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According to a new report from the Milken Institute, outdated processes within California’s film and television industry are moving away from the states from production and work. A disastrous report entitled “Hollywood Reset: Restoring Stability in California’s Entertainment Industry” warns that the decline is likely to continue unless significant changes are implemented.
“While previous turmoil to Hollywood included technical disruptions such as the advent of television (late 1940s), strong dollars (1990s), and competitive film incentives (early 2010s), Hollywood was not facing all of these issues at the same time.” “Combined with the high level of financial tension facing studios in the wake of the 2023 strike, the need to find cheap places has never been stronger than ever since it was streaming growth and loss of previous revenue streams on DVD and broadcast television.”
The report specifically targets the Los Angeles permit system as a region in urgent need for reform, and points out that it is the most expensive of its colleagues. For example, the LA’s permit application fee is $3,724, which is significantly higher than New York City’s $1,000, London’s large crew $540, and Atlanta’s $400.
A general view of movie cars was filmed on October 11, 2022 in Los Angeles, California, “Beverly Hills Officer: Axel Foley.” (Photo: Bellockimages/bauer-griffin/gc image)
These rising costs are attributed in part to Filmla’s independent, non-commercial structure, unlike cinemas in New York, London and Atlanta, which receive government subsidies.
“Filmla has far more additional permit fees and requirements than other major production hubs,” writes Klowden and Waddoups, pointing out that in 2023 Filmla introduced new management fees for the use of drones, helicopters, gunfire, explosions and lane closures.
The report also criticizes the complexity of California’s film credit programs, limited application windows, and applicant requirements to analyze job creation. The authors argue that this outdated process undermines California’s competitiveness.
Another factor that contributes to productions leaving the state is the industry’s “complex and fractured” labor contract system, which encourages studios to produce projects overseas, according to the report.
“Through our interviews, independent producers emphasized the patchwork labor system and studio contract agreements to add significant complexity to their work,” the report states. “This complexity makes the US workforce difficult and increases the incentive for studios to produce projects overseas.”
The report also cites the strong US dollar as a contribution factor in California, with a high cost of living. Strong dollars give “offshoring” more advantageous, as companies can save profits by filming in countries with nationalized healthcare systems.
Read the entire Milkin Institute report.
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To address these issues, Klowden and Waddoups propose increasing budgets for California’s film and television tax credit programs and increasing basic incentive rates. It also recommends that the tax incentive program be more “user-friendly” with a rolling application and a streamlined application process.
The report also suggests that local governments rethink Filmla’s independent structure and advocate subsidies to reduce production costs and streamline the process.
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