets.

"The theater box office seems to be thriving, especially for a number of indie films," said Sony Pictures Classics co-chief executive Michael Barker.