New Approaches to Combat Rising Film Production Costs in LA

Movie set with film reels and clapperboard.

Los Angeles risks becoming “the next Detroit” if film production declines continue, as celebrities and studios flee the once-dominant entertainment capital for states with better tax incentives.

Key Insights

On-location film production in Los Angeles plummeted 22.4% in Q1 2025 compared to the same period last year.
Television filming, a cornerstone of LA’s entertainment economy, is down 30% from last year and nearly 50% from the five-year average.
Governor Newsom has proposed increasing film incentives from $330 million to $750 million to compete with states like Georgia and New York.
High housing costs in Los Angeles are driving away middle-class entertainment industry workers.
New legislation (SB630) aims to boost tax credits to 35% of qualified expenditures and expand qualifying productions.

Hollywood’s Alarming Exodus

The entertainment industry in Los Angeles is facing unprecedented challenges as production companies, studios, and even celebrities abandon the city for more tax-friendly locations. At a recent town hall on April 14, industry leaders gathered to address the crisis and push for revisions to California’s entertainment production tax incentives. The current incentive program has proven insufficient against aggressive competition from states like Georgia, New York, and Texas, which offer substantial tax breaks to lure productions away from Hollywood.

Film industry data paints a troubling picture: on-location production in Los Angeles decreased by 22.4% in the first quarter of 2025 compared to the same period in 2024. More alarming is the television sector, where filming is down 30% from last year and nearly 50% from the five-year average. Only 13 TV pilots were shot in Los Angeles last quarter, the lowest number ever recorded by FilmLA, the official film office of Los Angeles.

A Middle-Class Crisis

While executives and studio heads will continue to enjoy their Bel-Air mansions regardless of where filming occurs, thousands of middle-class workers in the entertainment industry face uncertain futures. State Senator Ben Allen highlighted this disparity at the April town hall, stating: “The studios don’t care where they do the work. They’ll do it anywhere. They’re still producing shows. What a lot of our colleagues simply don’t understand is that this is a middle-class problem. The studio heads are going to bed in Bel-Air no matter what.”

“This is not hyperbole to say that if we don’t act, the California film and TV industry will become the next Detroit auto.” – Noelle Stehman

The exodus is compounded by Los Angeles’s notorious housing costs, which squeeze industry workers even during successful productions. When work dries up, the financial pressure becomes unbearable. Soundstage occupancy has declined to 63% last year, down from 69% in 2023, further indicating the industry’s contraction in what was once its undisputed capital.

Fighting Back With Tax Incentives

Governor Gavin Newsom has proposed increasing California’s film incentives from $330 million to $750 million annually. Additionally, the newly proposed SB630 bill aims to boost tax credits to cover up to 35% of qualified expenditures for productions in Los Angeles and expand the types of productions that qualify for the incentives. Currently, half-hour television comedies are ineligible for the state’s tax credit program, which has contributed to a 30% decline in comedy production shoot days.

“This is not a tax giveaway. This is a job program that is keeping people in their homes, keeping people off the unemployment rolls. If we don’t do this, it’s going to cost a lot, lot more than these tax credits are costing us.” – state Assemblyman Rick Zbur

Feature film production has also taken a hit, with a 28.9% decrease compared to early 2024. The decline follows multiple industry challenges, including the pandemic and the writers’ and actors’ strikes, which halted production for months. Despite these setbacks, industry advocates argue that tax incentives represent a sound investment in California’s economy rather than a handout to wealthy studios.

Preserving Hollywood’s Legacy

The potential decline of Los Angeles as the entertainment capital carries implications beyond the industry itself. California’s unique cultural identity and global influence are tied to Hollywood’s presence. FilmLA spokesman Philip Sokoloski stated plainly, “California can’t afford to surrender any more work to its competitors.” The loss of the film industry would diminish not only the state’s economy but also its iconic status in American culture.

Industry professionals warn that without immediate action, the entertainment industry could follow the path of automotive manufacturing in Detroit—a once-dominant industry that largely abandoned its home city, leading to economic devastation. Whether California’s proposed tax incentives will stem the tide remains to be seen, but the stakes for Los Angeles and the state’s economy could not be higher.