When the inventors of business jargon find themselves in hell (or post-mortem heating and rehabilitation solutions), the devil will have put aside a particularly ghastly punishment for the deviser of the term 'rightsizing'.

In tougher economic times, it was the euphemism of choice for laying off staff. You're not getting the boot, merely being rightsized. A look at the stock markets recently suggests we may see the term used in that way again in the not-too-distant future.

But rightsizing springs to mind in assessing trends in the current film market in a rather different context. What we are seeing at present is a seemingly contradictory trend towards consolidation at one end and micro-business at the other. In other words, the answer to today's testing times is to either get bigger or to remain smaller.

What's happening is the changing market is looking for the right size of business to cope with prevailing challenges. It mirrors the discussion about film distribution, where in recent years there has been emphasis on blockbuster giants at one end and low-budget targeted product at the other.

This has been mistakenly seen as a split between global Hollywood spectacle and a new enthusiasm for local film, suggesting an organic change in consumer taste for which there is no evidence. Rather, the concentration at the extremes is a recognition of financial realities. The resultant squeeze in the middle is because films without the muscle for global mass-market release or the nimbleness to reach a tighter demographic target group struggle to find markets.

Consolidation is about making money in international markets. The studios are now owned by giant diversified conglomerates with the capacity for mass-market global business. And the paradox now being exploited by some studios is that being big puts one in a strong position to exploit the smaller opportunities, which is important if you don't want all of your eggs in the giant blockbuster basket. The bigger independents are realising they need to follow the same thought process.

Competition is getting tougher, but distribution opportunities are also greater, so it's no surprise to see a burst of mergers and acquisitions activity in every area. Universal last week revealed it was building production capacity in Germany which will help it produce smaller European films to distribute. And most of the studios have been forging partnerships with international production companies with some success.

Naturally, the independent sector is keen not to see the studios get their hands on a still greater share of the global distribution market. (And they can't play the cultural card because the studios will be working with local producers and film-makers.) The logical response is to make sure there are big enough production and distribution entities capable of taking on the studios at their own game. The resurrection of the European studio dream, for example, is already well under way and it's impossible to miss the expansion of Indian business.

This drive for size is also driven by convergence. As Apple has shown in music, and as developments in the US prove, there will be a small number of dominant players in new media distribution. Amazon this week decided to dump its DVD online rental service in favour of a slice of European player LoveFilm, which has also developed a promising downloads service with US studio support. And of course there's the Microsoft/Yahoo deal, in which online entertainment is a significant factor.

But all of this leaves serious opportunities for smaller players. If the mass market requires consolidation, the niche opportunities of an increasingly long-tail business require agility and focus. The global conglomerates cannot hope to monopolise talent or profitable niche markets.

Smaller players with smart business plans and an enthusiasm for new forms of distribution will play an important role in taking the YouTube generation into the business realm. A new production company from Beastie Boys producer Adam Yauch illustrates the point. He wants to make films that are cool. That's a perfectly rightsized mission statement for a long-tail era.