The Hollywood Film Industry Is Crumbling From Runaway Productions

Winston Cho with the Hollywood Reporter has a new piece about the Hollywood film industry decline here. As the heart of the film and TV industry, Los Angeles has long been synonymous with Hollywood. But today, the city that built an empire of entertainment is facing a stark reality: production levels are nearing historic lows, and many insiders fear the worst is yet to come. Rising costs, stringent regulations, and competition from global film hubs are pushing more productions to seek alternatives outside California, leading some to label L.A. a "production graveyard."

The Decline of Filming in L.A.

For decades, Los Angeles reigned as the center of TV and film production. Big-budget projects, including reality TV phenomena like MasterChef, which shot for years on a converted soundstage in L.A., brought significant revenue to the city. Yet, in a significant shift, the MasterChef production has relocated to Australia, lured by more generous tax credits and fewer filming restrictions. This is not an isolated case; it's part of a broader trend of productions migrating from Hollywood in favor of cities and countries with more appealing financial incentives.

Data from FilmLA, the office responsible for permitting productions in L.A., shows that from July to September 2024, the number of shoot days fell to their lowest levels of the year. The recent strikes by the Writers Guild of America (WGA) and Screen Actors Guild (SAG-AFTRA) were expected to lead to a production rebound. However, new reports suggest that L.A.’s film and TV industry hasn’t bounced back as hoped, and shooting days are lagging even behind the strike-riddled months of 2023.

Why Are Productions Leaving Los Angeles?

The shrinking production activity in L.A. is driven by several factors. First, the rise of international film hubs like the U.K., Australia, and Canada has presented stiff competition. Countries like the U.K. not only offer robust tax incentives but also have advantageous exchange rates, making it cheaper for American studios to film abroad. Last quarter, live-action scripted productions with budgets of $10 million or more grew in the U.K. and Canada, while the U.S. experienced a sharp decline.

Meanwhile, the cost of filming in California is proving prohibitive. The state offers a 20% base tax credit, which is lower than competing states like New York and New Mexico. Compounding the problem is California’s cap on tax credits—set at $330 million—and its exclusion of "above-the-line" costs, such as salaries for major actors, directors, and producers, from qualifying for incentives. In contrast, other countries allow these costs, making their offerings far more attractive to production studios.

Another major issue is the rising cost of permits and regulations in L.A. In 2023, FilmLA increased permit fees, adding limitations that have aggravated location budgets. Productions are now allowed fewer filming locations over a shorter time period. In some cases, location managers report that permit fees have doubled, adding even more financial strain to an already expensive city.

The Financial and Labor Challenges Facing Hollywood

Beyond permitting woes, L.A. is grappling with broader economic factors. In the post-Peak TV era, when streaming platforms were heavily competing for subscribers, production skyrocketed. But with the saturation of the streaming market, studios are now tightening their belts. Budgets are under intense scrutiny, and productions are increasingly turning to locations that offer better financial returns.

Producers and industry veterans are advocating for more robust financial incentives to keep Hollywood competitive. Judd Apatow, the famed director and producer, has publicly lamented the state’s inability to offer a “healthy tax rebate” for the industry. Without it, he warns, California will continue losing productions to other states and countries.

This belt-tightening is particularly stark in the realm of unscripted TV. Once a stronghold for L.A., unscripted programming is now migrating to states with more flexible tax credit programs. Illinois and Georgia, for example, have begun offering incentives for game shows, talk shows, and reality TV—formats that traditionally brought substantial revenue to Hollywood. The margins for unscripted shows are often slim, meaning even small cost-saving measures can have a significant impact on where productions are filmed.

Can L.A. Turn the Tide?

While the outlook appears bleak, there are some signs of hope. Industry insiders suggest that the worst of the filming slowdown may be behind L.A. Paul Audley, president of FilmLA, says the upcoming fall season could "make or break the year" for Hollywood. The number of production starts in the U.S. has started to rise again, indicating that the industry may have hit rock bottom and could soon be on the upswing.

Still, for many in the industry, the question remains: will L.A. be able to reclaim its place as the premiere hub for film and TV production, or will the production exodus continue? The answer may lie in whether California can reform its tax credit policies and reduce the cost of doing business in the state. Until then, Hollywood’s dominance in the world of entertainment may continue to erode.

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Source: Hollywood Reporter

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