If you walk down Sunset Boulevard today, you'll notice a strange quiet. Major Hollywood studios now spend just forty-two percent of their film production budgets on movies shot primarily or partly in the United States. Back in 1999, that number sat comfortably at seventy-four percent. A fresh study conducted by EY on behalf of seven major entertainment unions—including the Directors Guild of America, IATSE, and SAG-AFTRA—lays bare a stark reality. Hollywood hasn't just gone global; it's practically checked out of its home country.
For decades, the standard assumption was simple. Big-budget blockbusters, indie darlings, and network television shows would naturally anchor themselves in Los Angeles, New York, or thriving regional hubs like Atlanta. But the ground shifted beneath our feet. When you look at the top twenty-five highest-budget films each year, the domestic share of spending collapsed from seventy-four percent down to thirty-four percent over the same twenty-five-year stretch. Television production followed a similar path, dropping from ninety-four percent down to sixty-four percent. If you enjoyed this piece, you might want to look at: this related article.
So why did the soundstages empty out?
The Global Tax Incentive Race
Money talks, and right now, foreign governments are shouting louder than American lawmakers. Around sixty-five countries currently offer aggressive tax incentives, cash rebates, and financial kickbacks designed to lure Hollywood productions away from U.S. soil. If you're a studio executive holding a two-hundred-million-dollar budget, you have a fiduciary duty to your shareholders. Spending that capital in places offering deep tax relief makes financial sense on paper, even if it means shipping local crews out of work. For another angle on this event, refer to the latest coverage from Financial Times.
Countries across Europe, Asia, and parts of the British Commonwealth built entire studio ecosystems with modern stages, skilled technicians, and government-backed subsidies. When London, Vancouver, or Budapest offer a frictionless production experience paired with massive savings, staying home feels like a financial penalty.
The Human Cost Behind the Numbers
Data points on a spreadsheet hide the real fallout. Thousands of grip, electric, camera, and post-production professionals across America face chronic underemployment. The EY study estimates that if domestic spending shares had remained consistent with 1999 levels, the U.S. economy would see roughly four billion dollars more spent annually on film and television production combined.
Local vendors suffer too. Equipment rental houses, catering companies, hardware stores, and local dry cleaners all feel the squeeze when a major tentpole feature packs its bags for overseas lots. It's a trickle-down effect that hits working-class artisans long before it registers in studio quarterly earnings reports.
Can Domestic Production Make a Comeback?
Politicians and industry leaders are scrambling for fixes. Lawmakers have floated proposals for federal film tax incentives to level the playing field, arguing that America risks losing its crown jewel cultural export entirely. Industry trade groups estimate that a robust federal incentive could generate billions in gross economic value and support thousands of full-time jobs.
Yet, tax credits alone won't solve the structural bloat inside major studios. Ballooning budgets, escalating labor costs, and heavy regulations make domestic shooting painfully expensive before cameras even roll. If the United States wants to win back its own industry, it has to offer more than nostalgia. It needs a modernized, competitive framework that makes shooting at home practical again.
Don't expect an overnight turnaround. The studios built global pipelines that run too smoothly to dismantle on a whim. Until the math changes, expect Hollywood to keep booking one-way tickets abroad.
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