The movie-rental service Netflix Inc. is closing a small unit that finances independent movies, partly to avoid competing with Hollywood studios with which it partners for DVD and Internet distribution.

The financial impact on the company will be small, and only four out of about 400 employees are losing their jobs.

But the move could make it more difficult for smaller producers to find homes for their movies. Netflix' Red Envelope Entertainment had focused on bringing less-commercial projects to a broader audience. The unit acquired or helped finance independent films, distributing them in movie theaters as well as in the regular Netflix channels _ DVD by mail and online streaming.

Netflix spokesman Steve Swasey said the company began the unit as an experiment about two years ago, but ultimately decided that financing movies was not its forte. He said filmmakers still have plenty of outlets for financing and distributing movies, "and we don't need to do that to get great titles on Netflix."

Swasey said the company weighed the fact that it was often in the same room with studio partners at film festivals, and "we didn't want to compete" with them.

Movies distributed through Red Envelope _ named for the red envelopes used to ship Netflix DVDs _ include "Sherrybaby," "No End in Sight," and "4 Months, 3 Weeks and 2 Days." Red Envelope typically partnered with a larger company for theatrical release.