By: Armen Dilanchian
California, once the unchallenged hub of film production, is witnessing a significant exodus of production companies and studios. This trend is rooted in several factors, from economic pressures to evolving business environments in other states and countries. Below is an in-depth analysis based on recent data and industry reports.
The Decline in California’s Film Production
Since the onset of the pandemic, California has seen a notable decrease in film production activities. FilmLA, the official film office of the City and County of Los Angeles, reported that on-location filming in Los Angeles has declined by over 33% below its five-year seasonal average as of mid-2024. This trend is reflective of a broader decrease in film production across the state.
The impact of the Writers Guild of America (WGA) and SAG-AFTRA strikes in 2023 exacerbated this decline, with the number of film productions dropping by 40% compared to pre-strike levels(
TheWrap). While some productions resumed in 2024, the overall number remains significantly lower than in previous years, highlighting the ongoing challenges in the industry.
Reasons for the Exodus
High Costs and Bureaucracy: California, particularly Los Angeles, remains one of the most expensive places to film. The cost of living, high taxes, and extensive regulations create a financial burden for filmmakers. While California offers tax incentives through its Film & Television Tax Credit Program, these are often insufficient to offset the state's high costs compared to other locations.
Competitive Incentives Elsewhere: States like Georgia and New Mexico, as well as countries like Canada, have capitalized on California's drawbacks by offering more generous tax incentives, lower costs of production, and a more streamlined regulatory environment. For example, Georgia has become a major hub for film production, attracting high-profile projects with its attractive tax incentives and supportive local government policies.
Impact of the Pandemic: The pandemic forced many production companies to reconsider their base of operations. With many projects delayed or canceled, companies started looking for more cost-effective environments to restart their productions. This shift has led to the rise of new production hubs outside California, including states like New York and cities like Atlanta.
The Numbers: California vs. Other States
In 2023, California saw a total of 51 feature films shot within its borders, a sharp decline from previous years. By contrast, Georgia hosted 60 feature films, and New Mexico saw 25 films, a significant increase for a state of its size. The trend continued into 2024, with California struggling to regain its previous levels of production(.
The migration of production companies has led to a significant economic impact. California's entertainment industry, which once contributed billions to the state's economy, has seen a downturn as jobs and revenue flow to other states. The decline in production has also had a ripple effect on related industries, from catering and hospitality to post-production services.
Will California Change Its Policies?
The question remains whether California will adapt its policies to stem the outflow of production companies. While there have been calls to increase tax incentives and reduce regulatory burdens, the state has been slow to implement significant changes. The ongoing exodus suggests that without substantial reforms, California may continue to lose its dominance in the film industry.
However, industry insiders believe that there is still hope for California to regain its standing if it can offer more competitive incentives and address the high costs associated with filming in the state. The outcome will depend on the willingness of state policymakers to make the necessary adjustments.
California’s film industry is at a crossroads. The exodus of production companies is a clear signal that the state’s current business environment is no longer as attractive as it once was. As other states and countries offer more appealing alternatives, California must reassess its strategies to retain its film production industry. Whether the state can rise to this challenge remains to be seen, but the stakes are high for the future of Hollywood.
This situation underscores the need for California to reconsider its approach to supporting the film industry, lest it continues to lose ground to more film-friendly locales.
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