REE's key staff of four including acquisitions and distribution chief Liesl Copland will be moving on.
The division bought more than 120 films during its short life, among them the 2007 Palme d'Or winner 4 Months, 3 Weeks And 2 Days on which it partnered with IFC and 2 Days In Paris with Samuel Goldwyn.
In recent months REE had focused on acquiring rights for Netflix's streaming facility and executives had begun to question the purpose of acquiring single films for theatrical distribution while Netflix enjoyed comprehensive relationships with independent distributors.
'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,' a spokesperson for Netflix said.
'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.'
Netflix will announce quarterly earnings on Friday.