Is Hollywood Worth Saving? The Harsh Reality Facing L.A. in 2025

Hollywood’s grip on the entertainment industry is slipping, and 2025 may prove to be a make-or-break year. Productions are leaving, jobs are disappearing, and the city’s once-unrivaled dominance faces a serious threat from territories offering better incentives, greater flexibility, and fewer financial burdens.

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The Fragile State of L.A. Production

What was once an unshakable foundation of the film and television industry is now a battleground for survival. A brief resurgence in shoot days during Q4 2024 provided a glimmer of hope after years of contraction, yet the industry still faces profound structural challenges. With policymakers considering a broad expansion of tax incentives, the question remains: Can L.A. reclaim its standing as the heart of the entertainment industry, or has its grip loosened for good?

Compounding Hollywood’s production woes, the devastating wildfires that swept through Greater Los Angeles have further destabilized an industry on the brink. These disasters have not only displaced film workers and damaged critical infrastructure but have also disrupted planned shoots, leading to further delays and cancellations.

The destruction of iconic filming locations and the economic toll on local businesses have only exacerbated the industry’s structural issues. As the city grapples with these mounting challenges, the likelihood of deeper declines in 2025 grows even more substantial, making it clear that Los Angeles is no longer the unshakable production capital it once was.

It’s increasingly unlikely that an aggressive expansion of tax incentives will be possible amid the financial costs of the fires and as more of the tax base leaves Los Angeles and California.

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Q4 2024: A Short-Lived Surge Amid Long-Term Decline

After 11 consecutive quarters of decline that started with unprecedented governmental lockdowns and extended with dual industry strikes, film production in Los Angeles finally saw a 6.2% increase in shoot days from October to December 2024.

Feature film production led the charge with an astonishing 82.4% surge in Q4, contributing to an 18.8% annual gain. However, these figures come with caveats. Feature films still trail their five-year average by 27.6%, underscoring the lasting impact of the 2023 strikes and broader industry retrenchment.

Similarly, scripted television dramas doubled their output from 2023’s strike-ravaged levels, but the category remains 36.6% below its historical benchmark. Meanwhile, reality television—a longtime staple of L.A. production—plunged by 45.7% in Q4 and has endured nine consecutive quarters of decline. This dramatic fall suggests that unscripted content is permanently migrating elsewhere, with states like Illinois and Georgia stepping up their incentives.

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A Rotten Core: Hollywood’s Self-Inflicted Wounds

Regardless, if California were to expand its tax incentives, it wouldn’t solve Hollywood’s more profound, insidious problem—its creative stagnation and managerial ineptitude. The industry is plagued by a lack of originality or fresh talent, with studios and networks favoring insular, nepotistic hiring practices that reward connections over capability. Instead of championing groundbreaking storytelling, executives chase formulaic content, paralyzed by risk aversion and an obsession with corporate synergy.

Furthermore, a groupthink culture has stifled originality, leading to a glut of remakes, reboots, soulless franchise extensions, and overt political messaging in nearly every production. Meanwhile, producers who consistently oversee flops continue to “fail upwards,” insulated by an industry that rewards mediocrity with bigger budgets and loftier positions. This toxic cycle has eroded Hollywood’s reputation as a beacon of creativity, and no, banning TikTok is not going to magically send younger audiences flocking back to uninspired, committee-approved content.

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The Post-Strike Recovery That Wasn’t

The 2023 WGA and SAG-AFTRA strikes brought Hollywood to a standstill, but even as work resumed, production levels never rebounded to pre-strike norms. In 2023, film and television shoots in Greater L.A. dropped nearly 20%, marking the second-worst year for the city’s production industry, trailing only the lockdown period in 2020. While some attributed the collapse solely to labor stoppages, a closer look reveals a deeper crisis fueled by tightening studio budgets, shifting industry economics, aggressive incentives from competing regions, and, most importantly, a decade of derivative storytelling.

Hollywood’s share of qualified film and television projects has steadily declined, falling from 23% in 2021 to just 18% in 2023. The loss of projects has real consequences: The entertainment industry pumps approximately $43 billion in wages into California’s economy, and diminishing output threatens businesses reliant on film and television spending. As of last year, 27% of the nation’s film and television workforce resides in Greater Los Angeles, making the slowdown particularly devastating for local workers.

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Global and Domestic Competition: A Vanishing Advantage

For decades, Hollywood’s competitors have enticed productions with robust tax incentives, advanced studio infrastructure, and lower costs. Canada, the United Kingdom, and Georgia have been especially aggressive, offering tax credits that significantly undercut California’s incentives. The result: While production levels in the U.S. fell by 35% in 2024, live-action scripted projects in the U.K. and Canada remained stable or even increased.

Meanwhile, major studios are opting for more cost-effective locations. Disney’s 2024 slate includes 22 live-action movies, but only three are being filmed in California. Studios prioritize financial incentives, and many now view California’s film tax credit as insufficient.

New York, one of L.A.’s fiercest domestic competitors, recently expanded its film tax credit program, making it even harder for Hollywood to retain productions. Additionally, international locations such as Eastern Europe and Australia are emerging as production hubs, offering financial benefits and looser regulations that appeal to cost-conscious studios.

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The Cost of Filming in Los Angeles: Permits, Wages, and Red Tape

Beyond tax incentives, filming in L.A. has become increasingly cost-prohibitive. Rising labor costs, strict permitting regulations, and inflation-driven fee hikes are pushing productions elsewhere.

In 2023, FilmLA increased permitting fees by 8% to 17%, adding to the financial strain on local shoots. New limitations on permit usage—such as reducing location allowances—have further complicated budgeting for filmmakers.

The high cost of labor is another pressure point. While industry unions secured wage increases in 2023, some production executives argue that these rising costs are making L.A. uncompetitive. Sony Pictures CEO recently warned that new union contracts are accelerating the offshoring of productions, as studios seek to maximize budgets in more cost-effective regions. While labor leaders dismiss this argument as fearmongering, the reality is that production dollars are flowing elsewhere.

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The Fight to Keep Hollywood in Hollywood

Amid mounting concerns, California’s Governor has proposed a dramatic expansion of the state’s film and television tax credit program from $330 million to $750 million annually. The move is intended to counter the financial allure of rival jurisdictions and prevent further erosion of L.A.’s industry base. Supporters argue that past tax credits have yielded substantial returns—California’s $152 million allocation for 12 television projects in 2024 is expected to generate $1.1 billion in in-state economic activity.

Yet some industry veterans believe that even this increase may be insufficient. Unlike other states and countries, California does not allow above-the-line salaries to qualify for tax credits, a restriction that has driven big-budget productions elsewhere. Additionally, some argue that L.A. must do more to streamline permitting and reduce bureaucratic hurdles to make local filming more attractive.

However, the finer points of expanding California’s tax incentives will likely take a backseat as the city grapples with unprecedented fires, which have destroyed entire neighborhoods, which may depend on taxpayer funds instead of insurers to recoup the losses.

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FilmTake Away: Can Los Angeles Reverse the Trend?

The numbers tell a sobering story: Hollywood’s dominance in L.A. is under siege, and production levels remain far below historical norms. While the Q4 2024 bump provided a fleeting reprieve, it did not undo years of contraction and mismanagement.

If the industry hopes to reclaim its footing, 2025 must be a year of bold reforms and reinvestment. The stakes have never been higher.

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