Hollywood Unions Warn of 25-Year Decline in U.S. Production

A powerful coalition of Hollywood labor organizations, including IATSE, the Directors Guild of America, and SAG-AFTRA, published a striking report on Monday that highlights a long-term erosion of the U.S. film and television production market share. Prepared by advisory firm EY, the analysis looks back over the past quarter-century to quantify a trend that has accelerated significantly since the peak of the streaming boom. According to the report, major studios spent roughly 74 percent of their film production budgets within the United States twenty-five years ago. Today, that domestic share has plummeted to just 42 percent. A similarly severe contraction is evident in the television sector, where domestic spending has dropped from 94 percent down to 64 percent over the same timeframe. This steady outward migration of production activity has profound implications for American craftspeople, technicians, and local economies that historically relied on a robust studio system.

The release of the report coincides with active legislative discussions in Washington, where members of Congress are considering whether to introduce a federal production incentive ranging between 20 and 30 percent. Proponents of this federal intervention argue that existing state-level subsidies are no longer sufficient to counter the aggressive, lucrative tax credits and financial incentives provided by foreign jurisdictions such as Canada, the United Kingdom, and various European nations. Lawmakers have grown increasingly alarmed by the sharp downturn in domestic production employment following the end of the so-called Peak TV era in 2022. However, the EY report emphasizes that the globalization of entertainment production is not merely a recent post-pandemic phenomenon, but rather a structural shift that has been quietly unfolding since the turn of the millennium.

It is important to note that the overall size of the entertainment industry has expanded drastically during this 25-year period. In the film sector, total production spending by major studios more than doubled, rising from $3 billion to $7 billion annually. Meanwhile, television spending experienced an astronomical explosion, surging from $933 million to $8.4 billion per year. The authors of the report point out that the U.S. is essentially capturing a smaller percentage of a much larger global pie. The television landscape, in particular, has undergone profound transformations due to the rise of streaming platforms, which completely altered production scales, budgets, season lengths, and distribution models, creating unique challenges for historical comparisons.

The study deliberately restricts its scope to films with budgets of $5 million or more in 2025 dollars, alongside television episodes meeting specific length and cost thresholds. One of the most revealing findings of the research is that the exodus of production is heavily driven by high-budget feature films. For the top 25 most expensive films analyzed, the U.S. market share dropped precipitously from 74 percent to 34 percent over the 25-year span. Although these blockbuster projects represented only a quarter of all films produced by major studios, they accounted for half of the total crew positions and two-thirds of all production expenditures. This concentration underscores how major tentpole films spearhead the broader international migration of Hollywood budgets.

Ultimately, the report calculates that if the United States had managed to maintain its historical market share over the last 25 years, an additional $4 billion would be injected into the domestic economy annually for film and television production. While the study deliberately refrains from exploring the complex web of reasons why productions move overseas, it provides undeniable empirical data to fuel the ongoing debate in Washington. As Hollywood labor unions and industry stakeholders press for federal intervention, the findings serve as a stark reminder of how rapidly the global entertainment landscape has shifted away from its traditional southern California roots.