Why production left Hollywood

There was a time when Hollywood simply mentioned neighborhoods in the central area of ​​Los Angeles.

Recently, “Hollywood” has become a representative of the entire domestic entertainment business. And it’s at a crossroads.

The area with that name is not once a bustling production hub as studios cut tax benefits and labor costs abroad. It’s more expensive than ever to make films and TV series, especially after the pandemic and writers and actors who shaped how creatives are paid in the new streaming economy.

Many in the industry have tried to rectify the movement of thousands of jobs to other domestic filming hubs, including Georgia, New York, Texas, New Mexico and North Carolina, as well as international locations such as Canada, the UK, Ireland, Hungary, Croatia, Romania, Australia and New Zealand.

In July, California Gov. Gavin Newsom tried to increase the state’s total film and television tax credit to $750 million, nearly double the previous cap and encourage more productions for filming in Los Angeles.

President Donald Trump again lit the issue Monday when he repeated tariff threats on films made outside the United States.

“Our filmmaking business has been stolen from the United States by other countries, as if they steal candies from babies,” he wrote in a social media post, adding that he will impose a 100% tariff on “all films made outside of the United States.”

Trump made a similar comment in May. Then it is unclear how he will carry out these duties, who will target them, and who will step into potential bills. Actor John Voight, who Trump appointed Hollywood’s “special ambassador,” said tariffs would only be implemented in “specific limited circumstances,” and the administration would focus on developing federal tax incentives, revising tax laws, creating joint production treaties with other countries and providing infrastructure subsidies.

As Trump revives his threat, there are still many unanswered questions about how the US can impose tariffs on films and whether this move will actually help bring production back to Hollywood.

“It remains unknown how tariffs will be placed on services, not products, but if a logistical loophole is discovered and implemented, it will cause confusion within the entertainment industry.” “Then the question will be next? Where is the boundary between films and limited time series? What about the advertising industry, which saves money by filming commercials outside the US?”

Film and TV production is not always easy. Some productions film some of the film internationally, and those filmed domestically. Are films taxed based on the percentage of films filmed outside the US? What does that mean for foreign films that are looking for domestic releases?

“What would happen if there were major studios in the US, but the film had to be filmed in a location? Wedbush analyst Alicia Reese: “There are too many questions.”

Industry experts are also concerned about how enforceable duties will affect relationships with other countries. Hollywood relies on international box office sales to regain the budget for its noble films. China has already limited the number of Hollywood films it will feature on screen. Other regions can retaliate and do the same.

Sen. Adam Schiff, a Democrat of California, said in a statement Monday. “Congress should revive production and employment, rather than collecting tariffs that could unintentionally have harmful consequences, the incentives for medical federal films in a globally competitive federal film.”

At the end of the day, all Hollywood productions are all about money.

The budget is getting tighter. Streaming fundamentally changes the media landscape, fewer people go to cinemas, and studios aren’t generating much revenue from DVD sales. So studios should either hold onto their wallet strings tighter or face the rage of investors trying to calculate the breakup of linear television and its lucrative advertising revenue. Disney, Universal, Warner Bros. and Paramount.

Even before the pandemic and double labor attacks, Hollywood was filming films and television elsewhere in the United States and internationally.

In some cases, this is because the script dictates a specific international city or natural landscape, so it fits in the story told. For example, it would have been difficult to film the Lord of the Rings franchise and “Game of Thrones” completely in a studio backlot in Los Angeles.

The heart of the problem comes down to the soundstage.

Part of the escape from Los Angeles is also the result of the development of a domestic production hub that offers better financial compensation, such as tax credits and cash rebates, than those available on the West Coast. Over the past 20 years, 38 states have fired over $25 billion in filming incentives, according to a New York Times report.

These incentives allowed states such as Georgia to develop large production infrastructure and build a skilled workforce of local crews, craftsmen and engineers. Georgia offers these financial perks not only as jobs in production, but as a way to enhance economic growth for communities around the filming location. Hotels, restaurants, timber yards, vehicle rental companies, and even gas stations collide from producing projects locally.

The international production hub is the second part of this puzzle. Sites outside the US not only offer engaging film incentives, but also offer cheaper labor and even healthcare. In fact, Los Angeles was ranked as the sixth best place for filming, according to a studio executive survey published in January by ProdPro, a company that tracks production trends. Canada, Toronto; UK; Vancouver, Canada. Central Europe and Australia are all higher than Los Angeles.

For decades, Canada, known as Hollywood North, has been home to Hollywood film and television production. Shows like “Riverdale,” “Suit,” “Supernatural,” “Once Upon a Time,” “Schitt’s Creek,” and “The Story of The Handy Mide” were all filmed from Los Angeles just north of the border. In terms of film, “Mean Girls,” “Twilight,” “My Big Fat Greek Wedding,” “American Psycho,” and “Scream VI” are some of the titles that were filmed in Canada.

Like Georgia, Canada offers attractive tax credits to Stateside Studios, but also develops a top-notch workforce in the industry that is on and off the camera.

And competition is intensifying overseas. More countries have strengthened their photography infrastructure and increased generous tax incentives. Many countries also have more looser rules about what projects will handle financial benefits. New Zealand, the UK, Ireland, Australia, Norway, Italy, Hungary, Hungary, Germany and the Czech Republic are all surprised, according to ProdPro data.

For example, Australia and New Zealand saw a 14% increase in production of projects over $40 million between 2022 and 2024. Meanwhile, the US experienced a 26% decline.

“People will still have to film in place,” Wedbush’s Reese said. The industry said it would not completely change the kind of narrative that was told to stick to filming locations only available in the US.

“And that’s where the question arises: how do you get the soundstage?” she continued.

Lease pointed out that Los Angeles is already in a move to encourage Studios to use existing infrastructure using Newsom’s new tax infrastructure.

“We need to create a better tax structure to put more production, production bases and soundstages in the US,” she said.

Disclosure: Comcast is the parent company of Fandango and NBCuniversal, which own CNBC. Versant has become the new parent company of Fandango and CNBC due to the Bersant spin-off planned by Comcast.