Daily Trojan Magazine
Is Hollywood still bright enough to compete?
Young creatives are reimagining the film industry in the face of rising costs and shifting landscapes.
By ABBY WEILAND
For years, Hollywood has been the heart of the entertainment industry. With its sunny climate, diverse terrains and rapidly expanding studio infrastructure, Los Angeles quickly became a magnet for filmmakers in the early 20th century. Many people believed, and still do, that if you want to “make it” in the entertainment industry, L.A. is the place to be.
Despite Hollywood’s longstanding reputation as the epicenter of the entertainment industry, the already high permitting fees in L.A. are only continuing to rise, driving up production costs.
Christophe Merriam, a junior majoring in business of cinematic arts, has been co-running a startup film production company, Farley Productions LLC, for the last three years. Their work includes producing TV show pilots, commercials and ad campaigns.
The company recently produced a commercial in New York for a celebrity dentist, which Merriam said was a better experience than shooting in L.A.
“It was significantly easier. It was significantly cheaper. You don’t have to get as many permits as you do in L.A., and not nearly as many expensive permits as you do in L.A.,” Merriam said.
In comparison, Merriam noted that filming a pilot episode of a TV series in Hermosa Beach required them to pay more than double for permits.
Eleanor Smith, a freshman majoring in cinematic arts, film and television production, moved from Korea to L.A. to attend USC and pursue the entertainment industry. She is currently producing an independent film that she wrote and directed, titled “No One Will Believe You,” which she said had a steep cost.
“Just for a student film, the base permit is like $1,000, which for a student film is quite a lot,” Smith said.
California law also mandates that production companies show proof of insurance for additional insured people, workers’ compensation, general and auto liability, and cancellation before acquiring the permits to shoot on location. While this is a standard requirement at most shooting locations, Smith pointed out the added complexity of navigating this process for L.A.-based productions compared to other places.
“Getting insurance on top of that for your equipment is a whole other can of worms. And you can get a camera and just shoot stuff, but if you want to be legitimate, if you want to go to festivals even, there are so many things that you need.” Smith said.
(Tai Lyn Sandhu / Daily Trojan)
Due to the high production costs in L.A., many companies heavily rely on tax incentives to make their projects financially viable. The availability of these incentives plays a key role in determining where films and TV shows are made. As states and countries with more generous benefits continue to emerge, California faces growing pressures to offer more financial assistance to remain competitive.
“It’s important for California to make it easier for movies to be made here because it’s probably going to benefit the California economy and the L.A. economy if movies are made here,” said Talya Fleisher, a sophomore majoring in writing for screen and television.
In 2020, California introduced Program 3.0 under Senate Bill 878, a tax credit program that allocates $330 million each fiscal year to new, relocating, recurring and limited TV series, pilots for potential new series, and independent and non-independent feature films. Under Program 3.0, independent films and relocating TV series qualify for a 25% non-transferable tax credit, while non-independent projects receive 20%.
While these numbers may seem promising, they are lower than those of other states. Georgia, for example, has no annual cap on film incentives and offers a transferable tax credit of up to 30%, making it an attractive choice for producers.
Furthermore, California’s tax credits are non-transferable, meaning producers cannot sell credits to third parties. Transferable tax credits are often integral to a company’s financing strategy, allowing them to treat the credits like cash, either by getting money back or by selling them to someone else. California remains one of the few states that does not offer this type of incentive.
Program 3.0 has additional limitations on the types of projects eligible for tax credits. Categories that currently cannot benefit from California’s program include multi-camera sitcoms with live audiences, animation projects and visual effects work. This exclusion has caused some productions to outsource visual effects work to countries that provide standalone visual effects tax credits.
For example, according to the California Film Commission’s Progress Report, a visual effects and animation studio reported spending $920 million on visual effects labor worldwide but only $38.8 million in California.
The impact of California’s rising production costs, complicated process of obtaining insurance and limited tax incentives is becoming more apparent as productions increasingly look beyond California for their filming needs. In 2022, CFC reported that runaway projects — stories filmed partially in or entirely outside of California — accounted for $951 million in production spending. This represents a significant loss to the state, as producers seek out more favorable tax incentives and lower costs elsewhere.
“A lot of my freelance work has been based in L.A., but I definitely see [myself] either needing to go abroad or moving around the country, or being more flexible with where I’m at,” Merriam said.
While Merriam is open to working outside of California, Fleisher is uneasy about a potential shift away from Hollywood.
“I don’t like the idea of it becoming so spread out [that] you can’t even grasp it. I think part of the charm of the entertainment industry is that it has this home base,” Fleisher said.
To reverse the anxiety surrounding the migration of productions out of California, Gov. Gavin Newsom proposed Program 4.0 in October 2024. This program will expand California’s Film & Television Tax Credit Program to $750 million annually, an increase from the current $330 million. This expansion would place California as the top state for capped film incentive programs.
(Tai Lyn Sandhu / Daily Trojan)
While the increased funding will make it significantly easier to produce films in L.A., uncertainty remains among young USC creatives, such as Andrew Mendez, a senior majoring in business administration with aspirations of starting his own production company.
“There are new forms of storytelling, and there are new opportunities, like a new market. I think that’s the best way I can describe it. So I don’t think it’s losing its prestige, but there are definitely competitors now that can outshine it.” Mendez said.
Moreover, Fleisher argues that the industry’s growing emphasis on financial incentives is overshadowing its creative roots.
“I feel like we’re losing focus on what this is. The industry, it’s about making art and entertainment,” Fleisher said.
Fleisher’s sentiment echoes a broader tension felt by many film students who are navigating the divide between artistic passion and the realities of the industry.
“Hollywood is awesome. It’s cool that it provides opportunities for artists like me, but at the same time, it’s toxic, and I think international cinema has a lot more to say sometimes,” said Emma Yan, a freshman majoring in writing for screen and television.
Even though there is uncertainty about Hollywood’s place in the global entertainment industry, L.A. remains a central hub with undeniable influence.
“There are a few people whom I’ve met who are based in New York, but everyone is … coming here throughout the year,” Smith said.
This concentration of industry activity in L.A. has a direct impact on students, particularly in terms of internships and early career opportunities.
“From what I’ve seen in my job hunt, most internships — at least the ones I’m interested in — are in L.A.,” Fleisher said.
With L.A.’s continued abundance of opportunities, many young artists remain hopeful and determined to preserve Hollywood’s vitality. They are committed to maintaining Hollywood’s dominant role in the entertainment industry, despite the challenges it currently faces.
“I do think Hollywood is losing its appeal, but I think this next generation can work on bringing it back,” Yan said.
