For the first time, two Netflix films are competing for the Palme d'Or this year.
However from next year, films will have to be released in French cinemas if they want to be considered.
Jury president Pedro Almodovar agreed with the change, saying films should always be seen on the big screen and he was "concerned" about the issue.
Tilda Swinton film Okja, and The Meyerowitz Stories - starring British actress Emma Thompson and Ben Stiller - are the first Netflix films to be shown at Cannes which are up for the main prize.
The jury, which is also made up of Will Smith, Jessica Chastain and Paolo Sorrentino, will pick the Palme d'Or winner out of the 19 films in competition next weekend.
Almodovar gave a passionate defence of cinema at the festival's opening press conference, saying he didn't think films should be considered for prizes if they had not had a cinema release.
Reading from a pre-prepared statement, he said: "All this doesn't mean I'm not open, or don't celebrate the new technology and the possibilities they offer to us.
"But while I'm alive, I will be fighting for the one thing the new generation is not aware of - the capacity of hypnosis of a large screen for a viewer."
The Women on the Verge of a Nervous Breakdown director said he could not conceive the Palme d'Or - or any other prize - "being given to a film and then not being able to see the film on a big screen".
He was applauded by the audience for his strong remarks.
But Men in Black star Smith - giving an exuberant press conference performance in his debut as a jury member - disagreed with the cinema great.
The star, who has a film in the works with the streaming giant, said his children both go to the movies twice a week and watch Netflix.
"There's very little cross between going to the cinema and watching what they watch on Netflix," he mused, saying they were "two different forms of entertainment" and that Netflix "brings a great amount of connectivity".
"In my home, Netflix has been nothing but an absolute benefit. [They] watch films they otherwise wouldn't have seen. It has broadened my children's global cinematic comprehension."