@ Berlinale: Netflix Not Planning Return To Europe, HP/Wal-Mart Movie Income ‘Peanuts’

As Berlin buzzed to visits from stars like Penelope Cruz and Sir Ben Kingsley tonight, I was on Arts Alliance Media’s digital media panel debate during the European Film Market part of the Berlin International Film Festival – along with HP strategy manager Raoul Heinze, NetFlix’s Red Envelope acquisitions manager Liesl Copland, Cinetic Media VOD rights mogul Robert Nathan and British indie film producer Arvind David.

Netflix: No overseas expansions yet for the US online DVD rental service. Despite aborted attempt to expand in to Canada and the UK back in 2004, Europe’s market remains safe for the Lovefilms and Glowrias of this world. Said Copland: “We originally dabbled with the idea of going in to the UK long ago and then the Wal-Mart (NYSE: WMT) download-to-own business started to launch and we sort of stepped away from that. Because the bulk of the business is DVD-driven, our business makes or breaks on the postal service in each of these countries.

“In the US, we mail 1.8 million DVDs every day, so we are a huge customer of the postal service and we can’t just go in to a territory … as the digital future is now. I’m sure, 10 years from now, who knows – global Netflix? Again, you have to acquire the rights for each territory – it’s multi-territory, it is complicated, it’s been complicated enough in the US so, believe me, we’re not trying to divert ourselves to get rights in other countries at the moment.”

HP: Heinze stressed he was present as a tourist rather than a HP employee, but nevertheless had more to say on why the company shut Wal-Mart’s US movie download store in December after 10 months. Short version – it wasn’t making enough money and Apple (NSDQ: AAPL) was too strong. Long version: “HP is a very large company. If HP engages in something and it doesn’t turn a revenue within a certain timeframe of at least a billion then it’s peanuts for us to try to manage it. That’s the unfortunate situation in very large corporations and the business with Wal-Mart was definitely not anywhere near the size that we at that point believed we were at the right time in the market.

“So it has a lot to do about how big is that market being hyped by visionaries, by people that say words like ‘paradigm-shift’? And how big is that market actually today, taken existing competition? Obviously Apple being a formiddable (competitor).” That’s a shame, since Heinze said HP, in deciding to enter the business, had to pick Wal-Mart because it was “the gorilla in the room”. Instead, he spoke with intense admiration for iTunes.