Netflix (Rightly) Ditches Film Funding

Netflix is shutting down Red Envelope Entertainment, its department that invested in low-budget and documentary films. The company said it was shuttering the unit, which employed four people, because it competed with Hollywood studios (Netflix’s bread and butter). This is good news; Netlifx needs to rid itself of distractions and focus on a content streaming future.

Red Envelope invested in more than 100 films, including The Puffy Chair, a low-budget road trip comedy by the Duplass brothers. Netflix didn’t release financial results for the unit, but a Piper Jaffray analyst told Bloomberg News that Red Envelope probably contributed 1 to 3 percent of Netflix’s $1.2 billion in sales last year.

Netflix doesn’t need to be in the business of finding little films that could. Yes, it was great that it funded documentaries, but the movie rental company has much bigger fish to fry, and companies such as Snagfilms are stepping up to distribute documentaries.

Netflix’s biggest priority has to be getting more content for its online streaming services. Stacey’s predictions about the dearth of “Watch Instantly” content have come true, and after two weeks with the Netflix-streaming Roku box, I’m left to choose between watching old episodes of Buck Rogers or 100 Sailing Mistakes.

Once it has that problem licked, Netflix can then focus on its content delivery and start streaming in HD.