Hollywood Is Shrinking — And the Real Villain Isn’t Strikes or Wildfires, It’s the Government

American film and television production is in serious decline, and last week a surprisingly candid hearing in Burbank made one thing crystal clear: the biggest problem isn’t greedy studios, lazy writers, or California wildfires.

It’s the government — especially California’s own.

During a town hall organized by Senator Adam Schiff, industry veterans openly stated that the sharp drop in U.S.-based production is largely due to chronic lack of support from state and local authorities, combined with crushing taxes and bureaucracy.

In the fourth quarter of last year, the share of content actually produced in the United States fell to just 38% — a historic low.

California Is Killing Its Own Golden Goose

California, once the undisputed capital of global filmmaking, has become one of the most hostile places to shoot. High taxes, expensive permits, strict labor regulations, and layers of red tape have made staying in Los Angeles financially painful for studios.

As a result, productions are fleeing en masse to Canada, the UK, Eastern Europe, and even Australia — wherever rebates are more generous and bureaucracy is lighter.

Noah Wyle, star and producer of the upcoming medical drama The Pitt, gave a brutally honest example during the hearing. The first season of the show cost his company, John Wells Productions, roughly $100 million. Thanks to California’s tax rebate program, they eventually got back only $12 million.

“If we had shot in Canada or Europe,” Wyle noted, “we would have saved significantly more.”

The Rebate System Is No Longer Enough

For years, Hollywood relied on state tax incentives (rebates) to keep productions at home. Those incentives used to work. Now they don’t.

Studios have realized it’s simply cheaper and easier to move entire crews abroad than to fight California’s high costs and slow permitting process. The result is a vicious cycle: fewer productions mean fewer jobs, less economic activity, and more empty soundstages across Los Angeles.

The numbers don’t lie. American soil now accounts for less than 40% of all content being made by U.S. studios — a staggering collapse for an industry that once dominated the world.

What’s Really at Stake

Beyond the obvious loss of jobs for actors, crew members, and support industries, the decline has much wider consequences:

Empty studio lots and soundstages in California;
Weakening of America’s soft power through reduced cultural output;
Lost tax revenue for states that refuse to compete aggressively;
Growing dependence on foreign locations and foreign incentives.

Senator Schiff’s hearing made one thing painfully obvious: the crisis in Hollywood is not primarily creative or cyclical. It is structural and political.

Studios have no patriotic obligation to keep shooting in America if it costs them tens of millions more. They will go where it makes financial sense. Right now, that place is increasingly not California — and often not even the United States.

Unless state and local governments dramatically improve their incentives, cut red tape, and start treating film and television as the major economic engine it is, the exodus will only accelerate.

The golden age of Hollywood wasn’t killed by streamers, strikes, or pandemics.

It was slowly strangled by taxes, bureaucracy, and political indifference.

And the worst part? The people with the power to fix it don’t seem particularly interested in doing so.