Netflix closing the Red Envelope

Last updated on June 18, 2018 Views: 547 Comments: 0

In a move that could have a big impact on indie film sales and distribution, online film rental service Netflix USA is shuttering its film financing and acquisition arm Red Envelope Entertainment (REE).

REE was best known for investing in low-budget indie films and documentaries. The division would generally contribute half of a production’s total acquisition and theatrical release costs, along with half of the total profit, in return for Netflix disc and digital streaming rights.

REE changed tactics towards the end of their run, agreeing to pay a flat fee for non-exclusive Netflix rental streaming. This was packaged with rights to the retail DVD release, typically taking fewer risks for less money.

A New Model of Distribution

Netflix closed Red Envelope Entertainment in 2008, in part to avoid competition with its studio partners. At the time, a spokesman for the company said:

“We experimented with it for two and a half years and we acquired some really outstanding titles and released some movies that we’re really proud of, however, Netflix is a distribution company and we can bring these films to members without having to acquire them. We were running into our studio partners in the same acquisitions meetings and we want to focus on our core business.”

It was a bitter blow for many smaller production companies, who were counting on Netflix’s help to finance their upcoming projects. However, the giant was confident that their status as the undisputed king of streaming would help when acquiring the rights to content in the future.

REE invested in 126 films during their two-year tenure, with highlights including the Golden Globe-nominated Sherrybaby.

The Future of Netflix Content in 2018

Recent Netflix hits include Star Trek: Discovery and The Cloverfield Paradox, although both were distinctly more expensive than the average REE release, which could cost as little as $15,000.

The first season of Star Trek had a reported budget of $8m-8.5m per episode, with Netflix securing the worldwide distribution rights for a ‘blockbuster fee’ according to CBS CEO Leslie Moonves.

The streaming service also paid Paramount more than $50 Million for The Cloverfield Paradox. While it wasn’t a critical success, over 5 million subscribers watched the movie during the first week of release.

Bigger budget films are soon to follow, including science fiction horror film Annihilation, starring Natalie Portman. The transition to a smaller screen may have disappointed director Alex Garland, but if a project is suffering from development hell, Netflix seems to be well placed when it comes to scooping them up for the right price.

For smaller projects that were often the focus of REE, Netflix is still a solid platform to show off what’s on offer. They plan to release at least 80 original films in 2018 alone, with the majority unlikely to be anywhere near the scale of The Cloverfield Paradox or Annihilation.

The streaming service has proven itself as a viable option time and again, ensuring that there is a wide mix of content on the platform. Read more about Netflix VPN and how to fully unblock all Netflix’s channels.

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