Hollywood is locked in a death spiral that it may never be able to reverse, a report claims.
The days of La La Land may be numbered with the pressures of how people consume entertainment continuing to undergo massive shifts. And the legacy studio system is struggling to respond and reinvent itself accordingly, especially in the U.S. as productions of movies and TV shows flee California in droves and even increasingly head to other countries looking for far cheaper costs.
TV series and movies both are being produced in far fewer numbers in California leaving employees and actors without work. And as far as movies go, fewer are even being produced at all, according to an article in the Wall Street Journal.
In recent testimony at a congressional hearing held in Burbank, California, actor Noah Wyle — star and executive producer of The Pitt — said Hollywood is suffering “a near cratering of our once-thriving industry.”
Hollywood has suffered a 30 percent drop in employment over 2022, according to Labor Department data in Los Angeles, the Journal added.
Indeed, behind the cameras, workers logged 36 percent fewer hours since 2022, the paper added.
Industry insiders are proposing a federal tax break to counter the tax incentives in Canada, the U.K., Australia, and other countries that have led to so many producers leaving the U.S. for greener pastures.
California has moved to increase its own tax breaks, but the move has not helped retain productions, mostly because other costs are still much higher — including construction costs and union fees for crew and other production employees. But even in the USA, California can’t compete with New York, Chicago, Georgia, and other popular hubs for film and TV production, much less spots overseas.
Since 2020, streaming was one of the greatest drivers of growth in TV and film productions. But by 2024, the streamers began to find that the flood of new shows was not helping their bottom line as much as expected, and companies began to throttle down on their glut of new content. Those cuts only made matters worse for Hollywood.
Costs are one thing, which might be manageable in the long run. But a more important pressure is how consumers of entertainment are changing their habits. The main source of entertainment has shifted from TV shows and movies produced by Hollywood to sports and videos on TikTok and YouTube, the latter produced by everyday people or small production companies that don’t use a union labor force.
For Hollywood to make a comeback — as it has during past downturns — customers would have to swing away from small producers and social media. But these days, that swing back to the old ways of entertainment seems increasingly unlikely, insiders fear.
“The nightmare scenario is playing out in Los Angeles, where a century-old entertainment economy is evaporating with no signs of a turnaround on the horizon. Many worry Hollywood will soon resemble Detroit after the decline of the auto industry, with corporate headquarters still located here, but little of the actual work,” the WSJ concluded.
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