This Sunday marks a significant event for Los Angeles as Tinseltown’s stars gather in large numbers for the Academy Awards at the Dolby Theatre on Hollywood Boulevard, celebrating the unique magic that this historic city produces.
However, a closer examination of the nominees for the Best Picture Oscar reveals an unsettling trend: none of the ten nominated films were produced on the iconic soundstages or studio lots traditionally associated with Hollywood. While some post-production work took place in Los Angeles, these films were primarily or entirely shot in other locations, from Marty Supreme in New York to Sinners in Louisiana and Hamnet in the United Kingdom.
The Hollywood film industry, centered in Los Angeles County, is experiencing a significant decline. Production days recorded in Los Angeles have decreased dramatically, plummeting from 36,792 in 2022 to a mere 19,694 in 2025, as per research conducted by FilmLA. Additionally, approximately 41,000 workers vital to the industry's operations departed between 2022 and 2024—some voluntarily and others due to circumstances beyond their control. The industry's power dynamics have shifted, with Ted Sarandos, co-CEO of streaming powerhouse Netflix, now emerging as a central figure rather than a traditional studio executive.
Lights going out in Hollywood
Following a brief recovery from the pandemic, film and television production in Los Angeles has sharply declined. Shoot days have fallen by nearly 50% since 2021.
YEARLY PRODUCTION SHOOT DAYS IN LOS ANGELES
Chart shows the number of shoot days in Los Angeles since 2017
SOURCE: FilmLA
This trend persists even after Paramount Skydance's David Ellison successfully outbid Netflix for the historic studio Warner Bros. Discovery. The implications of this high-profile acquisition may further jeopardize Hollywood's status as a leading economic force in Los Angeles, with Ellison pledging to uncover over $6 billion in “synergies” as part of the deal. He has indicated that most of these cuts will impact “nonlabor sources,” leading the local film community to brace for substantial layoffs.
In addition, the looming threat of artificial intelligence revolutionizing the filmmaking process raises apprehensions about the industry's future. The specter of potential collapse, reminiscent of other American sectors hollowed out by globalization and technological advancements, hangs heavily in Los Angeles. Michael Lynton, former CEO of Sony Pictures Entertainment, recently described the current situation during a return visit to Hollywood: “The sunny version of Detroit,” he remarked, noting, “It was crickets. There’s nothing going on.”
The decline of an entire industry is a troubling narrative, irrespective of perspective. What makes the situation in Hollywood even more significant is the historical context. Movies have long served as a flagship American export, transmitting not only entertainment but also a unique American worldview globally. Currently, the U.S. earns over $20 billion annually from film and television exports, a figure that now lags behind other commodities like oil, vehicles, and industrial machinery. Nevertheless, these quintessentially American products—blockbuster films, binge-worthy series, and an array of charismatic characters—play a pivotal role in shaping the nation’s “soft power” internationally, diffusing American culture, language, style, and values across the globe in a way no shipping container filled with liquefied natural gas can replicate. Phrases such as “an offer he can’t refuse” or “I don’t think we’re in Kansas anymore” resonate universally, signaling their origin and meaning.
The cluster effect
For a century, Hollywood stood as one of the world’s premier examples of an “industry cluster.” Harvard Business School professor Michael Porter, who coined the term in 1998, characterized such clusters as “critical masses—in one place—of unusual competitive success in particular fields.” Other renowned examples include high-performance automotive firms in southern Germany, pharmaceutical entities near Philadelphia, and prestigious footwear brands in northern Italy. Porter specifically highlighted “Silicon Valley and Hollywood” as the most distinguished clusters in his writings.
These clusters thrive due to the creation of virtuous circles: when the best talent and companies within an industry congregate in a specific region, it attracts more players who seek to engage with the ecosystem. As Porter noted, those joining the cluster gain invaluable knowledge, relationships, and motivation that competitors outside the cluster struggle to replicate. This proximity leads to an upward cycle, inviting further industry players and reinforcing the industry’s strength.
Hollywood evolved as an industry cluster after early 20th-century filmmakers migrated from New York and New Jersey to avoid Thomas Edison’s stringent enforcement of patents concerning motion‑picture equipment. They were also drawn to Southern California's affordable land and consistent sunshine. Between 1910 and the early 1920s, many independent producers converged into vertically integrated studios—Paramount, MGM, Warner Bros., Fox, and Universal—centralizing production around Los Angeles and cultivating a dense network of backlots, sound stages, laboratories, equipment suppliers, and skilled labor. Furthermore, global distribution and exhibition were managed from Los Angeles. By the late 1920s and 1930s, this concentration had formed a self-reinforcing cluster: the Hollywood “Golden Age” studio system produced an extensive volume of films annually, cultivated internationally celebrated stars, and attracted talent and suppliers from around the world, transforming Hollywood from a mere geographical location into a global dream factory.
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