California's efforts to lure Hollywood back to the state with expanded film and television tax incentives may be too late to counteract decades of production moving elsewhere, according to film industry experts.
Gov. Gavin Newsom has touted the California Film and Television Tax Credit Program, stating it is projected to generate $6.6 billion in direct production spending and bring nearly 35,000 cast and crew jobs back to the state. However, industry professionals express skepticism, warning that the exodus of major studios to cheaper locations in states like Georgia and New Mexico, as well as international hubs such as Canada, the United Kingdom, and Australia, has inflicted significant damage.
"We need a major rescue, like, immediately," Jay Ellison, owner of Shadowcast Pictures, told Fox News Digital. He noted that his own camera rental business, which served the industry for nearly two decades, was forced to close due to the downturn. "It is decimation, and it's not just like the film rental companies, the production companies — it trickles down to the restaurants, the people supported by the industry here."
Experts point to a significant decline in scripted television production in Los Angeles, down nearly 30% since 2019, according to Luminate data. Paramount Skydance CEO David Ellison is reportedly considering relocating Paramount's headquarters, a move that could divert billions in production dollars from California.
"Production has been slowly and then speeding up really over the last two years, leaving California for other states and other countries and really nothing was done until it was almost too late," said Jason Fisher, founder and CEO of StageRunner and formerly head of production at Disney, Paramount, and AMC. Fisher noted that he observed the rise of runaway production more than two decades ago.
Entertainment lawyer Jonathan Handel echoed these sentiments, stating, "Why did it take so long for the political establishment to take this seriously? Because Hollywood's business has been leeching away for the last three decades."
The financial incentives offered by other states and countries have made it difficult for California to compete. "When I worked at the studios, we talked about a lot. ‘What could we do to keep the show here?’ And when you get to that place where you're just saving millions of dollars by going to some place other than California, they're just aren't any other levers to pull," Fisher explained.
Beyond financial incentives, rival production hubs have also developed extensive infrastructure, experienced local crews, and established vendor networks. "Other jurisdictions around the world have built up their own capabilities, and they are now attractive places to shoot. And there's only so much that you can stretch the California budget in terms of tax incentives," Handel added.
This decline has had a ripple effect on the state's economy, with over 80 production service businesses closing in Los Angeles since 2022, attributed to a lack of work and industry strikes. Industry workers report significantly reduced workdays, with many struggling to find consistent employment.
In response to these challenges, Gov. Newsom's office stated that California remains the nation's top destination for film and television production. "That’s exactly why Governor Newsom took historic action to more than double California's Film & Television Tax Credit Program, strengthening California's competitive edge by keeping jobs and investment where the industry's unmatched workforce, infrastructure and creative talent have made it the epicenter of the world's entertainment industry for more than a century," a statement read.
Despite these efforts, industry experts like Jay Ellison and Fisher maintain that the state's political leadership was too slow to address the issue. "The incentive has brought back some production. It's keeping things going. It's just not nearly enough when you're competing with so many other foreign countries," Ellison said. Fisher added, "I think it's a start, but I don't think it is enough."
Some experts also point to the studios themselves, noting their fiduciary responsibility to shareholders to seek the most cost-effective production locations. "The studios are the ones deciding where they're going to ultimately film, and they're choosing to film overseas because it's cheaper in the end," Ellison remarked.