When screenwriter David Scarpa visits the great Hollywood studios these days, he is struck by what is missing. “It used to be you’d walk around those back lots and you’d see many people and they were very busy,” Scarpa muses. “They were like small cities. Now often you’ll walk around and have nobody else there. It feels empty. You definitely feel the absence of life on those lots.”
Like the once proud industrial factories of the midwest, the dream factories of southern California are in decline. Last year was the worst for on-location filming in Los Angeles since tracking began 30 years ago apart from pandemic-hit 2020. Of all the TV shows and feature films that North American audiences watch, only one-fifth are now made in California.
This is because Hollywood is facing intense competition for film production from domestic rivals such as Atlanta and New York, and international challengers such as Australia, Britain and Canada, all offering more aggressive financial incentives. California’s politicians stand accused of resting on their laurels too long.
Donald Trump has a plan but, critics say, it will be no more effective for Hollywood than his notorious tariffs for the rust belt. The US president’s appointment of the actors Mel Gibson, Sylvester Stallone and Jon Voight (combined age 233) as “special ambassadors” to rescue the local industry met with widespread scepticism. Instead campaigners are focused on the hard graft of legislating new tax incentives in California’s state government.
Scarpa, whose recent credits include Gladiator II and Napoleon, adds: “The state and the city are both struggling with big fiscal issues and in a way it becomes an arms race: is LA going to be able to compete with eastern Europe? We have the best people in the world here but often producers find themselves shopping for the best price. If LA wants to remain a hub of production, they’re going to have to have some form of tax incentives to compete with them.”
Hollywood has been synonymous with film for more than a century. Southern California’s sunny weather allowed year-round outdoor filming while land and labour were cheaper than in eastern cities. Film-makers such as Cecil B DeMille and companies such as Paramount and Universal set up studios that ensured a creative ecosystem of actors, directors, musicians, writers and technicians. Hollywood burnished its self-mythology through films such as Sunset Boulevard, Singin’ in the Rain, The Player, Mulholland Drive and La La Land.
California continues to boom. According to IMF data released this week, the state’s nominal GDP reached $4.1tn, surpassing Japan’s $4.02tn and placing California behind only the US, China and Germany as the fourth biggest economy in the world.
Yet while the tech giants of Silicon Valley continue to thrive, Hollywood is facing an existential crisis. The first quarter of the year saw downturns in every category of production compared with the same period in 2024, according to FilmLA, a non-profit that handles film permits for the city and county.
Shoot days declined 22% over that period and just 13 TV pilots were made, the lowest tally ever observed by FilmLA. Meanwhile average occupancy rates for the majority of stages were 63% last year, down from 69% in 2023. And according to the Hollywood Reporter, the number of recording days booked for music scoring stages dropped from 127 in 2022 to just 11 so far this year.
The malaise threatens “below-the-line” crew members such as grips, electricians, carpenters, set decorators, sound engineers, costume designers and makeup artists who came to Hollywood because that was where the work was. If that allure fades they could take their talents elsewhere, sending the ecosystem into a death spiral.
The warning signs are everywhere. Los Angeles is now merely one of 120 jurisdictions around the world that offer some form of incentive for film-making. In February, the streaming giant Netflix announced a $1bn investment to produce 20 films and TV series in Mexico annually over the next four years. Last week Texas passed a bill that would more than double the money spent to lure film and TV production to the Lone Star state.
The flight from Hollywood has even prompted comparisons with Detroit, the “motor city” that, with the struggles of the car manufacturing industry, went from one of America’s most prosperous cities to one of its most troubled. Factories shut down, thousands of jobs were lost, the population collapsed and the city ultimately declared bankruptcy.
Philip Sokoloski, vice-president of integrated communications for Film LA, says: “I don’t think we’re past the point of rescue, but Detroit offers an example of what happens when everything is in your hands and you fail to work to keep it. For California, for greater Los Angeles, we’ve maintained leadership in this industry for a century.
“Generations of people have invested their time, their sweat and their dreams into building this business and it’s been ours to lose. California has underestimated the staying power of its competitors when it comes to their desire to have a slice of Hollywood for themselves.”
California remains the production leader, Sokoloski notes, but its share of the cake is down to an all-time low of just 20%. “That’s not what most people would think of when they think of Hollywood as a dominant presence in the industry. It’s very small, the smallest we’ve ever seen it, and as a result what happens to a region when the thing you’re best known for four out of five times is done somewhere else?”
Last October, Film LA made the case that California needs a vast expansion of its film and TV tax credit to maintain its competitiveness. Stay in LA, a grassroots campaign, is pushing for action. The state governor, Gavin Newsom, has proposed more than doubling the money allocated annually to California’s film and TV tax credit programme from $330m to $750m.
Two bills are now working their way through committee in the state legislature. Some politicians warn that the tax incentives will represent a corporate giveaway to wealthy studio bosses; others argue that more importantly they are about keeping jobs in California and offering workers a wage to match the high cost of living.
Mary Flynn, an actor who has noticed a drop in her auditions and work opportunities, reflects: “This is how bleak it is: we’re at a point where poor and working-class people are advocating to our government to provide tax incentives for big film studios to keep the work in California so that we can keep working because we can’t compete with Atlanta, where the minimum wage and things like that are lower. They’re taking advantage of tax opportunities but also how much they have to pay into labour.”
The drive comes after a punishing few years that have included the end of the streaming boom, pandemic, strikes and wildfires. Flynn adds: “We have exhausted so many resources and even in the midst of all this at Sag-Aftra [Screen Actors Guild–American Federation of Television and Radio Artists] we have video game actors still on strike.
“We are very much still hurting so it’s now up to the leadership at large to do what they ran on, which is to protect work and advocate for working-class people. Every single politician that sits at the state level in California advocated on that promise so now they’ve just got to deliver.”
Soon before his return to the White House, Trump described Hollywood as “a great but very troubled place” and declared that Gibson, Stallone and Voight would be his “eyes and ears”, helping to bring it back “bigger, better, and stronger than ever before!”
But Flynn for one is not pinning her hopes on the trio, noting that Voight has adopted “financial core” status with the Sag-Aftra, making him a fee-paying non-member who is allowed to work on both union and non-union projects. She adds: “He’s not only abandoned his fellow union brethren but any work in this town that is worth a cent is union-made; George Clooney and Tom Cruise are in Sag-Aftra, they are not fi-core.
“I don’t know what someone like Jon Voight is going to do to save all of our industry when he hasn’t really been in it seriously in a minute. I highly doubt that they would be able to be our knights in shining armour. It’s not a basket I’m putting my eggs in.”
Indeed, there is little sign of the promised rescue mission, with industry insiders reportedly saying it has been mostly “crickets”. The ghost of past failing metropolises persists. Last year Scott Galloway, a business school professor and podcaster, told Matthew Belloni of Puck that “LA is a much-better-weather version of Detroit right now.”
Belloni comments: “There are certainly differences from what happened in Detroit where the entire manufacturing industry left, and with it, the entire business is now a shell of itself. The entertainment industry will always have some root and connection to Los Angeles because of the infrastructure that is here and by that I mean the studios and the talent agencies are not talking about upping their headquarters and moving to Nashville or London.
“But he’s not wrong in the sense that the core rank-and-file middle class of the entertainment industry is being hollowed out, much like it was in Michigan. It’s never been more expensive to live here and, for many of these artists, it’s never been more difficult to find a job.”
