Red Envelope is sealed.

Wednesday, July 23, 2008 | 3:40 PM

Red Envelope Entertainment, Netflix's acquisition and distribution arm, is no more. Reports Anthony Kaufman at indieWIRE:

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."

Netflix will continue to license streaming rights for films, which had become Red Envelope's focus in the past few months -- in effect, they'll no longer be competing with the distributors they also partner with: "When Red Envelope was buying streaming rights from producers, it was effectively taking licensing money from distributors. ('Unique partnerships can create channel conflict in this new evolving world,' Sarandos admitted.)"

[Photo: "This Film Is Not Yet Rated," an IFC/Red Envelope co-production, 2006]