Long hailed as the beating heart of the entertainment industry, Los Angeles is losing its grip on film and TV production. Once the undisputed leader of Hollywood magic, Southern California faces a dismal reality: plummeting production levels, industry layoffs, creative drain, and a mass exodus of viable projects to rival jurisdictions.
A perfect storm of high costs, insufficient incentives, and poor policy decisions erodes the foundations of an industry that once defined the city’s identity and economy. As insiders warn of historic declines, the question looms: can Los Angeles reclaim its production throne, or will Hollywood’s golden age erode further with each passing year?
The Decline in Numbers: A Grim Reality
In 2023, film and TV production in Greater Los Angeles plunged nearly 20%. The region shot just 183 first-run scripted projects last year, down from 228 in 2022. While the dual writers’ and actors’ strikes played a role, the broader issue is more troubling: Los Angeles’ share of domestic production fell from 23% in 2021 to 18% in 2023.
Despite the end of the strikes, production levels have failed to recover, signaling deeper, systemic issues plaguing the industry’s once-thriving hub.
Compounding the problem, competing hubs like Georgia, Ontario, and the U.K. are thriving. At AFM in Vegas this year, the U.K.’s new Independent Film Tax Credit (IFTC) drew attention by committing enhanced tax relief for eligible films with a qualifying spend of up to £15 million. These territories saw steady or rising production levels in the last quarter alone, while the U.S. experienced a 35% decline in high-budget scripted projects. This shift is a stark warning that Hollywood’s struggles are uniquely American, with California bearing the brunt.
The three-month period from July to September 2024 marked a troubling milestone for Los Angeles, recording the weakest quarter of the year, with shoot days plunging to just 5,048, according to the latest figures. Alarmingly, this milestone is even lower than the same period last year—when Hollywood was brought to a standstill by dual writers’ and actors’ strikes!
New York has been far more resilient, experiencing only a 25% drop from 2022 levels, compared to the steep 40% decrease in other states.
This decline has broader implications; notably, the entertainment industry feeds $43 billion in wages into California’s economy. A shrinking production pie risks devastating the local workforce, from grips and camera operators to caterers and small business owners.
Studios Lead the Production Exodus
The return of film and television productions after the writers’ and actors’ strikes has been strikingly slow, with output falling far short of 2022 levels—and Los Angeles bearing the brunt of the decline. Disney’s 2024 slate of 22 live-action films includes a dismal three set to shoot in California.
The outlook is just as bleak with other major studios like Sony, Warner Bros., and Universal, which are diverting most of their production budgets to locations outside the state. California’s role as the epicenter of filmmaking is rapidly eroding, leaving a once-thriving industry in a precarious state.
Studio productions are being relocated to far-flung places such as Australia, Eastern Europe, and the U.K. and closer to home in New Mexico, Canada, Georgia, Illinois, and New York.
Even scripted television, a cornerstone of Hollywood, has not been spared. The Peak TV era ended in 2022, with platforms like Netflix and Amazon shifting from subscriber growth to profitability while shifting productions overseas. As content budgets shrink, the number of scripted series has dropped from 633 in 2022 to 481 in 2023, with projections suggesting further declines.
This contraction has devastated the local workforce. Los Angeles now accounts for just 27% of the nation’s film and TV employment, down from 35% in 2022.
High Costs, Low Incentives: Losing the Tax Credit Game
The exodus of productions from Los Angeles can be traced back to its inability to compete in the tax incentive arms race. California’s Film & Television Tax Credit Program offers a 20% base credit with a $330 million annual cap—far less competitive than Georgia’s 30% transferable credit or Canada’s advantageous exchange rates. Notably, California excludes above-the-line costs, such as salaries for actors and directors, from qualifying for incentives, putting it at a further disadvantage.
California’s governor recently proposed doubling the tax credit pool to $750 million annually, a move many applaud to keeping Hollywood in California. Yet, industry insiders argue that it may be too little, too late. Studios are increasingly tying greenlights to budget efficiency, with one studio executive admitting that tax credits are now scrutinized even for unscripted and documentary projects.
Many lament California’s inadequate support, warning that the state will continue to lose productions unless it offers a more competitive tax rebate. Rising costs leave little room for sentimentality when deciding where to shoot.
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The Economic Toll of Hollywood’s Policy Failures
Since the 1950s, production has been drifting from Hollywood, but today its impact is more glaring than ever. Beyond tax incentives, other policy failures have exacerbated Hollywood’s decline.
Rising permitting fees in Los Angeles, combined with tighter restrictions, have driven up costs. The permitting granting company, FilmLA, has increased service fees by 8–17%, and new guidelines now limit permits to just five locations over seven days, half of what was previously allowed. Permitting costs have doubled in many cases, making the region less attractive for productions.
The ripple effects of production declines extend far beyond the studios. Each lost project means fewer jobs for crew members, smaller paychecks for small businesses, and reduced tax revenues for the state. The loss of even a single supplier reverberates through the economy.
Industry executives are sounding alarms that the new labor contracts, with inflation-tied annual raises, are pushing studios to move productions overseas. California’s soaring costs make it nearly impossible to compete with the substantial savings offered by rival locations. However, critics argue the studios are responsible for their financial mismanagement and poor decision-making. Accusations that threats to offshore jobs are a pernicious tactic to pressure workers that only deepen the rift within an already fractured industry.
FilmTake Away: Can Los Angeles Reclaim Its Throne?
Despite the dire outlook, there are glimmers of hope. Many influential voices have called for expanding California’s tax credit program, emphasizing its proven track record as a job creator. Programs like the California Film Commission’s incentive scheme have successfully lured productions back to the state, generating millions in local spending.
However, experts caution that California must innovate to keep pace with competitors. While the program’s structure is sound, its funding and eligibility criteria need modernization to reflect the realities of 2024 and beyond.
Many production executives will attest that they are looking for the best deals on the planet. For Los Angeles to remain competitive, it must offer robust incentives, cut red tape, and address systemic and legacy inefficiencies.