Subsidizing film and television production only props up an obsolete system.
The film and television industry is undergoing a revolution as Hollywood, the geographic area, has grown too expensive for Hollywood, the industry. In a recent discussion between Academy Award–nominated actor Sterling K. Brown and The White Lotus’s Natasha Rothwell, the actors bemoaned show business’s rapid exit from Hollywood. Brown said that he was recently filming in Australia, and personnel from seven other productions were staying in his hotel. Rothwell mentioned seeing other projects filming when she was in Thailand and complained about the “outsourcing of work that is happening.”
“They’re going to Ireland to shoot game shows, sis!” Brown cried.
And in fact, the game show The Floor, hosted by Rob Lowe, has moved to Dublin to save money. “The state of the business is so bleak now,” Lowe told Vulture, “that even I am willing to consider shooting outside of L.A. because the opportunities here have just gone away.”
Only about one-fifth of American movies and television shows are now filmed in Los Angeles, according to New York magazine. A report by FilmLA, a group that collects data on filming permits in the city, found that 2024 was the worst year for on-site filming in three decades, except for the Covid-ridden 2020. Since 2017, television filming days have been cut in half, while movie filming days have dropped by 40 percent.
Southern California, once the capital of the film and television industry, now faces competition in ways it never has before. Dozens of states and countries have implemented tens of billions of dollars in tax credits to lure film crews to their cities. Rigorous union protections in California raise the cost of filming, while workers elsewhere can often do the same job more cheaply. The permitting process in and around L.A. is expensive and cumbersome. And, of course, people with money have fled high-tax California for more wallet-friendly climes like Texas.
The free market has been speaking for years, but as usual, politicians are only now waking up to the reality. And yet the salves they are offering the film industry to keep it vibrant are even worse than the problems they are intended to fix. As is often the case, they see more government as the solution to the crises government creates in the first place.
For instance, California Governor Gavin Newsom has proposed increasing the annual cap on the state’s film tax credit from $330 million to $750 million, effectively forcing taxpayers to subsidize the entertainment industry. In the past, subsidizing film and television production was paid for by people voluntarily buying a movie ticket or watching a TV show, which incentivized studios to create quality products. With taxpayers footing the bill via a tax credit, studios are simply encouraged to make more expensive products to procure the financial match. The more you spend to make your movie, the more you get from taxpayers.
And the arms race to attract film production has gotten expensive. Since 2017, the State of New York has spent $5.5 billion in tax credits to lure entertainment projects, and Governor Kathy Hochul has said she wants to spend $100 million more per year. That has included over $160 million in credits to the TV show Blue Bloods, $123 million to Billions, $111 million to Saturday Night Live, and $109 million to The Marvelous Mrs. Maisel. (A New York Times analysis calculates that those four shows alone cost the average state taxpayer $65.60, whether they watched them or not.)
So what will happen when California citizens are forced to fork over twice as much money to produce movies and TV shows? The same thing that happens every time a private industry is subsidized: when sclerotic, outdated systems are propped up with taxpayer money, costs go up, and innovation ceases. (See: higher education and medical care.)
And, of course, once politicians become business partners with film studios, don’t expect the funding to come without strings. As universities like Harvard have recently figured out, taking hundreds of millions of dollars from taxpayers is a devil’s bargain. A Democratic governor could, for instance, deny aid to films that don’t meet a decreed diversity requirement. (Newsom has already updated the program to include new workforce diversity provisions — why stop there?)
Conversely, a Republican governor could flip the game and withhold funding if a movie features two same-sex parents or ridicules a GOP president. No skin is too thin in politics today, and once politicians see a way to steer culture in their direction, meddling is inevitable, even from the party of small government.
While Newsom tries to use the carrot approach to lure film production back to California, Donald Trump is using the stick approach to bring movies back to America. Trump has proposed a 100 percent tariff on movies filmed overseas, which is the opposite of providing tax credits — instead of making movies cheaper to produce, he is threatening to make them more expensive if they don’t submit to his demands. Never shy about pitching his terrible ideas nationwide, Newsom has suggested that Trump create a federal $7.5 billion film fund so people all over America can be on the hook for bailing out bombs like woke Snow White.
It is unclear just how a tariff could be applied to a film, given that it is often a digital product distributed online. But if they do figure it out, we know it could make big-budget hits like The Avengers movies, the Star Wars series, the Harry Potter films, The Lord of the Rings, and other films too expensive to produce, given large portions of each of them were filmed overseas. (Although I suspect Darth Vader would be very persuasive when applying for a loan.)
Either way, the type of movies you are allowed to see may soon depend on who is elected either president of the United States or governor of California.
Even though Newsom’s and Trump’s approaches are diametric opposites, neither of them will save the film industry as it currently exists. Television and movies aren’t being hollowed out by offshoring; they are becoming outmoded by technology.
Every year sees the release of theater-quality films that were filmed on iPhones. No longer do aspiring filmmakers need a camera crew, a professional sound guy, and teams of lawyers to help them navigate local filming ordinances. Baby Spielbergs can now film full movies with cheap equipment for sale on Amazon and edit those films with powerful laptop software. And they don’t need a full studio system to distribute and promote their works of art — they can do that on social media. For comparison, think about what happened to the newspaper industry when people realized they could simply start publications of their own online.
Soon, filmmakers won’t even need actors. Last week, Google released a new AI program that generates full scenes with lifelike characters reciting the words that a user plugs in. It’s a full movie studio in a CPU. The stars of tomorrow won’t be flesh-and-blood actors like Tom Hanks and Jennifer Lawrence, they will be digitally created characters that “work” for free. (Learn to code, Margot Robbie!)
For an example of how lifelike digital actors are getting, watch this video of an actress reciting the paragraph you just read. And keep in mind, the quality of these videos gets better by a factor of ten every few months.
Since the beginning of the film industry, it made sense to have a central geographic hub where film crews, actors, and studio executives could all congregate, and the weather allowed for year-round filming — but no more. When films go completely digital — and given the speed of technological innovation, this could be within years, not decades — the only job left in Los Angeles will be fixing burned-out Waymo cars.
And neither tax incentives nor tariffs will keep the film industry centralized once every Jane and Jim can make Wes Anderson–level films. In fact, this might have the effect of broadening the reach of popular movies, when kids in Nebraska or Alabama get to realize their visions on the big screen.
Hollywood should face it: attempts to keep a studio-system-centered corpse animated may succeed for a few more years, but unlike a blockbuster summer movie, there is no muscle-bound hero coming to save them from the inevitable.