Outdated processes within California’s film and television industry are driving production and jobs away from the state, according to a new report from the Milken Institute. The dire report, titled “A Hollywood Reset: Restoring Stability in the California Entertainment Industry,” warns that the decline is likely to continue unless significant changes are implemented.
“While previous disruptions to Hollywood have involved technological disruption, such as the advent of television (in the late 1940s), a strong dollar (in the 1990s), and competitive film incentives (in the early 2010s), never has Hollywood faced all of these issues at the same time,” authors Kevin Klowden and Madeleine Waddoups write. “Combined with high levels of financial strain facing the studios in the wake of the 2023 strikes, driven by stagnating streaming growth and the loss of prior revenue streams in DVDs and broadcast television, the need to find less expensive locations has never been stronger.”
The report specifically targets Los Angeles’ permitting system as an area in urgent need of reform, noting it is the most expensive among its peers. For instance, L.A.’s permit application fee is $3,724, significantly higher than New York City’s $1,000, London’s $540 for large crews, and Atlanta’s $400.
These elevated costs are partly attributed to FilmLA’s independent nonprofit structure, unlike film offices in New York, London, and Atlanta, which receive government subsidies.
“FilmLA has far more additional permit fees and requirements than any other major production hub,” Klowden and Waddoups write, pointing out that in 2023, FilmLA introduced new administrative fees for the use of drones, helicopters, gunfire, explosions, and lane closures.
The report also criticizes California’s film credit program for its complexity, limited application window, and the requirement for applicants to analyze job creation. The authors argue that this outdated process undermines California’s competitiveness.
Another factor contributing to productions leaving the state, according to the report, is the industry’s “complex and fractured” labor contract system, which prompts studios to produce projects overseas.
“Across our interviews, independent producers highlighted the patchwork system of labor and studio contracts as adding significant complexity to their productions,” the report states. “This complexity makes navigating labor in the United States difficult and increases the incentive for studios to produce projects overseas.”
The report also cites California’s high cost of living and the strong U.S. dollar as contributing factors. A strong dollar makes “offshoring more lucrative,” as companies can save on benefits by filming in countries with nationalized healthcare systems.
Read the entire Milkin Institute report.
To address these issues, Klowden and Waddoups propose increasing the budget for California’s film and television tax credit program and raising the base incentive rate. They also recommend making the tax incentive program more “user-friendly” with rolling applications and a streamlined application process.
Also, the report proposes that local governments reconsider FilmLA’s independent structure, advocating for subsidies to reduce production fees and streamline processes.
