California’s film industry dominance is significantly challenged as its global competitors ramp up tax incentives. In 2023, New York disbursed $124 million in tax credits to Paramount Global alone for projects that invested $425 million in the state. Meanwhile, California saw only $71 million in spending from Paramount, down from $295 million in 2020. This is a trend we are seeing repeat in many areas. Brandon Blake, our industry insider entertainment attorney Los Angeles from Blake & Wang P.A., takes a closer look.
LA No Longer the Location Destination of Choice
Los Angeles’ US film and TV employment share dropped from 35% to 27% between 2022 and 2023. The city experienced a sluggish return to filming post-strikes, with TV production trailing its five-year average by 32%. Tax incentives are primarily driving this shift. California offers only a 20% base credit with a $330 million cap, lower than many of its rising competitors.
Georgia, offering 20% plus a 10% uplift, saw $2.6 billion in film spending in 2024. The UK has become a prime destination for big-budget films, offering incentives on above-the-line costs, which California doesn’t. Nor is the competition local only. As more and more international destinations seek to compete on the global filming stage, we’re seeing more and better tax incentives arise overseas.
An International Stage
Canada and Australia are attracting a lot of post-production work with generous VFX incentives. In fact, the UK recently increased its VFX credit to stay competitive. Studios are also influencing interesting location-shooting policies, with Warner Bros. promising $500 million annually to Nevada if it increases its tax incentive cap.
Reality TV production in LA plummeted 57% in Q2 2024 as other regions like Illinois expanded their incentives to include unscripted formats. Asian countries like Japan and Thailand are also entering the incentive race in a big way.
Despite these challenges, California remains a significant production hub. However, as the global competition for Hollywood dollars intensifies, the power of a well-placed tax incentive is reshaping the landscape of film and TV production worldwide. Healthy competition will benefit everyone, but it may be time for California to rethink its own tax credit program a little if it wants to retain its title as the go-to Hollywood location destination of choice.
Film and Television 