Nothing new. When I was in college down in LA I lived in a very small town founded by stunt people. Probably 80% of the people there were in the stunt business. Every few months they were off to another state or country for filming. Hollywood is just for the studio execs now, everyone else flies to whatever country offers the best tax breaks for them to film.
They go to some pretty incredible lengths too, A friend of mine and his dad own a stunt company that works explicitly with semi-trucks. Pretty much every time you see a semi in a stunt in a movie it's either my friend or his dad driving it. They will ship these semi's to foreign countries instead of film locally because the tax incentives are greater than moving entire production companies around the world.
According to this article about 1/3rd as many movies are made in LA since the 90s. They were only making 30% of films in LA in the 90s so your experience still matches with the data but having 2/3rds of the local film production move elsewhere is significant.
A few days ago I visited the little picturesque town of Hope, British Columbia. While driving down the Main Street, I saw a dozen chainsaw carvings of wildlife. I thought, why does that one look like Rambo? Found out the first movie was filmed there in 1982. The movie took place in the fictional town of Hope, Washington. When the movie begins, you see Sylvester Stallone walking into town under the real “Welcome to Hope” sign that was in the Canadian town at that time.
An interesting read but also feels like the rearranging of the deckchairs on the Titanic given the forthcoming disruption from generative AI in this industry.
I spent some time last month with a relative in the industry (camera operator and producer) and he already uses some very sophisticated AI to map out scenes and shots in gen ai full video before they shoot IRL. It's mostly a cost saving exercise as well as occasionally helping to improve the quality of the deliverable.
He is totally expecting that the next shift will be that gen ai video will become good enough to be considered the master (ie no need to film) and he is already transferring his skills as a camera operator into prompting and AI assisted scene design.
He knows that many different disciplines he works with will all compete for that prompting work and there obviously won't be enough work for everybody to go around.
The first part of this is using human actors in front of 360 video stages like The Volume [0] to display the sets (which was pioneered by The Mandalorian) and then ultimately the actors themselves will be AI rendered.
And at this point it doesn't matter where this is filmed.
I grew up close by to Pinewood Studios 30+years ago - I can't imagine them putting a lot more investment and development into that lot given where this is all going.
A lot of people, especially left leaning and young people, are very against any AI use and especially for AI pictures or video. For them it's very cringe-worthy. So that would all need to change somehow.
Remember that a lot of the people driving opinions on stuff are the artists that would be displaced by this technology.
Also... Actors aren't hired based on acting skill. AI can't replace the notoriety part of why studios hire actors.
I was at a Brazilian restaurant in the US that had TVs showing a well-known Brazilian singer/guitarist performing, and the middle-school-aged kids at the table next to me were discussing whether it was AI. It was clearly not, to me, but it seems to be getting hard for the next generation to tell it apart. I think they will be craving authentic experiences, but also willing to accept inauthentic ones when they do not have the money for the real thing.
I hope you’re right because I like the film industry a lot. But I worry this will be a repeat of the model versus cgi thing where many of the purists were converted by the cost to get the picture they can seen in their minds get made and seen by the masses.
Things change, and people forget why they were ever any other way. There are definitely resistance forces, but when the overton window flips, people just accept the status quo again.
Once it’s good enough no one will care. A green room in Atlanta can become Venice Beach.
Actors will still be in demand, at least leads and most speaking roles. 3000 extras, that’s going to be AI.
My hope would be this allows for hyper small budget shows to rival what takes millions today. Maybe we can actually get some creative stories instead of Marvel slop fest 43
> My hope would be this allows for hyper small budget shows to rival what takes millions today.
No way. Small creatives will go elsewhere. Unless the structural "winner takes all" economy changes, small players will have no chance, especially when they have to use monopoly expensive tech.
Good writing already left hollywood, hollywood is already repetitive reboot factory.
> AI can't replace the notoriety part of why studios hire actors.
I mean it probably can if a few famous actors license their likeness to be used in AI films. And it's probably only a matter of time until fully AI actors get marketed and licensed for use in AI films. I don't see a fundamental reason why AI actors couldn't build the same kind of notoriety and following.
1. Stagecraft/virtual production is a thing, yes, but the backgrounds are not "AI rendered," they're 3D scenes built in Unreal. They have to be, because they need to dynamically react to the camera moving to create parallax.
2. Yes, some people are using AI to plan scenes. With respect to your relative, those people are not the ones getting hired on large projects. When someone is hired in the film industry, they're hired for their specific taste, creative eye, and opinions. That contribution is literally their whole job. Outsourcing that task to AI is, within the industry, seen as an indication that someone is inexperienced or simply bad at their job.
Crews don't want to work for those people, and audiences don't want to watch content created that way.
3. It's easy to "expect" that "one day" AI might become the way movies are captured if you don't actually understand the limitations of AI video generation versus the demands of filmmakers and the expectations of audiences.
Putting aside the obvious stuff like continuity, shot duration, and resolution...GenAI is not color managed, it's not physically accurate, the results can't be copyrighted and it struggles with anything not in its training data (I.E., genuinely new ideas.)
This is NOT to say that this technology has no future in the film industry, obviously it does. But half the movies at the Oscars last year were shot on film, so the notion that all filmmaking is just going to turn into pixel soup being generated from prompts is just hilarious to everyone actually within the industry.
The future is probably not 100% generated, but probably a mix of generation + animation + motion capture. AI is not going to be able to replicate the deep and affecting performances you get from humans—I fully believe it can recreate some aspects of the visual arts, but no way is it going to get to the point where it will be the best of the best. It may become good enough, which is a thing and will make an impact, but I think creatives will still want that kind of control.
And when we see the edges of that control, people will be interested in seeing things that make it "the old way," part of the reason you see a lot more practical effects these days, and I would include the background-in-unreal backdrops there, because they read as more real than actors in front of a green screen—for reasons that are totally unconscious unless you are highly trained in the differences.
While I do think gen AI is going to change how movies and TV shows get made, anyone telling you it will be a whole hog replacement has not studied the history of multimedia and probably hasn't made anything that required a high-level of vision themselves.
Who cares about Oscars? It's about sales and mind-share. Ticket sales still have not recovered to pre-COVID levels, and they were already in a severe downward trend before the pandemic.
The trend is that increasingly, the entertainment people consume comes from small-time creators. And these small creators have thus far had very little capacity to create truly visually appealing content and take on more ambitious works. And still, they've been taking mindshare from the movie industry.
Increasingly sophisticated experiences are becoming possible for these creators via AI tools. Where do you think this is going? Keep on laughing it up at your award ceremonies, but the audience is moving on.
What will probably happen is that they'll buy the rights to use faces of famous people (actors or not) and use AI (or cheap actors) to do the real scenes.
I still don't understand why there's such a race to the bottom.
If they don't want to make a movie properly, why make it at all? The corner cutting across the board has become so bad that these movies are unwatchable.
This isn't even a new problem. A lot of traditional CGI can still be bad enough to ruin the illusion when it's the state of the art and a lot of attention to detail went into it. We've been circling the drain for decades. I suspect this is why everything became superheroes for a while. The illusion doesn't have to be good to meet that low of a bar.
If the goal is to be as cheap as possible, you might as well release the story as a picture book written by AI.
It's the same forces driving software quality to the bottom. Simply put, enshittification has become the expected norm and there is more money to be made pushing out barely acceptable slop than the higher effort(and cost) of better made stuff.
Also, it's not exactly that the higher effort, better quality stuff is gone as it's been drowned out by the slop. Higher quality things are still being made(e.g. The Odyssey which uses minimal CGI), just much smaller as a percentage of overall.
Earlier unit economics of slop were roughly comparable to higher effort output. It was cheaper, but not dramatically so to push out crap code, so the volume of slop was a bit lower. Now, low effort slop is genuinely low effort due to AI, so the economics work out even accounting for the lower adoption and higher complaints from the users.
Time will tell if this is a temporary phase, or the new, bleak normal.
We've had low effort fraud for all of human history. We absolutely need to revise our definition of fraud to include AI slop. People need to wake the fuck up.
Nobody would accept a low quality product under any other circumstances, so why is AI different? We only have this large scale fascination with it because so many people are completely uneducated in computer science and have no clue how it works or what the limitations are.
The article repeatedly mentions how production moved to Atlanta due to tax incentives. Even that is a race to the bottom, as Disney moved production of Marvel movies out of Atlanta last year to the UK where they got better tax incentives. Even the undercutting cities are being undercut.
The whole tax incentive business is a big race to the bottom. Sports teams also abandon their taxpayer funded stadiums once somebody else offers a better deal.
Sports teams are an interesting one because often times these things go on the ballot and people vote for that. So it Los like people and municipalities have varying reasons for keeping a team. That said sometimes it just doesn’t make business sense for a team to stay and other times a municipality decides it’s not worth the cost to keep a pro team.
I just saw the new Spider-Man movie and there were a ton of notices about Canada-based film credits and from various provinces, too. I'm not sure how these credits work, but maybe spreading the work out to various tax incentivized areas is the current play.
I mean, the VFX part of the Film industry (and actual location shooting to some degree) has been chasing subsidies / tax credits since around 2002 with the Harry Potter movies that mostly were shot and produced (and more specifically the VFX were done in London, rather than in California) in the UK.
Since then Canada and the UK in particular (and NZ and Australia) have had various different fluctuations in subsidies for various parts of filming / doing post-production of movies over the intervening years.
What has yet to be mentioned is why Hollywood, in the first place?
Out of the many reasons, one is quite simple: daylight. This used to be really important with film.
Historically, this was why efforts to move filming to somewhere like 'Scunthorpe, UK' didn't really work, despite tax fiddles, because you need light and some places just don't have it.
But this doesn't matter now, because film has moved on, there is no need to have a massive glowing unshielded nuclear fusion reactor, 93 million miles directly overhead, just to get some lens focused on some bits of silver halide.
My understanding is that an important consideration at the time was that it is very far from New Jersey.
Edison had a lot of early patents for film, and wanted to monopolize the industry.
Film makers in California were far enough away that it was inconvenient for Edison to sue them, both because it required sending people there in person, and because the district courts were favorable.
Tax incentives these days include transferable tax credits. Even if your net tax rate was 0%, you can sell the credit to someone else, typically a bank. IOW, states and countries give you money, not simply give you a tax rate break.
Hollywood accounting rules are regular accounting rules (GAAP). The only reason “Hollywood accounting” is a thing is because of a bunch of actors who didn’t know the difference between “gross” and “net” points got screwed over.
Everyone involved still pays their taxes, but the special purpose vehicle used to organize the production is essentially a passthrough entity.
If you’re not a name, you’re not getting gross points. There’s a wide swathe of participants (actors, writers, directors…) who need to demonstrate risk by taking net points to get signed, and they are routinely screwed by tactics like artificially inflated self-dealing distribution fees that cause the “production” itself to show a paper loss while the IP has generated hundreds of millions of dollars more than has been invested into it.
Movie Money
Understanding Hollywood's (creative) Accounting Practices
9781879505865
This is THE book on the subject.
There's a lot more to it than that. Sometimes productions get creatively charged by the studios costs that may not be directly related to shift losses. Sometimes contracts redefine common terms so your points structure is completely misleading.
I presume that what happens is if a movie is too profitable, other business expenses are shifted to the ledger to reduce the profits. This works because a movie is not a separate accounting entity.
There's also a separate LLC for the parent production company. The production company LLC can also send invoices to the individual movie LLC for services. People can get creative with production companies "overcharging" for various expenses back to the movie's LLC but whatever creative accounting they want to do still needs to ultimately satisfy IRS scrutiny if there's an audit. There are entertainment attorneys that specialize in movie LLCs.
Why would that matter if it's all still a subsidiary of Apple/Amazon/Disney/Comcast/Netflix/Sony?
The relevant taxing authorities would be concerned with the parent companies' financials, not the subsidiaries. Moving money from right hand to left hand doesn't change one's tax liabilities.
"Hollywood accounting" only refers to civil disputes due to insufficiently defined contracts between two businesses (usually actors and producers).
The benefit of “Hollywood accounting” isn’t necessarily tax avoidance; that’s what the tax credits are for. Rather, “Hollywood accounting” provides a way to avoid paying profit-based compensation.
I'd say it is the size of the population, far far too many people try to make it in Los Angeles without any specialized educations, so the car washers have 40 people that dry your windows, and the wait staff jobs are exponentially Orwellian. When I finally moved away, I was living over an hour away from Santa Monica, paying $4K a month for rent, and the entire neighborhood lights up every night like a gangsters' paradise. Street racing, graffiti everywhere, sidewalk food vendors everywhere, the local high school kids are covered in tattoos, including their faces. No thank you.
Yeah, that's fine too. If it weren't fine, there wouldn't be increasing demand. If it became too lopsided and thus expensive to live there, it'd become less desirable. CA has plenty of cheaper cities too.
Video game industry analysts are predicting the same is going to happen to their (my) industry. Contract out more and more work to SEA/China/Poland et.al. It's extra painful because games are relatively cheap to localize (fantasy is universal, it's just translating text and words), so studios based in cheaper parts of the world already have an advantage and they have access to the west markets. Global competition can be brutal.
As an aside, there are large portions of the US where coastal folks dont want to live. These places are 2-4x cheaper (compared to costal game industry hubs) and could be cost competitive.. but it's probably not going to happen.
> For a major blockbuster, tax incentives equate to tens of millions of dollars, freeing up money for name-brand actors, elaborate set pieces, and unremarkable CGI effects.
1) Supply/demand. There's actually a shortage of quality movies relative to what the market will bear, one need only look at the occasional breakout hit like Obsession to see that it's possible to make a ton of money if you understand the demand signals.
2) Demand signals. Median age of someone with greenlight authority is ~62. In the 80s, there were 30-year-olds running entire studios. No disrespect to Boomers, but this business is about marketing cultural products and they have no idea about the culture. This also creates significant demographic headwinds in the job market.
3) Costs. Wages/COL are a part of it, as are unions, star power demand, and how companies like AAPL/AMZN can do streaming as a loss-leaders, which creates a lot of downward pressure. The biggest one is that in theatrical CAC > LTV. You can spend 2x your production budget on marketing and that investment evaporates the first week of showing – there's no real brand loyalty to studios/streamers, especially now that they've commoditized their IP and put it on rotation through the online platforms.
4) Originality. Franchises, sequels, and remakes were roughly three-quarters of 2025, and nine of top ten 2024 worldwide grossers were sequels. This is a result of local minima/risk arbitrage in the studio's portfolios, the bottom line is that people will still show up for a Spiderman movie even if its crappy b/c of the pre-aware IP and there's nothing better out there. There are wonderful exceptions to this of course, like Christopher Nolan and many indie films.
5) Politics. Hard to not deal with politics amidst the outrage cycle, but the easiest way to achieve that is to have a plurality of viewpoints – which you can get if you stop trying to bend beloved IP to contemporary politics and just make new shit!
I worked in Los Angeles doing animation and VFX software for 33 years, and left 5 years ago as the cost of living there made no sense, and my prospects for work became nomadic global chasing of work now taking place in countries with no or ignored labor laws. (As if labor laws are respected in the US anyway.)
Interesting in relation to the article, the author describes working out of the empty Warner Bros. lot; I lived across the street, right next to "The Starlite" (the author will recognize.)
Los Angeles and the entertainment industry's economics are brutal. My wife is exponentially more successful than I, a film she was the VFX producer for won an Oscar, she's an industry player, and still LA is too expensive.
My state, like many others, offers rather large tax credits to make films inside this state.
> the entertainment industry's economics are brutal
A large part of those economics are self-inflicted. The money is "loaned" to the production company at credit card rates with repayment from the receipts from theater viewing years later. Depending on how "big" the movie is, 95-100% of the box office receipts for the first 2 weeks of a theater run go back to the studio (so the movie theater survives on selling popcorn and stuff). This tapers down until the theaters get 100% of ticket sales about 2 months later. The last movie that theaters made profits from displaying was The Full Monty - it got a small release in 1997 but those theaters played the movie for months.
I worked with some guys who did special effects for movies & TV shows.
Super interesting, do you feel this is death by 1000 cuts or can you point at the economics no longer working as small handful of causes (i.e. rise of cost of living in LA, move towards direct to streaming rather than theater releases, AI workflows)?
I think the economics of a global entertainment and wealthy persons' playground is what is "ruining" Los Angeles. Earlier in my time there, I spent time in an uber-wealthy circle and basically encountered Epstein-class people doing what they do with the children of their own staff, and that is when I noped out of that entire social circle. There is not much that can be done when you see such wealth pursuing such agendas and you also see them with celebrities, as well as senior city and state officials. Such people are untouchable as far as the law is concerned. Los Angeles is sick with treating others as disposable, with sexual aspects included. And it is not "Los Angeles", this is human nature without boundaries.
yeah this is what I heard from pretty much everyone in the business down there. since production has gone international LA can't compete with, say, Romania. You can ship out your must-haves and rely on locals for the rest, the savings are enormous.
There's some stuff you can still do in LA but a huge amount of actual shoot days are in countries with lower costs and fewer labor restrictions.
To be fair: the quality of movies produced by Hollywood has gone rapidly downhill already in the 1990s. You only need to compare the movies Quentin Tarantino makes; now personally I think Pulp Fiction is still by far his best work, but I concede that the movies he created lateron were above average (though I would not go as far as many others, who'd rate these in the 8 to 10 point ranges; I'd go more between 6 to 7 or 7.5, largely because there are a few smaller issues cropping up and I always notice these when I compare them with Pulp Fiction, which was really good; actually really well-made).
I noticed this in the 1990s in many movies. For instance, Independence Day - the computer animation pissed me off. I found them bad. Even Terminator 2, where evidently many people say it was great, I was nowhere near as convinced; I found the first terminator better and more "logical" and more consistent, too. But things decayed quickly in the 1990s really. Even movies such as Avatar I find total garbage. And while I am not totally against superhero comic/marvel adaptations (I liked xmen and in particular Hugh Jackman as wolverine), these are always the same formula. Tons of CGI, big fights where nobody knows what is going on, very little thought elsewhere in that formula. There are exceptions, but by and large these things keep on happening. Individual directors manage to break out of the mold (Chris Nolan) but by and large movies really SUCK now compared to the "oldschool days". And while some of this may be due to me becoming more critical, the production quality just sunk. Take movies such as Megalopolis - this captures what is going wrong. It seems as if the whole movie industry has partially collapsed in the last +25 years and they don't really know what to do to change this. The same has happened to games, by the way. It is almost as if only one formula exists only now.
>"If this has all drifted into bummertown, it’s because many of Hollywood’s problems can be traced back to a single economic theory of everything: the rent is too damn high. From there, everything else starts to unravel."
It's really understated just how much this is behind absolutely everything today. The only reason it became normal for SV software companies to pay 100k+ salaries to interns in the 2010s is because half of that had to be handed over to a landlord every month just to have people physically able to show up to your office. This is why Europe and Asia have completely dominated production of all the great AAA games over the last decade; when creative people can afford to live somewhere, all of the sudden you have the resources to truly focus on a product.
> It's really understated just how much this is behind absolutely everything today. The only reason it became normal for SV software companies to pay 100k+ salaries to interns in the 2010s is because half of that had to be handed over to a landlord every month just to have people physically able to show up to your office.
Well, it became normal because there were people (sometimes, but not always, the same people with significant holdings in the software companies) who held a lot of real estate and knew if they wanted that real estate to be more valuable, they'd need to force people to use it, meaning show up to work every day.
SV is the failure it is today because it concentrated all of the talent in one place needlessly. Something the rest of the country explicitly worked to not see happen.
Also, a lot of real estate is owned by the Hollywood investors or their close friends, so this is a circular economy where they get rich, then buy property in that place and get even richer with real estate increasing in value. The same thing happened in Silicon Valley, Wall Street, and many other places.
That rent is simply a tax (tribute) paid from people (peasants) to property owners (lords.) It's why people who own capital are the wealthiest that they've ever been in history despite producing nothing and increasingly being of severely subnormal intelligence.
The distraction is that a lot of people think that they are property owners who are not. The bank owns your property, you're a tax farmer. The people who own the bank are your bosses. They are granted the right by the state to loan you the money to buy an overvalued property, without actually having the money to loan you, and on the condition that the property that you bought is theirs if you miss a repayment on the money that they loaned you that that they didn't have.
This is also why building more housing does not work in the long term to lower rents. We have a surplus of housing, just like we have a surplus of commercial property. But we have arbitrarily changed expectations for the margins of finance capital. The tax farmers (most landlords) are a distraction so that their tiny margins can be pointed at - because the money was made from the property when they purchased it. Now they're behind the 8-ball trying to make the payments, until they lose their job to a better tax farmer.
If you build 9000 shitty units at the site of a grocery store, you can raise all of the rents around them because the 9000 shitty units are now an escape valve against displacement and dislocation. The next step is to raise the rents on the 9000 shitty units, by any means necessary, even if it means keeping half of them empty for a decade, and using them to write off your taxes on other properties you own.
The fact that there's no grocery store and no parking for 9000 units? Your problem.
YIMBY activism is entirely financed by these people, which is why it's so loud.
When corporations grow to a certain size, they become banks.
The same thing kind of happens to industries when they get dominated by a few large players. The large players are banks. The core of the industry becomes a form of finance.
Hollywood is now the financial capital of the film industry, not where films are made. Hollywood finances films.
I absolutely don’t want to imply there’s any one reason that he led us to where we are. This comment isn’t to try to undercut or malign some great data and investigation. But an article on this topic that literally does not include the word union in the entire text is not painting a full picture.
You can fairly point out that unions still exist in Georgia, and that the UK and other European locations have robust worker protections - this isn’t a situation of union work vs. non-union work. But the extent to which unions in California have a stranglehold on the movie industry is absolutely part of the story here.
Given that New Zealand actually changed its laws to prevent unionisation in order to ensure The Hobbit was made there, I think unions are definitely a factor.
I have no idea how strong the unions related to film are in the UK. It varies a lot between industries.
But weren't they all made outside of Hollywood? Emeryville, around Europe and the UK, and then the UK for Toy Story 5, Odyssey, and Spiderman respectively?
Which is cool, but also likely an outlier due to Christopher Nolan's usage of practical effects vs CGI. His clout probably helped with the funding of that tbh.
Hollywood makes slop now, the last movie I saw was some iteration of Mission Impossible where the genius agent defeats the all powerful AI and that just felt like lack of imagination.
Nothing new. When I was in college down in LA I lived in a very small town founded by stunt people. Probably 80% of the people there were in the stunt business. Every few months they were off to another state or country for filming. Hollywood is just for the studio execs now, everyone else flies to whatever country offers the best tax breaks for them to film.
They go to some pretty incredible lengths too, A friend of mine and his dad own a stunt company that works explicitly with semi-trucks. Pretty much every time you see a semi in a stunt in a movie it's either my friend or his dad driving it. They will ship these semi's to foreign countries instead of film locally because the tax incentives are greater than moving entire production companies around the world.
According to this article about 1/3rd as many movies are made in LA since the 90s. They were only making 30% of films in LA in the 90s so your experience still matches with the data but having 2/3rds of the local film production move elsewhere is significant.
A few days ago I visited the little picturesque town of Hope, British Columbia. While driving down the Main Street, I saw a dozen chainsaw carvings of wildlife. I thought, why does that one look like Rambo? Found out the first movie was filmed there in 1982. The movie took place in the fictional town of Hope, Washington. When the movie begins, you see Sylvester Stallone walking into town under the real “Welcome to Hope” sign that was in the Canadian town at that time.
An interesting read but also feels like the rearranging of the deckchairs on the Titanic given the forthcoming disruption from generative AI in this industry.
I spent some time last month with a relative in the industry (camera operator and producer) and he already uses some very sophisticated AI to map out scenes and shots in gen ai full video before they shoot IRL. It's mostly a cost saving exercise as well as occasionally helping to improve the quality of the deliverable.
He is totally expecting that the next shift will be that gen ai video will become good enough to be considered the master (ie no need to film) and he is already transferring his skills as a camera operator into prompting and AI assisted scene design.
He knows that many different disciplines he works with will all compete for that prompting work and there obviously won't be enough work for everybody to go around.
The first part of this is using human actors in front of 360 video stages like The Volume [0] to display the sets (which was pioneered by The Mandalorian) and then ultimately the actors themselves will be AI rendered.
And at this point it doesn't matter where this is filmed.
I grew up close by to Pinewood Studios 30+years ago - I can't imagine them putting a lot more investment and development into that lot given where this is all going.
[0] https://en.wikipedia.org/wiki/StageCraft
A lot of people, especially left leaning and young people, are very against any AI use and especially for AI pictures or video. For them it's very cringe-worthy. So that would all need to change somehow.
Remember that a lot of the people driving opinions on stuff are the artists that would be displaced by this technology.
Also... Actors aren't hired based on acting skill. AI can't replace the notoriety part of why studios hire actors.
Actions matter more than words. Sure, they're complaining about AI, but consuming AI content more and more.
It's a bit like people who complain that everything on the news is always bad. Everyone hates it, yet it's what everyone consumes.
I was at a Brazilian restaurant in the US that had TVs showing a well-known Brazilian singer/guitarist performing, and the middle-school-aged kids at the table next to me were discussing whether it was AI. It was clearly not, to me, but it seems to be getting hard for the next generation to tell it apart. I think they will be craving authentic experiences, but also willing to accept inauthentic ones when they do not have the money for the real thing.
I hope you’re right because I like the film industry a lot. But I worry this will be a repeat of the model versus cgi thing where many of the purists were converted by the cost to get the picture they can seen in their minds get made and seen by the masses.
Things change, and people forget why they were ever any other way. There are definitely resistance forces, but when the overton window flips, people just accept the status quo again.
Once it’s good enough no one will care. A green room in Atlanta can become Venice Beach.
Actors will still be in demand, at least leads and most speaking roles. 3000 extras, that’s going to be AI.
My hope would be this allows for hyper small budget shows to rival what takes millions today. Maybe we can actually get some creative stories instead of Marvel slop fest 43
> My hope would be this allows for hyper small budget shows to rival what takes millions today.
No way. Small creatives will go elsewhere. Unless the structural "winner takes all" economy changes, small players will have no chance, especially when they have to use monopoly expensive tech.
Good writing already left hollywood, hollywood is already repetitive reboot factory.
> AI can't replace the notoriety part of why studios hire actors.
I mean it probably can if a few famous actors license their likeness to be used in AI films. And it's probably only a matter of time until fully AI actors get marketed and licensed for use in AI films. I don't see a fundamental reason why AI actors couldn't build the same kind of notoriety and following.
> I don't see a fundamental reason why AI actors couldn't build the same kind of notoriety and following.
Can AI's trash a room at Hotel Marmont? Dump their girlfriends when said girlfriends turn 25? Become Scientologists?
Man, this is so misguided....
1. Stagecraft/virtual production is a thing, yes, but the backgrounds are not "AI rendered," they're 3D scenes built in Unreal. They have to be, because they need to dynamically react to the camera moving to create parallax.
2. Yes, some people are using AI to plan scenes. With respect to your relative, those people are not the ones getting hired on large projects. When someone is hired in the film industry, they're hired for their specific taste, creative eye, and opinions. That contribution is literally their whole job. Outsourcing that task to AI is, within the industry, seen as an indication that someone is inexperienced or simply bad at their job. Crews don't want to work for those people, and audiences don't want to watch content created that way.
3. It's easy to "expect" that "one day" AI might become the way movies are captured if you don't actually understand the limitations of AI video generation versus the demands of filmmakers and the expectations of audiences. Putting aside the obvious stuff like continuity, shot duration, and resolution...GenAI is not color managed, it's not physically accurate, the results can't be copyrighted and it struggles with anything not in its training data (I.E., genuinely new ideas.)
This is NOT to say that this technology has no future in the film industry, obviously it does. But half the movies at the Oscars last year were shot on film, so the notion that all filmmaking is just going to turn into pixel soup being generated from prompts is just hilarious to everyone actually within the industry.
The future is probably not 100% generated, but probably a mix of generation + animation + motion capture. AI is not going to be able to replicate the deep and affecting performances you get from humans—I fully believe it can recreate some aspects of the visual arts, but no way is it going to get to the point where it will be the best of the best. It may become good enough, which is a thing and will make an impact, but I think creatives will still want that kind of control.
And when we see the edges of that control, people will be interested in seeing things that make it "the old way," part of the reason you see a lot more practical effects these days, and I would include the background-in-unreal backdrops there, because they read as more real than actors in front of a green screen—for reasons that are totally unconscious unless you are highly trained in the differences.
While I do think gen AI is going to change how movies and TV shows get made, anyone telling you it will be a whole hog replacement has not studied the history of multimedia and probably hasn't made anything that required a high-level of vision themselves.
Who cares about Oscars? It's about sales and mind-share. Ticket sales still have not recovered to pre-COVID levels, and they were already in a severe downward trend before the pandemic.
The trend is that increasingly, the entertainment people consume comes from small-time creators. And these small creators have thus far had very little capacity to create truly visually appealing content and take on more ambitious works. And still, they've been taking mindshare from the movie industry.
Increasingly sophisticated experiences are becoming possible for these creators via AI tools. Where do you think this is going? Keep on laughing it up at your award ceremonies, but the audience is moving on.
This is only going to replace movies that were already using CGI.
If every movie defaulted to CGI over natural settings, you wouldn't have stuff like the Odyssey made...which is setting sales records.
What will probably happen is that they'll buy the rights to use faces of famous people (actors or not) and use AI (or cheap actors) to do the real scenes.
People want to see expensive effort in movies they have to buy tickets to see and AI is the opposite of effort.
I still don't understand why there's such a race to the bottom.
If they don't want to make a movie properly, why make it at all? The corner cutting across the board has become so bad that these movies are unwatchable.
This isn't even a new problem. A lot of traditional CGI can still be bad enough to ruin the illusion when it's the state of the art and a lot of attention to detail went into it. We've been circling the drain for decades. I suspect this is why everything became superheroes for a while. The illusion doesn't have to be good to meet that low of a bar.
If the goal is to be as cheap as possible, you might as well release the story as a picture book written by AI.
It's the same forces driving software quality to the bottom. Simply put, enshittification has become the expected norm and there is more money to be made pushing out barely acceptable slop than the higher effort(and cost) of better made stuff.
Also, it's not exactly that the higher effort, better quality stuff is gone as it's been drowned out by the slop. Higher quality things are still being made(e.g. The Odyssey which uses minimal CGI), just much smaller as a percentage of overall.
Earlier unit economics of slop were roughly comparable to higher effort output. It was cheaper, but not dramatically so to push out crap code, so the volume of slop was a bit lower. Now, low effort slop is genuinely low effort due to AI, so the economics work out even accounting for the lower adoption and higher complaints from the users.
Time will tell if this is a temporary phase, or the new, bleak normal.
The acceptance of the slop is the problem.
We've had low effort fraud for all of human history. We absolutely need to revise our definition of fraud to include AI slop. People need to wake the fuck up.
Nobody would accept a low quality product under any other circumstances, so why is AI different? We only have this large scale fascination with it because so many people are completely uneducated in computer science and have no clue how it works or what the limitations are.
The article repeatedly mentions how production moved to Atlanta due to tax incentives. Even that is a race to the bottom, as Disney moved production of Marvel movies out of Atlanta last year to the UK where they got better tax incentives. Even the undercutting cities are being undercut.
The whole tax incentive business is a big race to the bottom. Sports teams also abandon their taxpayer funded stadiums once somebody else offers a better deal.
Yep. See the Kansas City Chiefs.
Clark Hunt is the largest recipient of welfare in the entire region.
Sports teams are an interesting one because often times these things go on the ballot and people vote for that. So it Los like people and municipalities have varying reasons for keeping a team. That said sometimes it just doesn’t make business sense for a team to stay and other times a municipality decides it’s not worth the cost to keep a pro team.
Not that you're wrong, but I could have sworn that Marvel production was always based in the UK.
Post-production is very much still in California though.
I just saw the new Spider-Man movie and there were a ton of notices about Canada-based film credits and from various provinces, too. I'm not sure how these credits work, but maybe spreading the work out to various tax incentivized areas is the current play.
I mean, the VFX part of the Film industry (and actual location shooting to some degree) has been chasing subsidies / tax credits since around 2002 with the Harry Potter movies that mostly were shot and produced (and more specifically the VFX were done in London, rather than in California) in the UK.
Since then Canada and the UK in particular (and NZ and Australia) have had various different fluctuations in subsidies for various parts of filming / doing post-production of movies over the intervening years.
What has yet to be mentioned is why Hollywood, in the first place?
Out of the many reasons, one is quite simple: daylight. This used to be really important with film.
Historically, this was why efforts to move filming to somewhere like 'Scunthorpe, UK' didn't really work, despite tax fiddles, because you need light and some places just don't have it.
But this doesn't matter now, because film has moved on, there is no need to have a massive glowing unshielded nuclear fusion reactor, 93 million miles directly overhead, just to get some lens focused on some bits of silver halide.
My understanding is that an important consideration at the time was that it is very far from New Jersey.
Edison had a lot of early patents for film, and wanted to monopolize the industry.
Film makers in California were far enough away that it was inconvenient for Edison to sue them, both because it required sending people there in person, and because the district courts were favorable.
Why Hollywood?
Because Edison and Patents in New York which was the original centre for filmmaking in America.
https://en.wikipedia.org/wiki/Motion_Picture_Patents_Company...
Film in Atlanta has dropped significantly.
We had a boom from 2010-2022, but post streaming era the gravity has moved to the UK and Eastern Europe.
Why though? I thought Hollywood had their own accounting rules which always meant movies made a loss. What are they paying the tax on?
Tax incentives these days include transferable tax credits. Even if your net tax rate was 0%, you can sell the credit to someone else, typically a bank. IOW, states and countries give you money, not simply give you a tax rate break.
Hollywood accounting rules are regular accounting rules (GAAP). The only reason “Hollywood accounting” is a thing is because of a bunch of actors who didn’t know the difference between “gross” and “net” points got screwed over.
Everyone involved still pays their taxes, but the special purpose vehicle used to organize the production is essentially a passthrough entity.
If you’re not a name, you’re not getting gross points. There’s a wide swathe of participants (actors, writers, directors…) who need to demonstrate risk by taking net points to get signed, and they are routinely screwed by tactics like artificially inflated self-dealing distribution fees that cause the “production” itself to show a paper loss while the IP has generated hundreds of millions of dollars more than has been invested into it.
Movie Money Understanding Hollywood's (creative) Accounting Practices 9781879505865 This is THE book on the subject. There's a lot more to it than that. Sometimes productions get creatively charged by the studios costs that may not be directly related to shift losses. Sometimes contracts redefine common terms so your points structure is completely misleading.
I presume that what happens is if a movie is too profitable, other business expenses are shifted to the ledger to reduce the profits. This works because a movie is not a separate accounting entity.
>This works because a movie is not a separate accounting entity.
Each movie is set up as a separate legal business entity (LLC). That's the SPV. https://www.google.com/search?q=each+hollywood+movie+is+a+se...
There's also a separate LLC for the parent production company. The production company LLC can also send invoices to the individual movie LLC for services. People can get creative with production companies "overcharging" for various expenses back to the movie's LLC but whatever creative accounting they want to do still needs to ultimately satisfy IRS scrutiny if there's an audit. There are entertainment attorneys that specialize in movie LLCs.
Why would that matter if it's all still a subsidiary of Apple/Amazon/Disney/Comcast/Netflix/Sony?
The relevant taxing authorities would be concerned with the parent companies' financials, not the subsidiaries. Moving money from right hand to left hand doesn't change one's tax liabilities.
"Hollywood accounting" only refers to civil disputes due to insufficiently defined contracts between two businesses (usually actors and producers).
The benefit of “Hollywood accounting” isn’t necessarily tax avoidance; that’s what the tax credits are for. Rather, “Hollywood accounting” provides a way to avoid paying profit-based compensation.
soon they will be filming in mumbai. already setup for movie making.
The cost of housing is probably the #1 reason and, in my opinion, California’s biggest problem.
California as a whole is still doing pretty well but high housing cost is slowly pulling out the rug from under the state.
But the California legislature does know that and has forced many cities to start building housing but there is still a lot work still in flight.
I'd say it is the size of the population, far far too many people try to make it in Los Angeles without any specialized educations, so the car washers have 40 people that dry your windows, and the wait staff jobs are exponentially Orwellian. When I finally moved away, I was living over an hour away from Santa Monica, paying $4K a month for rent, and the entire neighborhood lights up every night like a gangsters' paradise. Street racing, graffiti everywhere, sidewalk food vendors everywhere, the local high school kids are covered in tattoos, including their faces. No thank you.
Cities don't need ever-increasing populations to thrive.
Both populations and supply can remain static as demand pushes up prices and swaps lower earners for high net worth people.
Classic supply/demand.
Yeah, that's fine too. If it weren't fine, there wouldn't be increasing demand. If it became too lopsided and thus expensive to live there, it'd become less desirable. CA has plenty of cheaper cities too.
Video game industry analysts are predicting the same is going to happen to their (my) industry. Contract out more and more work to SEA/China/Poland et.al. It's extra painful because games are relatively cheap to localize (fantasy is universal, it's just translating text and words), so studios based in cheaper parts of the world already have an advantage and they have access to the west markets. Global competition can be brutal.
As an aside, there are large portions of the US where coastal folks dont want to live. These places are 2-4x cheaper (compared to costal game industry hubs) and could be cost competitive.. but it's probably not going to happen.
>For studio executives, it means making do with smaller crews, outsourcing production overseas, and, eventually, using AI to replace some human labor.
Ah so this might be how "shorter working hours" looks on the ground. "Leisure and Culture"'s share of the pie has actually shrunk abit:
https://archive.md/2026.06.04-075622/https://www.theguardian...
That's world, not US, so it might also be that foreign production teams are not counted as "leisure and culture" in their own jurisdictions lol
Original pdf here, p11 https://globaljusticeproject.wid.world/www-site/uploads/2026...
> For a major blockbuster, tax incentives equate to tens of millions of dollars, freeing up money for name-brand actors, elaborate set pieces, and unremarkable CGI effects.
Love the dig at the end.
To paraphrase Syndrome [0]: When everything is a explosion, then nothing will be an explosion.
[0] _ https://en.wikipedia.org/wiki/List_of_The_Incredibles_charac...
My take on the problems including cost sickness:
1) Supply/demand. There's actually a shortage of quality movies relative to what the market will bear, one need only look at the occasional breakout hit like Obsession to see that it's possible to make a ton of money if you understand the demand signals.
2) Demand signals. Median age of someone with greenlight authority is ~62. In the 80s, there were 30-year-olds running entire studios. No disrespect to Boomers, but this business is about marketing cultural products and they have no idea about the culture. This also creates significant demographic headwinds in the job market.
3) Costs. Wages/COL are a part of it, as are unions, star power demand, and how companies like AAPL/AMZN can do streaming as a loss-leaders, which creates a lot of downward pressure. The biggest one is that in theatrical CAC > LTV. You can spend 2x your production budget on marketing and that investment evaporates the first week of showing – there's no real brand loyalty to studios/streamers, especially now that they've commoditized their IP and put it on rotation through the online platforms.
4) Originality. Franchises, sequels, and remakes were roughly three-quarters of 2025, and nine of top ten 2024 worldwide grossers were sequels. This is a result of local minima/risk arbitrage in the studio's portfolios, the bottom line is that people will still show up for a Spiderman movie even if its crappy b/c of the pre-aware IP and there's nothing better out there. There are wonderful exceptions to this of course, like Christopher Nolan and many indie films.
5) Politics. Hard to not deal with politics amidst the outrage cycle, but the easiest way to achieve that is to have a plurality of viewpoints – which you can get if you stop trying to bend beloved IP to contemporary politics and just make new shit!
I worked in Los Angeles doing animation and VFX software for 33 years, and left 5 years ago as the cost of living there made no sense, and my prospects for work became nomadic global chasing of work now taking place in countries with no or ignored labor laws. (As if labor laws are respected in the US anyway.)
Interesting in relation to the article, the author describes working out of the empty Warner Bros. lot; I lived across the street, right next to "The Starlite" (the author will recognize.)
Los Angeles and the entertainment industry's economics are brutal. My wife is exponentially more successful than I, a film she was the VFX producer for won an Oscar, she's an industry player, and still LA is too expensive.
My state, like many others, offers rather large tax credits to make films inside this state.
> the entertainment industry's economics are brutal
A large part of those economics are self-inflicted. The money is "loaned" to the production company at credit card rates with repayment from the receipts from theater viewing years later. Depending on how "big" the movie is, 95-100% of the box office receipts for the first 2 weeks of a theater run go back to the studio (so the movie theater survives on selling popcorn and stuff). This tapers down until the theaters get 100% of ticket sales about 2 months later. The last movie that theaters made profits from displaying was The Full Monty - it got a small release in 1997 but those theaters played the movie for months.
I worked with some guys who did special effects for movies & TV shows.
Super interesting, do you feel this is death by 1000 cuts or can you point at the economics no longer working as small handful of causes (i.e. rise of cost of living in LA, move towards direct to streaming rather than theater releases, AI workflows)?
I think the economics of a global entertainment and wealthy persons' playground is what is "ruining" Los Angeles. Earlier in my time there, I spent time in an uber-wealthy circle and basically encountered Epstein-class people doing what they do with the children of their own staff, and that is when I noped out of that entire social circle. There is not much that can be done when you see such wealth pursuing such agendas and you also see them with celebrities, as well as senior city and state officials. Such people are untouchable as far as the law is concerned. Los Angeles is sick with treating others as disposable, with sexual aspects included. And it is not "Los Angeles", this is human nature without boundaries.
yeah this is what I heard from pretty much everyone in the business down there. since production has gone international LA can't compete with, say, Romania. You can ship out your must-haves and rely on locals for the rest, the savings are enormous.
There's some stuff you can still do in LA but a huge amount of actual shoot days are in countries with lower costs and fewer labor restrictions.
Explains why I have slowly stopped watching live action. I can't stand the cognitive dissociation that needs to happen for me watch.
Simple one light is different in NYC and Toronto.
In the next decade, AI will be gutting every industry associated with hollywood other than nvidia and tmsc.
To be fair: the quality of movies produced by Hollywood has gone rapidly downhill already in the 1990s. You only need to compare the movies Quentin Tarantino makes; now personally I think Pulp Fiction is still by far his best work, but I concede that the movies he created lateron were above average (though I would not go as far as many others, who'd rate these in the 8 to 10 point ranges; I'd go more between 6 to 7 or 7.5, largely because there are a few smaller issues cropping up and I always notice these when I compare them with Pulp Fiction, which was really good; actually really well-made).
I noticed this in the 1990s in many movies. For instance, Independence Day - the computer animation pissed me off. I found them bad. Even Terminator 2, where evidently many people say it was great, I was nowhere near as convinced; I found the first terminator better and more "logical" and more consistent, too. But things decayed quickly in the 1990s really. Even movies such as Avatar I find total garbage. And while I am not totally against superhero comic/marvel adaptations (I liked xmen and in particular Hugh Jackman as wolverine), these are always the same formula. Tons of CGI, big fights where nobody knows what is going on, very little thought elsewhere in that formula. There are exceptions, but by and large these things keep on happening. Individual directors manage to break out of the mold (Chris Nolan) but by and large movies really SUCK now compared to the "oldschool days". And while some of this may be due to me becoming more critical, the production quality just sunk. Take movies such as Megalopolis - this captures what is going wrong. It seems as if the whole movie industry has partially collapsed in the last +25 years and they don't really know what to do to change this. The same has happened to games, by the way. It is almost as if only one formula exists only now.
>"If this has all drifted into bummertown, it’s because many of Hollywood’s problems can be traced back to a single economic theory of everything: the rent is too damn high. From there, everything else starts to unravel."
It's really understated just how much this is behind absolutely everything today. The only reason it became normal for SV software companies to pay 100k+ salaries to interns in the 2010s is because half of that had to be handed over to a landlord every month just to have people physically able to show up to your office. This is why Europe and Asia have completely dominated production of all the great AAA games over the last decade; when creative people can afford to live somewhere, all of the sudden you have the resources to truly focus on a product.
Cue https://worksinprogress.co/issue/the-housing-theory-of-every...
> It's really understated just how much this is behind absolutely everything today. The only reason it became normal for SV software companies to pay 100k+ salaries to interns in the 2010s is because half of that had to be handed over to a landlord every month just to have people physically able to show up to your office.
Well, it became normal because there were people (sometimes, but not always, the same people with significant holdings in the software companies) who held a lot of real estate and knew if they wanted that real estate to be more valuable, they'd need to force people to use it, meaning show up to work every day.
SV is the failure it is today because it concentrated all of the talent in one place needlessly. Something the rest of the country explicitly worked to not see happen.
Also, a lot of real estate is owned by the Hollywood investors or their close friends, so this is a circular economy where they get rich, then buy property in that place and get even richer with real estate increasing in value. The same thing happened in Silicon Valley, Wall Street, and many other places.
That rent is simply a tax (tribute) paid from people (peasants) to property owners (lords.) It's why people who own capital are the wealthiest that they've ever been in history despite producing nothing and increasingly being of severely subnormal intelligence.
The distraction is that a lot of people think that they are property owners who are not. The bank owns your property, you're a tax farmer. The people who own the bank are your bosses. They are granted the right by the state to loan you the money to buy an overvalued property, without actually having the money to loan you, and on the condition that the property that you bought is theirs if you miss a repayment on the money that they loaned you that that they didn't have.
This is also why building more housing does not work in the long term to lower rents. We have a surplus of housing, just like we have a surplus of commercial property. But we have arbitrarily changed expectations for the margins of finance capital. The tax farmers (most landlords) are a distraction so that their tiny margins can be pointed at - because the money was made from the property when they purchased it. Now they're behind the 8-ball trying to make the payments, until they lose their job to a better tax farmer.
If you build 9000 shitty units at the site of a grocery store, you can raise all of the rents around them because the 9000 shitty units are now an escape valve against displacement and dislocation. The next step is to raise the rents on the 9000 shitty units, by any means necessary, even if it means keeping half of them empty for a decade, and using them to write off your taxes on other properties you own.
The fact that there's no grocery store and no parking for 9000 units? Your problem.
YIMBY activism is entirely financed by these people, which is why it's so loud.
I think there is a huge aspirational factor here too. A lot of people think "I will be rich one day".
People also feel secure if they have wealth, even if its assets that are illiquid. If you sell your house you have to buy another or pay rent.
Lots of things like this have happened.
Silicon Valley stopped making computers, or any kind of manufacturing. Who knows, maybe some black projects exist.
But I was told that some underground utilities in the area were non-standard, not just water, power, sewer, but also nitrogen or more.
When corporations grow to a certain size, they become banks.
The same thing kind of happens to industries when they get dominated by a few large players. The large players are banks. The core of the industry becomes a form of finance.
Hollywood is now the financial capital of the film industry, not where films are made. Hollywood finances films.
Because of financial incentives. And it makes critics sad when films aren’t shot where their story is based. Saved you reading it.
I absolutely don’t want to imply there’s any one reason that he led us to where we are. This comment isn’t to try to undercut or malign some great data and investigation. But an article on this topic that literally does not include the word union in the entire text is not painting a full picture.
You can fairly point out that unions still exist in Georgia, and that the UK and other European locations have robust worker protections - this isn’t a situation of union work vs. non-union work. But the extent to which unions in California have a stranglehold on the movie industry is absolutely part of the story here.
Given that New Zealand actually changed its laws to prevent unionisation in order to ensure The Hobbit was made there, I think unions are definitely a factor.
I have no idea how strong the unions related to film are in the UK. It varies a lot between industries.
Ok, what part then?
I mean, kind of good maybe?
As someone not in the USA who loves movies, it is too easy to get sick of LA and desert locations everywhere.
A lot of non-LA/desert scenes are LA sets.
I wonder if this will change as Hollywood is eyeing three $1B+ box office earners back to back to back this summer
But weren't they all made outside of Hollywood? Emeryville, around Europe and the UK, and then the UK for Toy Story 5, Odyssey, and Spiderman respectively?
A decent amount of odyssey was actually filmed on the universal backlot
Which is cool, but also likely an outlier due to Christopher Nolan's usage of practical effects vs CGI. His clout probably helped with the funding of that tbh.
They are still building new soundstages as we speak.
Unlikely.
Money is money, and if you can film in UK where you get tax incentives and lower costs there's no reason to film in Hollywood.
Hollywood makes slop now, the last movie I saw was some iteration of Mission Impossible where the genius agent defeats the all powerful AI and that just felt like lack of imagination.