(Bloomberg) -- Netflix Inc. plans to pay filmmakers, actors and movie producers a bonus if their films are successful, a new incentive aimed at winning projects that might otherwise go to rival studios, according to people familiar with the matter.

The measure of success would depend on the movie, said the people, who asked not to be identified because the deliberations are private. A prestige film might have its incentive pegged to how many awards it wins. Bonuses for other movies could be based on viewership.

The approach would be a departure for Netflix, which has typically rewarded talent with upfront deals. But the bonuses are different than Hollywood’s traditional “back-end” arrangements, where filmmakers get a percentage of box-office money. Since Netflix’s films don’t get released widely at theaters -- if they hit the big screen at all -- there’s no hope for a big payoff there.

Scott Stuber, the head of Netflix’s film unit, has discussed various possibilities with producers, people familiar with the conversations said. But he has yet to settle on the precise way to reward people, or how many people would receive the bonus, they said.

More Competition

Netflix has built up its movie studio from scratch in just a few years, forcing it to make up the rules as it goes along. It’s also facing greater competition for projects than ever before, making it harder to lure talent and stay ahead of rivals. It doesn’t offer the kind of deals that major studios like Disney provide. Robert Downey Jr., for instance, has made millions for his role in “Iron Man” and subsequent Marvel movies -- making him one of a handful of stars who earn more in profit than salary.

Netflix has never offered back-end deals. It covers the full cost of production and pays producers a premium on top of that, granting them a profit before the project is even released. These deals are a safer bet because the producer is guaranteed to make a significant amount of money, but they also cap the potential profit.

That formula has worked for Netflix in the television industry, where it’s one of the most powerful TV networks in the world. Netflix does pay bonuses to producers whose shows get picked up for many extra seasons, and it tends to increase the salary for the stars of its most popular shows.

Irking the Establishment

But Netflix is a more divisive figure in the movie business. The company has angered filmmakers, movie theaters and cinephiles by insisting that its features appear on its service at the same time they appear in theaters -- or shortly thereafter. In response, some chains have shunned its films altogether. Canadian theater circuit Cineplex Inc. didn’t allow Netflix movies to show at its venue during the Toronto Film Festival, one of the most prestigious events each year.

Bonuses are one of many ways in which Netflix is trying to accommodate talent. The company has also started to give certain movies larger release windows in pursuit of awards. Netflix’s inability to convince major theater chains to carry its movies has cost the service many projects, according to the people, and may have hurt its films at the annual awards shows.

To contact the reporter on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, John J. Edwards III

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