Netflix, the online film rental juggernaut, is adhering to its name: Getting out of the theatrical business altogether, abandoning film production, and focusing solely on Internet and new media distribution platforms. With the move, the company has folded its nearly 3-year-old division Red Envelope Entertainment (REE), which purchased all-rights to indie films, and will be letting go its 5-person staff, which includes veteran exec, Liesl Copland, head of Red Envelope Entertainment.

In its short life, Red Envelope acquired 126 films, including the Golden Globe nominated "Sherrybaby," co-produced a slate of movies for IFC TV (including Kirby Dick's This Film is Not Yet Rated) and partnered on theatrical distribution for such micro-hits as 2 Days in Paris with Samuel Goldwyn, No End in Sight with Magnolia Pictures, The Puffy Chair with Roadside Attractions, and 4 Months, 3 Weeks and 2 Days with IFC Films.

Due to changing marketplace conditions and the natural evolution of Netflix, according to Chief Content Officer Ted Sarandos, the company decided it was time to move on. "The one thing we learned this year is that there's no shortage of produced movies and there's no shortage of money for viable projects," Sarandos told indieWIRE yesterday. "The best role we play is connecting the film to the audience, not as a financier, not as a producer, not as an outside distributor or marketer."

Here, from the Netflix website, is how the service described its Red Envelope Entertainment division two years ago:

"Netflix (NFLX) is committed to providing consumers with access to the widest variety of films available. With over 65,000 titles, the Netflix catalog spans every major genre, from documentaries and dramas to comedies and how-to. To that end, Red Envelope Entertainment is acquiring and funding original content projects to increase consumer options and provide an innovative method for film distribution. While giving filmmakers a platform to expose less commercial projects to a broader audience, Red Envelope Entertainment looks to leverage its proprietary technology to offer subscribers unique and original content to which they wouldn't otherwise have access. This original content initiative creates a national distribution channel for films and entertainment programming otherwise not available to broad audiences." 

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