What's Happening?
A new study commissioned by major entertainment industry unions, including the Writers Guild of America, SAG-AFTRA, Directors Guild of America, LiUNA, IATSE, and the International Brotherhood of Teamsters, reveals that major Hollywood studios now spend
more than half of their production budgets outside the United States. The study, conducted by Ernst & Young, analyzed film and television production spending from 1999 to 2024 for movies with budgets over $5 million and TV shows over $1 million per episode. It found a significant decline in U.S. production spending, with the share of production spending on movies filmed partially or primarily in the U.S. dropping from 74% to 42%. Similarly, for television, the share of production spending in the U.S. decreased from 94% to 64%.
Why It's Important?
This shift in production spending has profound implications for the U.S. entertainment industry and its workforce. The decline in domestic production means fewer jobs for American cast and crew, impacting local economies that rely on film and television shoots. The study highlights a significant loss of economic activity within the U.S., as studios increasingly seek out international locations, often due to more favorable tax incentives and lower production costs. This trend jeopardizes the competitiveness of the U.S. as a global production hub and underscores the urgency for policy interventions, such as a federal film tax incentive, to retain and attract productions domestically. The economic impact extends beyond direct employment to ancillary businesses like catering, equipment rentals, and hospitality.
What's Next?
The findings of this study are expected to intensify the entertainment industry's lobbying efforts for a federal film tax incentive. A bipartisan bill introduced in Congress last month proposes a 20% base rate on cast and crew spending for U.S.-based productions, with potential increases up to 30% for specific criteria, such as independent productions or those relocating significant operations back to the U.S. If passed, this incentive aims to make the United States more competitive and could potentially double annual production spending in the U.S. by 2035, according to a Motion Picture Association estimate. The industry will likely continue to advocate for policies that encourage domestic production and safeguard American jobs.
Beyond the Headlines
The exodus of Hollywood production spending reflects a global competition for creative industries, where countries offer attractive incentives to draw in major film and television projects. This phenomenon raises questions about the long-term cultural and economic implications for the U.S. as the traditional home of Hollywood. Beyond the immediate economic impact, there are concerns about the erosion of the domestic talent pool and infrastructure if productions continue to move overseas. The debate over federal tax incentives also touches on broader economic policy discussions regarding government intervention in industries and the balance between fostering domestic growth and maintaining fiscal responsibility. The study underscores the complex interplay of economic factors, policy decisions, and global market forces shaping the future of the entertainment industry.
