Billion-Dollar Blockbusters Won’t Revive L.A.’s Film Industry

Hollywood, or at least some aspect of it, had a summer. 

Between massive box office performances from “The Odyssey” (partially shot in Los Angeles), “Spider-Man: Brand New Day” and “Obsession,” the industry appears to have recaptured some of its cultural magnetism and moneymaking ways. Adjusted for inflation, the movie industry’s $4.76 billion summer ticket haul represented a 26 percent jump from the summer of 2025.

“ ‘The Odyssey’ is an example of the movie equation working,” said Robert Marich, a film industry analyst and author of Marketing to Moviegoers. “It’s not some new high-water mark. It’s just working the way it’s supposed to work.”

But Hollywood the industry and Hollywood the place have never been so disconnected. Even a new class of summer blockbusters, including five films with billion-dollar
box office takes, can’t save the film industry from more serious structural problems affecting its hometown.

Seemingly by the day, Los Angeles keeps losing its incumbency advantage to domestic and global competition to host new productions. Currently, more than 100 such incentives are available to production around the globe. In 2025, 45 percent of all U.S. films and scripted television shows were shot outside of the United States.

Los Angeles keeps confronting weak studio utilization as productions continue to shoot across the country and overseas, stagnating the local market for film and television and ancillary jobs. There has been an uptick in shoot days for new digital production, which L.A.’s film permitting office, FilmLA, said jumped 47 percent in the second quarter as studios in Burbank and elsewhere book more online creators. But it’s not growing fast enough to offset other losses. 

Many local leaders continue to push for incentives as the salvation for the film and television industry. Even after California expanded its Film & Television Tax Credit Program to $750 million annually through June 2030, more than doubling the previous $330 million allocation, a number of new, increased incentive programs have been proposed, with candidates for local and state office seeming to outdo themselves in suggesting more lavish expenditures. 

That includes President Donald Trump’s suggestion in August of a nationwide sweetener, which has pushed Congress to draft a bill that would offer another 20 percent federal incentive. 

However, Michael Thom, a public policy professor at the University of Southern California’s Price School of Public Policy, argues that the film industry and incentive supporters continue to attempt the same strategy while expecting different results. It’s almost, as Thom noted, that the industry’s employment doesn’t correspond to taxpayer subsidies.

“If jobs continue to leave the state, why not blame something else, such as long-term changes in how people consume entertainment — and the SAG-AFTRA contract ratified at the end of 2023?” he wrote in response to questions from Commercial Observer, referring to the writers and actors strikes three years ago. 

“Shortly thereafter, nationwide employment fell sharply. I don’t think that’s a coincidence. If the industry is contracting, throwing more money at it is like handing out buckets to passengers on the Titanic.”

Data from FilmLA suggests incentives have become a significant part of the overall Los Angeles production industry. The local nonprofit provides incentives to three categories of productions: feature film production, television drama production and, most recently, television comedy production. The most recent data suggests incentives were responsible for 33 percent, 38 percent and 37 percent of all shoot days, respectively, which FilmLA Communications Vice President Philip Sokoloski said “are larger numbers than we’ve seen in the recent past, which we attribute almost entirely to the availability of extra funding in the program.” 

Feature films shot last quarter in Los Angeles include a relatively unknown slate: “Chester’s Awakening,” “Kill Royale,” “They Know” and “The Incredible Heist of Hallelujah Jones.” Even breakout horror hit “Obsession,” filmed mostly on location in the San Fernando Valley for under $1 million, didn’t use the incentives, as its budget was too low to qualify. 

Even as more state incentives were claimed, production in all three of those categories was down versus the same time period last year. Victor Coleman, chairman and CEO of Hudson Pacific Properties, said in a recent quarterly earnings call that “candidly, the state credits have been disappointing in that they haven’t really expedited a lot of filming.”

All of this continues to weigh on studio owners like Hudson Pacific. The frenzy for physical lots before the pandemic — a gold rush, according to Marich — found buyers and developers running up costs and paying top dollar, assuming the industry would remain buoyant. But that boom has busted.

Lenders took control of Hackman Capital Partners’ 1.2 million-square-foot Radford Studio Center earlier this year, and Television City, another famed production complex that Hackman acquired earlier this decade, is up for sale as of July. 

Hudson Pacific Properties, the nation’s largest owner of studio real estate, posted a $105 million loss last quarter, with Coleman stating on an earnings call that the “production landscape remains mixed.” He also had to field questions about Netflix, the company’s biggest film tenant in Hollywood, and what would happen in 2031, when the leading streamer will begin occupying Hackman’s former Radford Studio lot it picked up this year for $400 million, a deep discount.

“There are empty soundstages all over Los Angeles, and people make movies on iPhones now,” wrote Thom. “In fact, that’s increasingly the type of content people watch — short-form, DIY videos. Who needs a studio lot anymore?”

And, while the impact of the feature film exodus is significant, it’s always important to note that feature film as well as serialized television aren’t the only games in town, or in the entire Los Angeles production ecosystem. Other sectors that support jobs, careers, studio time and related services have been struggling lately, including commercial production (down 21.5 percent since last year) and reality television production (down 40 percent annually). 

Without incentivizing these sectors as well, “you can continue to expect erosion in those categories as they respond to the economics of the global production economy,” said FilmLA’s Sokoloski. 

A state bill to start incentivizing the making of commercials died in committee in August.

“The pundits are often fixated on the movie business to the exclusion of everything else,” said Marich. “Everything else is three-quarters of the equation.”

And those behind-the-scenes parts of the industry continue to hurt. In June, Shadowcast Pictures, a stalwart production studio, announced it was closing its doors, one of 80 such production services companies that have closed since 2022. In the spring, Hudson Pacific announced that its ancillary operations arm, Quixote, would start winding down most Los Angeles soundstage operations amid the production slowdown.

And that’s far from the only threat coming from current trends in production, which include artificial intelligence, streaming industry economics and even colossal mergers, which may have dramatic impacts on film industry real estate. 

Many analysts forecast the long-in-the-works Paramount-Warner Bros. merger will severely cut the number of movies being made, shrinking the production pie for Los Angeles and other filming locations. L.A. County lost 42,000 jobs in the motion picture sector between 2022 and 2024, according to the Bureau of Labor Statistics, and a much-touted report by CVL Economics predicts the new Paramount merger could cost the county another 4,500 jobs over the next three years.

Michael O’Leary, CEO of Cinema United, an industry group representing movie theaters, has repeatedly restated opposition to the merger, writing in a letter to theater owners in late July that the transaction “will result in fewer movies, higher costs for you and your patrons, and, ultimately, fewer theaters.” Paramount later mollified some theater chains by making a promise, in writing, to release a minimum number of films, with guaranteed release windows.

Movie theater owners have a right to be concerned. This summer’s celebrated box office performance was hailed as a return of the good old days, a sign that Gen Z moviegoers would put down their smaller screens and head to the big one. But measured in raw dollars from ticket sales, movie sales this summer mask a shrinking number of tickets sold. 

A New York Times analysis found 2026 ticket sales through Aug. 16, roughly 568 million, is 30 percent lower than the same time period in 2019, or 248 million fewer admissions. Higher costs for premium experiences like IMAX, buoyed “The Odyssey,” for instance, which relied on IMAX for just over a third of its total ticket sales. 

Studios have been infamous for finding ways to utilize creative accounting in the past. But, right now, it seems like there isn’t any kind of math that makes the harsh reality of today’s economics appear any better.