The international movie biz that’s regrouping at Cannes is down but certainly not out.

Still, Cannes faces a paradox: Many pure-play distributors who need product can’t afford to pay much. Those who can — Europe’s giants, for instance — often have moved into production: At Cannes, they hardly need to buy at all.

The real battle at Cannes will be over price.

“Suppliers will have to offer a different type of movie: lower-budgeted films with realistic prices rather than lower-budget films at unrealistic prices,” one top distributor says.

“Most buyers tend to buy films very carefully, and the number of films they buy has been dropping, but they still have to buy films for their slots,” argues Kiwamu Sato at Japan’s Shochiku Co.

“Distributors are suffering. Anyone who says otherwise lives in a fantasy world,” says seller Nicolas Brigaud-Robert, CEO of Paris-based Films Distribution.

The litany of tough times — the credit crunch, a stronger dollar, weakening DVD market, rising piracy, sagging revenues at parent congloms — is hammering distribs in Japan, Russia, Spain, Mexico and Latin America.

Since Cannes 2008, Russia’s ruble and Brazil’s real have lost 33% and 41%, respectively, against the dollar. Some Russian distribs claim successful renegotiations on deal terms, but they decline to give details.

Mexico’s peso is worth 25% less in dollars; Nueva Era Films’ Leopoldo Jimenez says he’ll be highly selective at Cannes.

Bank credit has dried up in Brazil: Split-revenue acquisition deals are increasingly common, reports Rain Network’s Fabio Lima.

Spanish banks no longer lend for P&A campaigns, nor do they discount distribs’ contracts with TV stations, one distrib says.

Japan also has its stories of woe. “Independent arthouse and foreign-language distribution has been damaged by recession,” says Yuji Sadai at Japan’s Bitters End. “The DVD market and theatrical youth audiences especially have declined.”

The niche pic glut clogs theater access: Britain saw 340 firstrun specialized film releases in 2007, notes the U.K. Film Council’s Peter Buckingham. Few lasted long in theaters.

Above all, says Constantin’s Martin Moszkowicz, in key markets, “Local product is at least as attractive as a lot of so-called international product.”

Top Euro players — Pathe, StudioCanal, Constantin, Medusa — are digging into production. In March, WB took over Pathe’s U.K. distribution operations.

Though a relative distribution safe haven, France suffers a surfeit of releases — around 15 a week, says former Bac Films acquisitions head Mathieu Piazza.

And there are other concerns: Gallic “TV acquisition budgets are declining and might not recover as fast as the general economy,” says Lionel Uzan at France’s SND.

Hit on all sides, Berlin dealing was guarded.

Prices paid for non-must-have U.S. fare plunged in select territories, by 50% below AFM asking prices for Spain, says Wide’s Luis de Val.

In the arthouse sector, prices for Germany, Italy and Britain were down 20%-25% on middecade rates. Fewer films sold and films saw fewer deals, one Gallic sales agent reports.

In general, Berlin trading was labored. Still, despite the presales biz drying up, a clutch of relatively modestly budgeted titles with high-profile or genre elements saw deals: StudioCanal’s “Chloe,” Pathe’s “Centurion,” IM Global’s thriller “St. Vincent,” Mandate’s “The Baster,” Rezo’s “The Admiral” and Summit’s “The Ghost” and “Twilight” follow-up “New Moon.”

There were select arthouse sales, such as those of Roissy’s Cesar winner “Seraphine.”

So Cannes unspools amid a thick fog of uncertainty enveloping the sales biz. Still, according to U.K.-based Optimum Releasing’s Will Clarke, one thing remains for sure: Sales agents who bring strong, high-quality product at any range, from anywhere, will have delivered the thrill of Cannes.

Nick Vivarelli in Rome and Mark Schilling in Tokyo contributed to this report.