How Netflix keeps luring big-name directors away from the traditional box office

Directors who have made their mark with theatrical releases — Greta Gerwig, Rian Johnson, Martin Scorsese and Alfonso Cuarón — are also making content exclusively for Netflix

In this articleNFLX your favorite stocksCREATE FREE ACCOUNTFilm directors Rian Johnson (L), Greta Gerwig (C), and Guillermo Del Toro (R)Getty ImagesNetflix isn't interested in bringing movies to theaters

The company's leaders have said they see theatrical movie releases as an "outdated" model

Yet for more than a decade, the er has lured in some of Hollywood's biggest directors to make content exclusively for its platform

Martin Scorsese, Alfonso Cuarón, Bong Joon-ho, Spike Lee and Guillermo del Toro, darlings of the big screen, have all directed films for the ing service without the mise of a wide theatrical release

More recently, Netflix has wooed Greta Gerwig into the director's seat after acquiring the rights to C

Lewis' "The Chronicles of Narnia" book series, signed Rian Johnson to make two sequels to 2019's "Knives Out" and made itself the of Kathryn Bigelow's first film release in nearly a decade

Many of these creatives have touted the importance of the theatrical experience, but few of the Netflix jects are expected to garner a wide release or a long run in cinemas

Most of the time, Netflix's films are launched in a limited number of theaters for a week, just long enough to be eligible for Academy Award contention

In fact, Gerwig's "Narnia" film is getting an exclusive two-week global debut in IMAX starting Thanksgiving Day 2026, something that has never been done before

Daniel Craig returns as Benoit Blanc in "Glass Onion: A Knives Out Story. "NetflixNetflix has been able to bring Hollywood talent away from the traditional theatrical model by offering lucrative contracts, creative freedom and an audience pool of more than 300 million rs, Hollywood insiders, who requested anonymity to discuss industry moves, told CNBC

It's also become a haven for auteurs whose films might not otherwise get made, either because of pricey budgets or risky genres. "What Netflix offers filmmakers is an irresistible combination of deep financial pockets and wide creative latitude," said Paul Dergarabedian, senior media analyst at Comscore. "This is enough to draw some of the biggest names in filmmaking today both behind and in front of the camera, and it's striking since most of these notable names have built their careers on the canvas of the big screen in the movie theater. "Why not theatrical

For as long as Netflix has been disrupting the traditional Hollywood model, analysts and box-office ponents have argued for why the er should embrace a more conventional theatrical apach

Every year or so, a study appears from a box-office analytics company or on behalf of one of Hollywood's theatrical trade groups concluding that audiences are more ly to a movie that's been released in theaters. "It seems for most of the other traditional media companies the pendulum has flown back to the idea that, yes, theatrical does enhance the value of a movie," said Robert Fishman, analyst at MoffettNathanson

Hollywood insiders told CNBC that Netflix's leaders have long admitted that money is being left on the table by not employing a typical theatrical model

But Netflix's co-CEO, Ted Sarandos, has said he has no plans to change the company's box-office strategy

Watch now3:4803:48Netflix's advantage is it's still consumers first choice, says MNTN CEO Mark DouglasThe Exchange"It would be complicated for Netflix, a distraction from what they're trying to do," said industry analyst David Poland. "And it would be potentially money-losing. "Sarandos has repeatedly said that Netflix's purpose is to vide content for its ing rs, noting that the audience that pays for its service should get it as soon as possible, not wait for an ext theatrical window to elapse

Netflix has benefited from its partnership with Sony, which gives the er exclusive U

Ing rights to the studio's theatrical releases after they wrap up in theaters

With the deal, Netflix gets fresh content without the box-office risk

Of course, keeping rs happy is only part of the strategy

Netflix s millions in marketing costs by skipping theaters, industry experts said

Typically, a film's marketing budget is half of what it spent on duction

So a film the Russo Brothers' "The Electric State," which reportedly cost $320 million to make, could have had up to a $160 million marketing budget if it went to theaters

Millie Bobby Brown and Chris Pratt star in Netflix's "The Electric State. "NetflixNotably, the film was originally slated to be duced under Universal Studios but was transferred to Netflix after executives at Universal balked at its steep budget, people familiar with the matter told CNBC

Success of a Netflix film is based on viewership, a metric that is not comparable to box-office dollars. "The Electric State" was ed by 25. 2 million rs in its first three days on the platform, according to Netflix's Tudum site at the time of its release

That is one-third of what Netflix's "Red Notice" generated during its three-day launch in 2021. "Red Notice" is Netflix's best-performing film to date with more than 230. 9 million views

What Netflix offersIt's hard for directors and other creatives to dismiss the kind of viewership Netflix brings, Hollywood insiders told CNBC

It's one of the reasons that Netflix has been able to draw in big-name directors, writers and ducers over the last decade

Netflix has also been more flexible with its purse strings. "The Electric State" is just one example

Scorsese's "The Irishman" also saw studios pass on the film because of its ballooning budget, but Netflix stepped in and acquired the rights

Al Pacino, Martin Scorsese and Robert De Niro attend "The Irishman" International Premiere and Closing Gala during the 63rd BFI London Film FestivalMike Marsland/WireImage"Netflix, because they have interest in getting awards and nominations and all that stuff, have funded and purchased and been involved with directors who are really high-quality filmmakers worldwide," Poland said. "It's a tribute to Netflix that those movies exist. "The er has had at least one best picture contender at the Academy Awards since 2019

The company has not been shy spending money to secure top talent either

It's signed dozens of lucrative first-look deals with creators, which give it the exclusive right to review and potentially purchase or distribute a new ject before it is offered to other buyers

Past deals have run the gamut between television and film and included creators Tyler Perry, Antoine Fuqua, Shonda Rhimes and Jennifer Lopez

Netflix has even been more targeted in its contracts, as was seen when it penned a two-picture deal with Johnson for sequels to his 2019 film "Knives Out," which reportedly was for more than $400 million. "It would be tough for any creative to turn down the offer of the financial resources to realize their creative vision

And despite wanting their movies to be seen on the biggest screen possible, [they] have made the calculus that getting their works realized on film and presented on a major ing platform is a bargain worth making," Dergarabedian said

Wall Street doesn't seem to mind Netflix's movie strategy

Netflix is expected to spend around $18 billion on content this year, according to the company

It does not disclose what percentage of that funding goes to its movies versus its television ductions

Insiders said that with those kinds of investments, consumers might need to watch out for more price hikes

MoffettNathanson's Fishman noted that Netflix will continue to weigh its value position to determine if it needs to increase the cost of its services

If Netflix keeps creating content from top-tier creators, then the analyst firm expects prices to increase

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.