Hollywood’s Ongoing Struggles: Why California’s Film Industry Faces an Uphill Battle

By Mike Fortin
Cinedrones.com
July 18, 2025

LOS ANGELES — Hollywood, the birthplace of American cinema, is grappling with a crisis that threatens its status as the world’s entertainment capital. Despite California’s recent efforts to bolster its film industry through an expanded tax credit program, the state may have waited too long to act. Even with the new incentives, productions are fleeing to other states and countries, driven by a combination of economic, logistical and systemic challenges that make shooting in California less appealing than ever.

On July 2, 2025, Gov. Gavin Newsom signed a bill increasing California’s Film and Television Tax Credit Program from $330 million to $750 million annually, a significant step aimed at luring productions back to the Golden State. The legislation, hailed as a lifeline for an industry battered by a “quadruple-whammy” of the COVID-19 pandemic, 2023 writers’ and actors’ strikes, Southern California wildfires and fierce competition from other regions, is projected to generate thousands of jobs and billions in economic activity. Yet, industry insiders and data suggest this boost may be too little, too late, as Los Angeles continues to lose its grip on film and TV production.

According to FilmLA, the film office for Los Angeles, shoot days in the region plummeted to 5,048 in the third quarter of 2024, marking the weakest quarter of the year and a 22.4% drop from the same period in 2023. Overall, 2024 saw just 23,480 shoot days, the second-lowest figure recorded outside the pandemic-stricken 2020. Since 2022, California has lost an estimated 17,000 entertainment jobs, with the state’s share of national film and TV employment dropping from 35% to 27%. These numbers paint a stark picture: Hollywood is bleeding, and the new tax credits may not be enough to stop the exodus.

Why Productions Are Leaving California

The reasons productions are bypassing California are multifaceted, rooted in financial pressures, regulatory hurdles and competitive disadvantages. Below, we explore the key factors driving this trend:

1. Insufficient Tax Incentives Compared to Competitors

While California’s new $750 million tax credit program is one of the largest capped programs in the U.S., it pales in comparison to states like Georgia, which offers an uncapped 30% transferable credit, or New York, which recently boosted its annual allocation to $800 million. International hubs like the U.K., Canada and Australia provide even more generous subsidies, often covering up to 40% of production costs. For example, Lucasfilm relocated “Star Wars” projects like “The Mandalorian” and “Ahsoka” to the U.K., citing better financial incentives. California’s 20% to 25% base credit, even with the proposed increase to 35%, excludes above-the-line costs (e.g., salaries for actors and directors), a limitation not found in most competing regions. This makes it difficult for big-budget films to justify shooting in California when millions can be saved elsewhere.

Vince Gervasi, president of Santa Clarita-based Triscenic Production Services, called the new incentives “a drop in the hat,” noting that Georgia’s uncapped program has drawn major projects like Netflix’s “Stranger Things” and Marvel films. “It sounds like a lot of money when you say it’s $400 million more, but in the big picture, it’s nothing like what Georgia is giving out,” Gervasi said.

2. High Production Costs

California’s high cost of living and working extends to film production. Labor costs, particularly for unionized crew members, are significantly higher in Los Angeles than in other regions. A budget document reviewed by The New York Times showed that a seven-person set operations team in Budapest costs $59,000 for a 30-day shoot, while a single senior-level grip in Los Angeles costs $53,000 for the same period. Add to that the expense of health care, pensions and other benefits, and California becomes a costly choice. Studio executives, under pressure to maximize budgets as streaming platforms prioritize profitability, often opt for cheaper locations like New Mexico or Eastern Europe.

3. Bureaucratic Red Tape and Permitting Challenges

California’s permitting process is notoriously cumbersome, with high fees and long wait times deterring productions. FilmLA reports that permit fees in Los Angeles can be prohibitive, and the limited application window for tax credits adds logistical complexity. In contrast, states like Texas and Louisiana have streamlined their processes, making it easier for productions to set up quickly. Industry experts, including location scout Dale Dreher, have called for California to reduce regulations and offer incentives like free police services on sets to compete more effectively.

4. Competition from Other States and Countries

The global race for Hollywood dollars has intensified, with regions like Georgia, New York, Texas and Louisiana aggressively expanding their incentive programs. Georgia, for instance, has spent over $5 billion since 2015 to attract productions, hosting shows like “Stranger Things” and films like “Avengers: Endgame.” Texas recently increased its biennial tax credits to $300 million, drawing projects like “Yellowstone.” Internationally, the U.K.’s new Independent Film Tax Credit offers enhanced relief for films with budgets up to £15 million, pulling productions like “Barbie” across the Atlantic. These regions not only offer financial incentives but also boast growing infrastructure, including soundstages and skilled crews, reducing California’s historical advantage.

5. Industry Contraction and Studio Pullbacks

The end of the “Peak TV” era, marked by a drop in scripted series from 633 in 2022 to 481 in 2023, has hit California hard. Studios and streamers, reeling from streaming losses and the 2023 strikes, have scaled back production, prioritizing budget efficiency over location loyalty. This contraction has led to a 35% decline in high-budget scripted projects in the U.S., with Los Angeles bearing the brunt. Soundstage occupancy in the region fell to 63% in 2024, down from 90% between 2016 and 2022, leaving facilities like Los Angeles Center Studios struggling to fill their lots.

6. Impact of External Disruptions

Recent Southern California wildfires, which disrupted over a dozen productions in 2024, have added to the industry’s woes. The fires, combined with the lingering effects of the pandemic and strikes, have made California a riskier choice for productions. Crew members and studio owners report not only financial losses but also personal hardships, with some losing homes and others leaving the industry entirely.

The Human Toll

The decline in production has taken a devastating toll on Hollywood’s workforce. Script supervisors, cinematographers and art department coordinators are turning to food banks, selling homes or moving to states like Georgia for work. “We are allowing California to become to the entertainment industry what Detroit has become to the auto industry,” said Michael F. Miller Jr., a vice president at the International Alliance of Theatrical Stage Employees. The union estimates 18,000 full-time jobs have vanished in the past three years, primarily in California.

Pam Elyea, owner of North Hollywood’s History for Hire prop house, said her rent now consumes 60% of her income, up from 20% five years ago. “I have six months left on my lease. If California is committed to leveling the playing field, I can do this,” she said. Without significant changes, however, many fear the industry’s infrastructure — from soundstages to skilled crews — will continue to erode.

Can California’s Tax Credits Turn the Tide?

While the $750 million tax credit expansion is a step forward, critics argue it doesn’t address the root causes of Hollywood’s struggles. The program’s focus on TV shows and exclusion of above-the-line costs limits its appeal for big-budget films. Independent producers, like Sky Moore of Greenberg Glusker, called the increase “a big yawn” for smaller projects, which often can’t compete with the financial incentives offered elsewhere.

Moreover, California’s budget constraints raise questions about the program’s sustainability. Assemblymember Corey Jackson noted that expanding tax credits comes at the cost of other priorities, like housing and healthcare, especially in a state facing projected deficits. Some economists, including Michael Thom of the University of Southern California, argue that film tax credits fail to deliver promised economic benefits, returning as little as 15 cents per dollar spent in some states.

A Call for Broader Solutions

Industry leaders are urging California to go beyond tax credits. Proposals include allowing above-the-line costs to qualify for incentives, streamlining permitting processes and offering advance credits, as Ireland does, to attract independent productions. Others, like FilmLA president Paul Audley, suggest expanding the program to cover animation, unscripted shows and commercials. Federal intervention, such as President Donald Trump’s proposed 100% tariff on overseas films, could also shift dynamics, though details remain unclear.

For now, Hollywood’s future hangs in the balance. California’s rich talent pool, iconic locations and storied infrastructure still hold appeal, but without aggressive action, the industry risks becoming a shadow of its former self. As producer Uri Singer, who recently shot “Corporate Retreat” in Los Angeles thanks to a tax credit, noted, “You can get such good cast and crew here, but financially, it’s better elsewhere.” Until California can close that gap, the cameras will keep rolling — just not in Hollywood.

Sources: Los Angeles Times, The Hollywood Reporter, The New York Times, FilmLA, The Guardian, CalMatters, Politico, CBS News, Vulture, Fox Business, California Film Commission, Breitbart News (X post)