There is an industry losing 42,000 jobs and bleeding before us: Hollywood

The entertainment industry in Los Angeles is going through its worst crisis in decadeswith a dizzying drop in the number of productions and jobs, which has caused a feeling of “economic disaster” in the creative heart of California. It seems like a well-known story that we recover cyclically every few years, but this time some abysmal figures, never seen before, accompany: the media have detected how companies are entering a real emergency situation. Are we contemplating Hollywood’s last great crisis?

Two years of chaos. According to The Wall Street Journalthe crisis that Hollywood is going through not only affects the large studios and production companies, but also has an impact on thousands of indirect jobs and the commercial fabric of the city: restaurants, technical services, prop stores and housing have seen how the activity linked to film and television is drastically reduced. In the last two years, more than 40,000 jobs have been lost in the sector, leaving animators, technicians, scriptwriters, operators and small businesses in a precarious situation, and raising the local unemployment rate above the state and national average.​

Some data. These 40,000 direct jobs disappeared represent a drop of more than 20% of the sector’s total. With this, the unemployment rate in Los Angeles County for industry professionals has reached 5.7%, exceeding not only the state average of California (5.5%) but also the national average of the United States, around 4.3%. All this has led to a drop in local production to historical record numberswith a decrease of at least 30% in film and television projects recorded in Los Angeles, continuously since 2023.​ And how is that reflected for practical purposes? In it production exodus: The number of Hollywood projects filming outside of California, primarily in states with more competitive tax incentives such as Georgia and New Mexico, has risen 25%.​

The signal from the sets. The occupation of the Hollywood sets It is perhaps the clearest sign of how the area’s economy has fallen. In 2024, the average occupancy of sets in Los Angeles fell to a historic 63%, a significant decrease from the average of more than 90% that remained constant between 2016 and 2022. And there is another fact: only 20% of the activity on sets was destined for television, down from 30% in previous years. The cause, as we will see below, is the reduction in expenses that the platforms of streamingimmersed in extreme savings policies.​

But why does it happen? First of all, prolonged strikes of scriptwriters and actors since 2023, which paralyzed a good part of local production, generating million-dollar losses and discouraging new investments from being generated. Added to this is the considerable increase in the cost of living and production in Los Angeles, which has led many studios and production companies to seek alternative destinations with tax incentives and more attractive subsidies, such as those mentioned above, Canada or other emerging markets.​

Another significant cause is the transformation of the entertainment economic modelparticularly with the proliferation of platforms streaming. These platforms, faced with market saturation and pressure to maintain profitability, have reduced their budgets and the number of projectstaking away part of the total production volume in Los Angeles. The combination of lower demand and budgetary adjustments has pushed the industry into a prolonged contraction.​ And finally, there is the emergence of artificial intelligencewith its challenge to traditional labor, especially in fields such as animation, visual effects and post-production.

And now what. To begin with, an immediate effect: The position of the United States as a global leader in audiovisual production is in danger. Not only are a significant number of productions moving to other regions and even countries, attracted by better fiscal conditions, lower costs and cheaper technical equipment. It is that thanks to the globalization of entertainment that has brought streamingticket offices like those in Korea or China They are no longer secondary. This week’s highest-grossing film worldwide it has been an anime. The animation phenomenon of the year has been a k-pop idol movie. The throne is more disputed than ever.

Header | Braden Egli in Unsplash

In Xataka | While Hollywood goes through a slump, one film industry is constantly filling theaters: the Chinese one