Why did Ernst Lubitsch’s Paramount films have prestige even when they were not major box-office successes?

Ernst Lubitsch’s films at Paramount were considered prestige projects because they were among the most lavish and sophisticated motion pictures produced by the industry during the 1930s. Even when these films did not achieve major commercial success, they lent the studio significant cachet.1

This prestige was rooted in Lubitsch’s unique directorial style, often referred to as the "Lubitsch Touch," which combined understatement, allusion, and graceful wit to create sophisticated comedies with implied sexual overtones. His work drew upon refined theatrical traditions, including the comedies of manners of Oscar Wilde, George Bernard Shaw, and Molière, as well as the structure of "well-made" bourgeois farces. Because of his status as the studio's most respected director, Lubitsch was granted a free hand creatively, often producing his own films and maintaining the privilege of final cut.21