Hollywood is grappling with a severe downturn, evidenced by a 16% decrease in shooting days in Los Angeles last year and a 50% drop compared to the 2017 peak. The U.S. and Canadian box office receipts totaled $8.6 billion in 2025, which is considerably less than the nearly $12 billion achieved in 2018. This decline has resulted in the loss of 73,000 production jobs in the U.S. since the end of the streaming bubble in 2022, with two-thirds of these losses occurring in Los Angeles.
The exodus of production from Los Angeles is attributed to high costs, particularly labor due to the high cost of living and elaborate union agreements. Other states and 81 countries now offer more generous incentives and have developed their own crew bases. For instance, the U.K. spent $2.2 billion on film and TV subsidies in 2024, and these national incentives are often combined with local rebates, creating a highly competitive environment. This has led to productions, such as a $100 million Netflix crime drama, choosing to film in locations like New Jersey after failing to secure California tax credits.
California has taken steps to counteract this trend by doubling its state film tax incentive program to $750 million in 2025 and expanding its scope to include above-the-line salaries. Despite these efforts, Los Angeles continues to struggle, with FilmLA reporting a nearly 13% decrease in on-location shoot days in the second quarter of 2026 compared to the same period in 2025, and a 36% decrease below the five-year average. Feature film production was down 20% and TV production fell 30% year-over-year in the second quarter. The state's expanded incentive program, however, has already awarded credits to 170 projects projected to generate approximately $6.6 billion in production spending and nearly 35,000 jobs.
There is a growing push for federal intervention, with proposed legislation to establish a 20% federal tax credit for qualifying U.S. film, television, and visual effects productions, which could be combined with state programs. Additionally, recent developments include a proposed settlement in the Paramount Skydance acquisition of Warner Bros. Discovery, which mandates an increase of at least $1.5 billion in domestic film production compared to 2025 levels and requires the continued operation of major studio lots in Southern California. Mayor Bass's Executive Directive 11 in Los Angeles has also aimed to reduce local filming costs by streamlining permitting and reducing fees at key locations.
While these initiatives show promise, a federal incentive alone may not guarantee a full return of production to Los Angeles, as California would still need to compete with other production centers on costs, incentives, infrastructure, and ease of filming. The ultimate goal is to ensure that films and television shows continue to be made in Los Angeles, sustaining the ancillary businesses, crews, and craftspeople that form the backbone of Hollywood's economy, which currently faces significant challenges, as exemplified by the 50% downturn experienced by local businesses like Sandy Rose Floral.
