The Substance, a best picture nominee at this year's Academy Awards, is set in Hollywood, paying homage to the star-studded area by showcasing iconic city imagery from palm trees to the walk of fame.
The movie was entirely filmed in France.
In fact, not a single one of this year's 10 nominees for best picture was filmed in California, so other U.S. and international regions benefitted from the business.
This year's Academy Awards, held on Sunday at the Dolby Theater in Hollywood, is an example of California's low standing in the global entertainment sector, as producers increasingly choose other locations because of financial incentives. California and Los Angeles are in a bruising battle for business, with overall film and television production in greater Los Angeles down 5.6% in 2024, according to FilmLA, a nonprofit group that tracks the industry.
In the latest act to boost that standing, state officials have introduced legislation that would broaden California’s Film & Television Tax Credit Program, even beyond a doubling of incentives proposed by the governor last year, to include greater incentives for more broad filming uses.
The new pieces of legislation, SB 630 and AB 1138, call for broadening and expanding the state tax credit program to allow productions to have a higher percentage of their costs qualify for tax relief and "to expand the kinds of productions that qualify for the program, focusing on the kinds of productions that we are losing and that provide the best jobs," said Assemblymember Rick Chavez Zbur, who introduced the bills along with assemblymember Rick Chavez Zbur and State Senator Ben Allen at a press conference in the past week.
The effort is the latest of several initiatives from policy makers and industry stakeholders to return Hollywood to its former luster. In October, the governor announced plans to double the state’s annual movie and television tax incentive cap to $750 million per year in mid-2025, making it the second-largest tax incentive program in the United States, trailing only Georgia, which has no cap. Meanwhile industry groups have formed to encourage productions to return to Los Angeles to support industry workers whose homes were damaged in the recent Eaton and Palisades fires.
Tinseltown's tax play
The current Film & Television Tax Credit Program has resulted in a loss of $7.7 billion in economic activity, 28,000 jobs and $2.6 billion in labor income, Zbur said, with producers opting for more affordable regions.
The latest bills call for changes to the existing structure of the tax credit program before new rules are issued in July. Such changes include allowing more types of film work — such as streaming series, independent films, and post-production services — to benefit from the program, Zbur said.
Newsom's proposal to double the value of the incentive program will allow more productions to access the program, Zbur said. But increasing the dollars in the credit program is not enough to bring back the thousands of jobs being lost to Georgia, Canada, Australia, New York and now Texas and Nevada, he added.
The new bills aim to make the films more like the United Kingdom, where another best picture contender and box-office sensation, Wicked, was filmed. In the United Kingdom, productions like Wicked get tax breaks of up to 26% off on money spent in the country. The California program now offers about 20%, with increases up for negotiation.
"If we let this industry die, everything is going to get worse," Senator Allen said at the press conference, in part referring to current fire rebuilding efforts in the county.
Soundstage operators are spending billions to develop new properties and update existing ones to ensure their facilities are top notch as competition heats up. The city of Los Angeles is working with developers to streamline completion of 7 million square feet of new or upgraded space, according to the mayor's office.
While there's no guarantee that increased production will have a notable effect on office leasing, meanwhile, the sector has traditionally played an important role in filling local office buildings, according to CoStar Group Senior Director of Market Analytics Ryan Patap.