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Netflix Halts Indie Film Unit

23 Jul, 2008 By: Erik Gruenwedel

Netflix Inc. is shuttering Red Envelope Entertainment, a two-year-old Beverly Hills, Calif.-based investment unit that funded nearly 100 independent films, including documentaries Trumbo and No End in Sight as well as romantic comedy Two Days in Paris.

The closure affects five employees, including four executives, from about 80 employees in the Los Gatos, Calif.-based online rental pioneer's Beverly Hills office, according to Netflix spokesperson Steve Swasey.

“We gave it try for a couple years and got some good titles out of it,” Swasey said. “At the end of the day, it is not core to our business. We are a great distribution company but not a studio, not a financier of films, and we decided not to do that.”

Swasey denied the closure had anything to do with Netflix's ramped up efforts to stream movies through its proprietary and third-party services, including the Roku and LG manufactured set-top boxes and Microsoft's Xbox 360.

The company currently streams for free to its subscribers about 10,000 titles from a library of more than 100,000 movies and TV shows. Some analysts believe Netflix didn't want to risk alienating its studio content providers, which also produce independent films.

“We put all the wood behind the arrow of what is most strategic and most in-focus for our core business, which is movie distribution,” Swasey said. “To be in the business of acquiring titles is outside the core of our business expertise and our reasons for being.”

Netflix reports its second quarter results July 25.

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