California vs. the World: The Race to Nab Film and TV Productions

Last year, New York dispersed about $124 million in tax credits to various entities belonging to Paramount Global as a reward for 10 projects that were shot in the state. Those productions — which encompassed an array of feature films, TV series and even a talk show, including Clifford the Big Red Dog, Blue Bloods and The Drew Barrymore Show — invested nearly $425 million in the region through labor and other costs.

California, meanwhile, saw just $71 million in spending from Paramount Global for titles that were granted credits in 2023 to film in the area. The figure was a far cry from the $295 million the company spent for projects that were awarded incentives just three years earlier. It’s the latest in a trend of productions turning away from the Golden State and toward other jurisdictions that are steadily beefing up their tax relief programs in bids to attract Hollywood money. 

Though it remains recognized as the world’s foremost production hub, California is steadily losing its allure as the premiere, go-to destination. Los Angeles still has the largest portion of the film and TV economy in the U.S., but its lead is shrinking. The area posted a 27 percent share of employment in the sector in 2023 — an indication of its share of domestic production — compared to 35 percent from just the year before, per an Otis College report. 

The report doesn’t account for production in the United Kingdom, Canada and Australia, all of which have become filming hotspots at various points over the past decade thanks to tax incentive programs with looser restrictions and limitations than California’s. It reflects the decade from 2013, the birth of the streaming era, to 2024, after Hollywood’s historic dual strikes that immediately followed belt-tightening by studios as they pivoted toward profitability of their streaming businesses.

The findings track with a report from FilmLA that found an anemic return to filming in Los Angeles after production was decimated by the work stoppages. The main reason for the sluggish rebound: a double-digit drop in TV shoots in the three-month period from January to March. Filming in the category — long an anchor of filming in the area — trailed its five-year average by more than 32 percent. A subsequent report from the film office found that overall production from April to June declined roughly 12 percent compared to the same period last year and more than 33 percent compared with the five-year average, even accounting for low activity during the strikes. 

Association of Film Commissioners International executive director Jaclyn Philpott says the organization is focused on “bringing the industry closer to our film commissions and their regions” to “further develop” the sector. “Disruption is not new,” she adds. “Embracing challenges to find solutions is our goal, and a significant digital transformation project is on its way.” 

Tax incentives play a key role in the erosion of California’s share of production. The state’s film commission, which declined to comment, offers a 20 percent base credit to feature films and TV series — lower than most other jurisdictions vying for Hollywood dollars, including New York, New Mexico and the U.K. — and has a $330 million cap on the program. 

“Shooting in California depends on a variety of factors, like location, talent wanting to shoot there and whether the story is tied to the area,” says Ian Brereton, a lawyer who advises production entities on tax incentive structuring. “If not, it loses some competitiveness to other jurisdictions because of soft money incentives and labor costs.” 

In comparison, Georgia, which has the same base incentive as California’s but offers a 10 percent uplift for displaying the state logo in the project, doesn’t have a cap on the amount in tax credits it gives to productions annually. It saw roughly $2.6 billion in spending from film and TV projects in the 2024 fiscal year. Kelsey Moore, executive director for the Georgia Screen Entertainment Coalition, stresses that the state has “cemented its reputation as a globally recognized production hub” and is now “competing handily” with Los Angeles and New York. 

Critically, California is the only major production hub that bars any portion of above-the-line costs, like salaries for actors, directors and producers, from qualifying for incentives. The U.K. has leveraged that idiosyncrasy to lure big-budget titles. Over the past couple of years, it’s become one of the principal destinations for feature films.

Movies shooting there in 2024 include Jurassic World 4 (Amblin Entertainment, Universal Pictures), the next Mission: Impossible installment (Paramount), The Fantastic Four: First Steps (Disney) and Wake Up Dead Man: A Knives Out Mystery (T-Street Pictures, Netflix). Those productions will see a cash rebate on salaries for Scarlett Johansson, Tom Cruise, Pedro Pascal and Daniel Craig, among others, provided those costs are incurred in the U.K. The country has a very broad definition for qualifying expenditures, allowing payments to non-U.K. residents to be considered when calculating incentives, though the tax relief is capped at 80 percent of costs. The British Film Institute has estimated that spending by films and high-end TV shows in 2023 reached roughly £4.2 billion, nearly a third of which came from feature films.

Some of those movies shooting in the U.K. will also likely see incentives for performing visual effects and postproduction work in other countries. Canada and Australia, for instance, offer the most generous tax relief for that sector, says Sarah Westman-Liu, director of incentives at payroll services company Entertainment Partners. “You’re going to get between 30 and just over 40 percent of the entire spend back in Canada,” she observes, noting that the country has the added bonus of beneficial exchange rates. “Australia is even higher now” when combining the 30 percent rebate for productions that undertake post, digital and visual effects in the region (increased from 16.5 percent in July) with the 15 percent credit from individual states. 

Studios aren't standing on the sidelines of the incentive race either, eyeing opportunities to press their thumbs on the scales of legislative decisionmaking. In March, the U.K. unveiled a five percent bump and removal of the 80 percent cap for visual effects costs in the country to stay competitive in the VFX and postproduction sector. After listening “carefully to representations from companies like Pinewood, Warner Bros. and Sky Studios, we will provide eligible film studios in England with a 40 percent relief on their gross business rates until 2034,” said finance minister Jeremy Hunt in a statement. Studio space in the country has doubled in the past three years, with Comcast-owned Sky Group planning a major expansion of its soundstages just outside of London.

This was followed by Warner Bros. Studios chief operating officer Simon Robinson unveiling plans on Tuesday to commit half a billion dollars annually toward productions in Nevada — contingent on the state passing a measure to increase the cap on its film and TV tax incentive program by nearly 10 fold from $10 million to $95 million. Warners' expansion into Nevada would mirror Netflix's growing footprint in New Mexico, which last year raised the maximum amount of tax relief it gives to the entertainment industry.

And in a troubling sign for production in L.A., filming for reality TV in L.A. plummeted in the second quarter of 2024 after a rough start to the year. The latest report from FilmLA found that on-location filming of the format fell nearly 57 percent compared to the same period last year. It dragged down the entire TV category, which has long been an anchor of production in the region. “Generally speaking, unscripted television is a location-heavy format that generates significant permit volume,” says Philip Sokoloski, FilmLA vp integrated communications. “The employment impact of reality production is lower than it is for scripted TV, and projects are not incentive-eligible through the state of California. It remains an important part of L.A.’s production economy.”

With competitors making increasingly attractive bids for unscripted titles, production for those projects might not return to the region at the same levels as before the strikes. In June, Illinois Gov. JB Pritzker signed a bill expanding the state’s tax credit program to include game, national talk and contest-based shows, among other reality TV. Georgia already allows the format to qualify.

Countries in Asia, which have largely stayed away from tax relief for movie and TV productions in the past, are also looking to compete. Last year, Japan unveiled an incentive scheme offering reimbursement of up to 50 percent of qualifying expenditures in the country, with a cap of $6.4 million. It’s already drawn Snake Eyes: G.I. Joe Origins and the second season of Tokyo Vice. Thailand, where the upcoming season of White Lotus filmed, has similarly approved increases to its program. 

Yet, despite efforts by other locales to lure movies and TV shows, California remains the heartland of production. Brereton notes, “It’s still the place where the magic is made.”

This story appeared in the Aug. 21 issue of The Hollywood Reporter magazine. Click here to subscribe.

Correction: A previous version of this story incorrectly stated Georgia distributed $2.6 billion in tax credits in the 2024 fiscal year. The state saw that amount in spending from TV and movie productions.