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All the Hollywood Action Is Happening Everywhere But Hollywood
As in New York and Silicon Valley, jobs in Los Angeles’s core industry are moving elsewhere in search of lower costs and incentives
By
Greg Ip
June 18, 2025 - 8:00 pm EDT
LOS ANGELES—If budget were all that mattered, “Way of the Warrior Kid,” in which a former Navy SEAL helps his nephew deal with bullies, would likely have been filmed in Atlanta, Canada, Australia or Britain. But when producer Ben Everard showed the script to Chris Pratt, the star of “Guardians of the Galaxy” and “Parks and Recreation,” Everard said he agreed to do it on one condition: “You gotta shoot it in L.A. because my wife’s pregnant.”
Everard counts that as a victory for his adopted hometown—and a warning. Increasingly, raw economics favor shooting projects somewhere else. For Los Angeles to get the nod often takes something idiosyncratic, like a star with an expectant wife. The 41-year-old Everard has made five of his seven films here, and in three, it was because of the star’s family.
If Los Angeles County were a country, its economy would be among the world’s 20 largest. But that economy is ailing. Payroll employment is 1% lower than at the end of 2019; before the pandemic; it’s up 5% for the country as a whole.
A big reason is the malaise in film and video production. Los Angeles County employment in motion picture and sound recording is down 10% since 2019, according to Labor Department data. The number of “shoot days” across all types of production, including feature films, television and commercials, fell for the third straight year in 2024, according to FilmLA, a nonprofit that coordinates film permitting in most of the county. California’s share of global projects fell to 18% in 2023 from 23% in 2021, FilmLA has found.
After hearing from actor Jon Voight on Hollywood’s plight, President Trump last month proposed his favorite solution: tariffs on foreign-made films. The idea got a tepid reception here. Hollywood prefers more generous
tax incentives. Gov. Gavin Newsom has proposed more than doubling California’s film and television tax credit budget to $750 million annually. The industry also wants less red tape and more housing to reduce the cost of doing business here.
Locals rattle off the omens. Disney’s Marvel Studios makes its superhero movies near Atlanta or in the U.K. Netflix just expanded a production facility in Albuquerque, N.M., and broke ground on a huge new complex in New Jersey. The U.K., by one measure, has more square footage of soundstage than Los Angeles.
There are two key reasons. First, other jurisdictions are offering more lucrative, less restrictive incentives. Second, Los Angeles—always an expensive place to do business—has become more so. Housing shortages, aggravated by wildfires in January, have made the cost of living prohibitive.
Los Angeles has formidable natural advantages. With ocean, mountains and desert within a few hours drive, you can shoot almost any movie here, and thanks to fabulous weather, on almost any day.
Everard, a former chairman of FilmLA, maintains it’s worth paying more for the talent pool here because the superior quality shows on the screen. But, he said, “We’re living off Hollywood’s endowment.” The difference in cost is now so great that other jurisdictions don’t have to be as good—just good enough.
The recent
immigration raids and the protests that followed won’t help. “Disruption of law and order creates uncertainty, which is the enemy of productive filmmaking,” says Everard. “Plus, it’s irresponsible for a film to draw city resources away from emergency needs in times of crisis.”
Off a thoroughfare in Hollywood, editors are putting together “Way of the Warrior Kid” at the offices of director Joseph McGinty Nichol, who goes by McG. The offices sit inside a studio complex that was once home to Charlie Chaplin and later Muppets creator Jim Henson.
McG ticks off the recent blows Hollywood has suffered: Covid-19, then the writers’ strike in 2023, and now artificial intelligence. “I feel like it’s musical chairs and there’s a hundred people walking around, but 25 seats just got pulled.”
McG, who was born in Kalamazoo, Mich., worries Hollywood is headed the same way as Detroit. True, the major studios and streamers are all based here. The auto manufacturers are also still based in Michigan, but auto assembly has moved to “right-to-work” states or other countries.
Like finance in New York and tech in Silicon Valley, film in Los Angeles benefits from the economics of network effects. The top actors, lawyers, agents, studio executives and directors have to be here to work with each other.
But New York and Silicon Valley are cautionary tales: in both, a prosperous top masks a shrinking middle. While Wall Street’s top executives, traders and investment bankers are still in New York, mid-tier jobs migrate to places with cheaper housing and lower taxes like
Denver,
Miami and
Dallas. The top tech firms such Nvidia, Apple and HP are still in Silicon Valley, but they make their hardware elsewhere, predominantly Asia.
Richly-compensated actors, directors and studio executives will be fine. It’s the grips, camera operators, costume and set designers, makeup artists, and editors, mostly middle-class, being squeezed between a shrinking pool of work and the high cost of living.
John Dietrick, an editor on “Way of the Warrior Kid,” said his wife, who also works in film, can’t work abroad because they have young children. “When they’re not shooting much in L.A.,…there’s less work for her,” he said. “So it’s harder to keep our heads as much above water.”
L.A.’s chronic
shortage of housing finds its way into the cost of film production. “People in high-cost cities demand more,” said Azeen Khanmalek, executive director of Abundant Housing LA, a pro-development group. “We saw the same dynamic play out in the tech sector. The amount of money you needed to live in the Bay Area was so great, salaries had to be higher, so some folks packed up shop and moved to Bozeman or Austin.”
Producers complain high wages are killing them, while unions say members need them to stay above water, said Adam Fowler of CVL Economics, a consulting firm specializing in the creative economy. “Nobody is wrong. Everyone loses.”
Some production staff have spent so much time in Atlanta they moved there, lured by housing that’s half as expensive as in Los Angeles.
To retain a competitive advantage, McG maintains Los Angeles must be a nice place to visit and live. He’s doing his part. Last fall he and musician John Mayer bought the run down Henson complex and are spending millions to restore its Chaplin-era look and feel.
As McG shows a visitor the historically protected facade topped by Kermit the Frog dressed as Charlie Chaplin, a half-naked man shuffles along the sidewalk. Probably a “homeless guy going to score fentanyl somewhere,” McG said. “We can’t keep the city clean enough to make it hospitable…That’s deeply problematic.”
Crew members tick off the costs of producing here: $700 to use a dog on set. A building permit and structural engineer to move a wall for a better camera angle (they dropped that idea). Gasoline to power generators that costs nearly $2-a-gallon more than in Georgia.
Much as American tech companies chasing subsidies and cheap labor nurtured skilled workforces in Asia, American film companies have done the same in Europe, Canada and Australia. “We’ve saturated the entire world with trained professional talent,” said Bruce Gillies, line producer (effectively, the budget guy) on “Way of the Warrior Kid.” “Then we left and we put ourselves outta work.”
In animation, where physical presence is less important, California’s share of production dropped from 67% in 2010 to 27% in 2023, according to a report by CVL Economics. It attributes that to foreign incentives and talent pools such as in Canada that built a pipeline in related skills such as videogaming.
But what if the industry and the state are chasing jobs that are doomed anyway? Last month Google released the latest version of its AI video generator, Veo. As my colleague Joanna Stern demonstrated,
you can dictate scenes into it to produce an entire show.
Everard insists the public will always want human-created stories played by familiar humans such as Pratt. “Why hasn’t there been a hit AI-written song yet?” he asks.
He might be right. But to take away jobs, AI doesn’t have to be as good as what Everard, McG and Pratt can accomplish with a $90 million budget in Los Angeles; it only has to be good enough. Soon, it may be.
