Hollywood production struggle: Can Southern California revive its entertainment glory?

A volatile industry in crisis

Entertainment production in Los Angeles has ridden the highs and lows, but the current slump paints a grim picture. Words like “dead,” “barren,” and “apocalyptic” are frequently mentioned by those who run Hollywood’s production facilities. This isn’t just a downturn—it’s a potential industry collapse.

Financial ripple effect

The film and TV industry in Southern California provides employment for 618,000 individuals across various professions, generating $115 billion annually for the local economy. Recent trends, however, have shown a worrying decline. A 2023 study revealed that local film and TV production has dipped by 19.3% over the past year, creating significant economic challenges.

Government stepping in

On October 27th, during an event at Raleigh Studios, Governor Gavin Newsom announced a proposal that aims to double the current California film incentive to a substantial $750 million. If approved, this increase will take effect in July 2025. The goal is to address several issues cited by industry insiders, including expanding eligibility for these incentives to a more diverse range of productions.

Impact on small businesses

Jason Jones, president of a location brokerage, noted that budget consciousness among productions has led to studios centralizing their shoots, which significantly impacts peripheral businesses. Brian Boehner, CEO of Fat Eye Studios, saw revenues plummet by 70% in the past year. Despite long-term client relationships, high overheads and substantial recent investments have left Fat Eye with only four to five months of operating capital.

Bleak outlook for independent operators

In contrast to the optimism that surrounded small studios post-COVID, the current state of affairs is dispiriting. Jacqueline Carroll, co-founder of Studio Eleven43, shifted her operations to Los Angeles hoping to tap into more opportunities but found many large studios lying unused. Paramount, Universal, and Sunset Bronson Studios remaining empty signals dire times for smaller facilities. Studio Eleven43, which once employed ten people, now operates with a skeleton crew of three.

Expanding yet sinking

While soundstage investments are booming, the real issue might not be the lack of facilities but the shortage of work. Warner Bros. Discovery and Universal have invested heavily in expanding their campuses. Real estate developments are also underway, with vast acres dedicated to new soundstage and office complexes. Despite these expansions, the actual work is what’s missing.

“The real problem isn’t the number of studios; it’s the decreased production volume,” as one insider put it.

Tax Incentive Dilemma

California’s tax credit program is a significant factor driving productions out of state. The state’s current tax incentives are capped at $330 million annually, much lower than what states like Georgia and New York offer. This discrepancy pushes filmmakers to more financially attractive locales like London or Vancouver, although the costs of production remain similar.

For example, Boehner highlighted that his wife, an actress, was working on a project set in Whittier but filming in Vancouver due to better financial incentives.

Calls for more robust support

FilmLA has called for a “vast expansion” of the tax credit. The current economic downslide mirrors the situation from 2009, a crisis weathered back then by a robust tax credit program. An enhanced tax credit might once again rejuvenate local production.

Entertainment directive by local authorities

Los Angeles Mayor’s Entertainment Directive, signed in August, aims to offer a more holistic approach to solving the crisis. This initiative involves forming a 19-member Entertainment Industry Council tasked with identifying problems and proposing solutions. Rachel Freeman, deputy mayor for business and economic development, emphasized the vital role of the entertainment industry, which contributes billions to the local GDP and supports a wide array of small businesses.

Survival strategies

While government policies grind through bureaucratic processes, soundstage owners are looking for immediate solutions. Some are pivoting to virtual production and live events, while others, like Carroll, are using their production teams to keep content flowing. However, the pivot isn’t always smooth. Boehner mentioned difficulties in getting permits for converting his studio into a live event space.

In some dire cases, owners are contemplating selling their assets. Historical sites with a rich film production heritage, like Santa Clarita’s Sable Ranch, are now up for sale due to economic strain.

Final thoughts

The mantra for today’s soundstage operators has become “Survive till ’25.” Whether the proposed measures can effectively revitalize the industry remains to be seen. In the meantime, the resilience and adaptability of these business owners will be tested like never before.

For more in-depth news and analysis on the entertainment industry, make sure to share this article and stay connected for further updates.