Netflix Closing Red Envelope Entertainment Division

The LA Times reports that Netflix is closing the Red Envelope Entertainment division because "...the Red Envelope Entertainment unit competed with its main suppliers, Hollywood studios." A Netflix spokesperson told HackingNetflix that only 4 employees will be moving on (the L.A. Netflix office has 77 employees).

Netflix's Red Envelope Entertainment invested in more than 100 films, including Sherry Baby, Helvetica, Confessions of a Superhero, John Waters: This Filthy World, and Cowboy del Amor. You can view the entire list of Red Envelope Entertainment movies on the Netflix website (many are available through through Netflix's Watch Instantly).

I'm really disappointed that Netflix has decided to stop buying independent films. There are so many great small films that languish because they can't find an audience or get funding, and Netflix was able to provide both. In a 2006 Wired story, Ted Sarandos, Netflix's chief content officer, said that he eventually wanted to buy every film at Sundance.

via paidContent.

Comments

[Corey3rd]

This is such a lie. Red Envelope did not compete with any Hollywood studio. I never heard a single major studio complain about losing a film to Red Envelope. This was a last chance distribution deal to films that had completely fallen through the cracks that nobody saw any potential in purchasing. If Red Envelope passed on your film, that pretty much was the signal to just burn DVD-Rs and sell them out of the back of your car.

[Robert Martin]

Red Envelope provided negligible competition, but the fact that they were putting any money at all into marginal indies gave the fish a larger barrel.

Makes shooting 'em tougher.

Netflix's stake in streaming films unfortunately makes them much more subject to Hollywood whim. "Right of first sale" is now meaningless, they need licenses!

And if Netflix isn't supplying that infusion of cash during production, it means they'll probably be able to pick up the same indies in even cheaper packages somewhere up the road.

[andyg8180]

http://www.netflix.com/Collection?vt=tl&cid=1410&so=1&lnkctr=genDdTlyr&st=yr

thats a link to the Red Envelope movies... There were some good ones i was impressed with.... But overall, nothing to cry about... I guess you can say the losing of another Indie movie producer is a sad day indeed...

[AnnR]

I only yesterday got the chance to watch a Red Envelope film called "Super High Me" (recommended!). I didn't even know until yesterday that Netflix was in the biz of buying indie films. Sad that it's come to an end.

[joshhyde]

I wonder which studio strong armed them. This has to be some kind of concession for a deal. Hopefully, something along the lines of more movies added to "Watch Instantly".

[Im Not A Turnip]

I've seen things like this play out plenty of times. "You can be my supplier, distributer, whatever, but you will NOT be my competition."

[Corey3rd]

I only say that this can't be the real story because the Hollywood studios have no problem in HBO & Showtime owning films and shows. While you might say that's apples and oranges, in contracts, Watch Now is on par with Cable's OnDemand.

this has gotta be a cost saving effort. Retool the direction to get out of theatrical aspect. They'll just make a deal with the producers of these festival projects that can't get a proper distribution deal to supply them with DVDs for rental.

Why should Netflix even pay $20,000 for the rights and the costs of manufacturing? This way Netflix can tell the indie producer that they'll get 40 cents a rental. Right now the profit margin in Indie film (especially indie docs) is a lost hope. When risk outweighs reward - make someone else pay for it.

seems like Netflix will become the iTunes for indie producers who can't secure a deal with Magnolia or an even smaller distributor.

I had a film that Red Envelope was interested in. I enjoyed my talks with their people. I understand why they had to back away from the table (idiot director hadn't secured rights to a variety of high profile clips). I feel bad that they shut RE down. But right now the market is dead.

I go to Full Frame in Durham. For the last several years, the panel about the marketplace has been a celebration of riches. Every distributor on the panel had a success story. This year's panel was like a wake. All the hot films from the year before had completely stiffed theatrically.

[Brian]

@Corey3rd

Actually, studios own HBO (TimeWarner) and Showtime (part of CBS). Big difference.

@joshhyde

I'm going to either guess Weinstein, maybe ThinkFilm ... it has to be a strong indy studio or a major with a strong indy division. I guess if we see a rush of films from a particular studio, we'll know.

It's too bad this happened, but I'm not surprised.

[Corey3rd]

The Weinsteins have an exclusive deal with Blockbuster. And they are dead fish at this point. They can't even afford to make a Tarantino film. ThinkFilm is barely in the game as they owe way too much money to filmmakers. These two are cripples at this point.

While HBO is owned by Time-Warner, they also run films from other studios. Same with Showtime. And they put those films on their OnDemand channel. Netflix through WatchNow and the little box have become a cable channel.

Judging from the larger article here:

http://www.indiewire.com/biz/2008/07/netflix_exits_a.html

this was a hobby that never struck box office gold. Seems like netflix will just go for streaming rites and your company provides the DVDs,

[eviltimes]

This is not a great loss. The vast majority of Red Envelope titles I recieved were substandard at best, and "coaster worthy" was the norm.

[lifterus]

Please. This was probably a commercial disaster of epic proportions.

[Bman]

Interesting...what about the 26 half hour programs of the little known classic tv series "The Court Of Last Resort"?
Try and find more than the single dvd out there.
As gatekeeper to the complete series we ask...
Anyone interested in streaming the entire series?
Hook us up and win a prize!
Bman