Lights Out: The Financial Health of the Los Angeles Film Industry

Rika Nishikawa, Homeschool, 12th year/Senior, Spring 2025

Bringing in over $100 billion in tourism and 200,000 local jobs to California, the entertainment industry in Los Angeles, or LA, is undeniably the mecca for film and television (City of Los Angeles Economic & Workforce Development Department, 2025). But riddled with setback after setback, LA has seen a recent downturn in filming and job opportunities, hurting the industry’s economic health. 

Though much of the creative and executive work has stayed in LA, film tax incentives in other states, such as Georgia and New York, and even internationally, with some in Eastern Europe and Canada, have driven some production out of California. Billions of dollars have been offered in incentives, and for an industry facing significant financial struggles, companies are lured toward saving money where they can. “It’s harder and harder to make your money back now, so that’s a reason to make production cheaper and drive costs down as much as possible,” emphasized Timothy Peternel, an active producer in LA and a professor at DePaul’s School of Cinematic Arts.

This economic downturn followed what was the longest work stoppage in LA history: the union strikes in 2023 by the Writers Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA). Tackling issues related to artificial intelligence and the protection of artists’ rights, the strikes halted production altogether, costing the industry over $5 billion (Knapp, 2023) and 24,799 workers their jobs (Otis College of Art and Design, 2023). And this was in addition to the economic devastation that was the COVID-19 pandemic, which left the industry in shambles as film festivals were cancelled, theaters closed, and films were delayed or canceled. 

“Los Angeles and the film industry are still recovering from the economic setbacks of the last few years. The pandemic and strike halted production and development,” Ilisa Aaron, a screenwriting professor at DePaul’s School of Cinematic Arts, noted. “Add on the uncertainty of how many people will be impacted by AI—it doesn't bode well for the upswing people hoped would happen in 2025.” With recent developments on the Trump administration’s proposed tariffs on foreign movies along with the challenges faced so far, it is clear that the future of the industry is unsteady and in the unknown.  

Sources:

• City of Los Angeles Economic & Workforce Development Department: https://ewdd.lacity.gov/index.php/entertainment-incentives 

• Knapp, 2023 (University of Michigan Journal of Economics) https://sites.lsa.umich.edu/mje/2023/12/06/a-deep-dive-into-the-economic-ripples-of-the-hollywood-strike/ 

• Otis College of Art and Design: https://www.otis.edu/about/initiatives/documents/otis-college-report-creative-economy-december-2023.pdf 

Interviews:

• Ilisa Aaron, DePaul School of Cinematic Arts Professor, iaaron@depaul.edu

• Timothy Peternel, Independent film producer and DePaul School of Cinematic Arts Professor, tpeterne@cdm.depaul.edu