If Pop.com, an internet film site, backed by such Hollywood luminaries as Steven Spielberg and Ron Howard, can fail, it does not say much for the future of the internet as a medium for narrative entertainment. But new broadband internet access technologies are creating a brighter picture.

At present, the internet starts out at a disadvantage. The size of digital video files and the slow connections through which the majority of users access the net mean that films on the internet are rarely more than ten minutes long.

Short films are generally used by young directors to build up a portfolio, says Laurence Penn, founder of In-Movies, an internet film site which shows both original short films and some classic features that visitors can watch in 10-minute episodes.

"Short films are not a business proposition," says Mr Penn. "They have never been a business proposition." To broaden its appeal, In-Movies has expanded the content of its site to include news, reviews and trailers of mainstream Hollywood films.

But this is not to say that the internet film has no value. "Short films are very much a loss leader for us," says Mr Penn. The trailers, in contrast, have more value as they encourage people to sign up to the new DVD rental and subscription service.

Patrick Bossert, head of e-strategy at KPMG Consulting, the business consultants, says: "I have a fairly downbeat view on where the internet movie genre is going. It fits with the pop-promo and video shorts category, and will struggle to break out."

Others are more bullish. Top quality content can make internet-based short films a viable business model, says Michael Comish, international president of AtomShockwave, the internet film site. AtomShockwave makes around 6m showings of short films a month and has around 10m unique viewers. "The figures speak for themselves," says Mr Comish.

Today, the business model is based on syndication, advertising and sponsorship. AtomShockwave acquires all the rights to films for a limited period of time, enabling it to can syndicate its films to television stations and airlines.

It also takes advertisements on its site, but can be more ambitious than most websites, which have to rely on the banner ads that are ignored by most users. AtomShockwave's users will already have the hardware and software to see films, so the site can display ads with rich media content.

"We have a bias towards hip, cool entertainment," says Mr Comish, which appeals to Atom's audience of 16- to 30-year-olds - an attractive market for advertisers.

AtomShockwave also has a strong sponsorship business, says Mr Comish. For example, Swatch, the watchmakers, sponsored the site and a competition to find talent to produce the next series of advertisements for Swatch.

But to be successful, AtomShockwave says it needs an evolutionary business model which takes into account all changes in the media. As an example, Mr Comish points to its '10 Minutes Older' series, where 15 leading feature film directors, including Bernardo Bertolucci and David Lynch, made 10-minute films that AtomShockwave distributes over the net.

In another example of crossover between the media, the work of director Amy Talkington, now working for Francis Ford Coppola's movie studio Zoetrope, was shown on AtomShockwave.

But, while slow connections may be a problem for the nascent internet movie industry, broadband may change everything. Watching films through a 56K modem, which is how most users connect to the net, is not a compelling experience, says Mr Comish - unless the films are animations Macromedia's Flash system. These are relatively quick to download.

"Broadband will make a huge difference," says Mr Comish. "Broadband users spend more time on line, come back more often, and do more when they are there."

At In-Movies, meanwhile, the DVD service is a stop gap, says In-Movies founder Mr Penn, until broadband access becomes widespread. He does not expect this to occur until 2002 or 2003, when the site will be able to sell access to entire feature films.

Broadband will allow users to watch films and trailers in different places, such as on a mobile phone or in an office, says Craig Hill, strategy development director of Wheel, the new media agency. Watching films and promotional material on the internet is a different experience from conventional media, with different rewards - and broadband will exaggerate this, he believes.

Others disagree. Rather than increase its appeal, the arrival of broadband may soon spell the end of the internet short film, says Nora Barry, founder of both Druid Media, a new media consultancy, and The BitScreen, an internet film website.

The BitScreen was designed as an artistic endeavour to see how the peculiarities of the internet, in particular the slow connections and the fact that people probably would not stay on a site for more than 10 minutes, affected story telling. So licensing these films to other media is not an issue, because they are designed for the internet.

"The real reason for broadband is to connect to a set top box," says Ms Barry. "If you had a choice of looking at a feature film on your PC or curled up on your couch in front of television, you'd choose your television. Short films are an internet phenomenon. I don't know whether they'd work on TV."

The PC is not really an entertainment device and people seem to use television and the internet in different ways, she adds. They will often view something on television and then use the internet to communicate with others about it.

"People only have so many hours to consume media, and a lot of the sites are to try to get people to change their habits," she says. "Of course, for those who are eight or nine years old today, and have always used computers, this may change."