This was supposed to be the year that Cannes finally embraced the new digital dawn. For the first time films from Netflix were included in the official competition. Bong Joon-Ho's Okja and Noah Baumbach's The Meyerowitz Stories, both distributed by the world's busiest streaming service, would compete against work by Michael Haneke, Todd Haynes and Sofia Coppola for the Palme d'Or.

Last year, Amazon Prime, Netflix's great rival, were in the race with Jim Jarmusch's Paterson and Nicolas Winding Refn's The Neon Demon, but that company has, since its inception, worked hard to get its films into cinemas. Manchester by the Sea, winner of two Oscars, is an Amazon presentation. Netflix has been more reluctant. Yet Cannes has always argued that this is a cinema festival. Had the organisers turned a corner? Had Netflix yielded?

Maybe neither is the case. Rumours were rife that the French exhibitors association – represented on the Cannes board – had been urging the festival to dump the Netflix releases unless the company committed to a release in domestic cinemas. On Thursday, less than a week before the festival kicked off, a statement was released.

“The Festival de Cannes does reiterate that, as announced on April 13th, these two films will be presented in Official Selection and in Competition,” it read. “The Festival de Cannes asked Netflix in vain to accept that these two films could reach the audience of French movie theatres and not only its subscribers.”

Ouch. But what really perked interest was the second paragraph. “The Festival de Cannes has decided to adapt its rules to this unseen situation until now: any film that wishes to compete in Competition at Cannes will have to commit itself to being distributed in French movie theatres,” it read. If this rule had been in place this year neither of the two Netflix releases would have been allowed to compete.

Many cineastes celebrated the principle behind the decision. It seems right that the Cannes Film Festival honours theatrical exhibition and encourages distributors to put the work of major film-makers on the big screen. The general principle (stay with me here) is not in any sense elitist. It is unquestionably a good thing that streaming now allows punters who live nowhere near an arthouse cinema to see films by the likes of Bong and Baumbach. But it would be awful if that were the only way such films were shown. There is already much muttering about Netflix's acquisition of Martin Scorsese's upcoming The Irishman. Surely, that great film fanatic would want his picture to be projected in all its full-sized glory.

The situation is, however, a little more complicated than that suggests. Throughout the world, theatrical exhibitors are worrying about the narrowing window between a film’s cinema release and its appearance on streaming services. If Netflix were to change its habits and put the two Cannes releases into French cinemas it would find itself in a very tricky bind. The nation’s strict laws forbid films that have been in wide theatrical release from appearing on a streaming platform for three whole years. By that stage, the buzz will have long faded and the films will have been widely pirated.

This is not an easy decision for Netflix. Following the Cannes announcement, France’s National Film Board refused Netflix a special “visa” that would allow limited release of the two films without imposing the delay between exhibition and streaming.

French industry observers believe that the election of Emmanuel Macron, a supposed pragmatist, may encourage the loosening of such restrictions throughout French industry. Discussions on changing the regulations have been bogged down for years, but that change must surely come. Even the most fervent cinema lover would admit that a statutory three-year window is unnecessarily prohibitive.

For the moment, this leaves the festival in a peculiar place. Okja, an ambitious ecological fantasy starring Tilda Swinton, and The Meyerowitz Stories, a complex comic drama starring Ben Stiller and Emma Thompson, will be among the hottest tickets on the Croisette. But there will be as much chatter about the means of their exhibition as their content.

We know for certain that the conversation is not over. Personnel from the other international festivals have seasoned their support with qualifications. "I personally believe that cinema remains an experience to be enjoyed in theatres," Alberto Barbera, director of the Venice Film Festival said. "But we cannot ignore the fact that with the rise of new platforms we cannot go back in time, and festivals must not be put in the position of having to choose one side or the other." Earlier this year, for the first time, a streaming only film, Netflix's I Don't Feel At Home in this World Anymore, won the Grand Jury Prize at the Sundance Film Festival.

All is in flux.