The Thought Police: How Hollywood, the industry of dreams, turned into an economic nightmare

The film and TV industry of Los Angeles, which was once the beating heart of global entertainment, has become a shadow of its former self. The numbers are grim: in the past two years, more than 42,000 jobs have been lost—almost a third of the workforce—and television productions have dropped from 18,000 shooting days in 2021 to fewer than 8,000 in 2024. The conclusion is clear: Hollywood is not just in crisis—it is in terminal decline.

Hollywood: Neighborhood or city?

Hollywood, we should remember, is a neighborhood in central Los Angeles rather than an independent city. It cannot survive on its own. Once farmland, Hollywood was a separate city only between the years 1903–1910, until it merged with Los Angeles to ensure a water supply. The first film studios arrived just after the merger, in the 1910s, and were concentrated in the "Hollywood Boulevard" area. 

Although most studios have long since moved from Hollywood itself to nearby cities like Burbank and Culver City, the name "Hollywood" has remained shorthand for the entire film industry, much the way "Wall Street" stands for American finance. Today, the entire Los Angeles area relies almost entirely on a single industry: catering companies that feed film crews, production and lighting houses, music recording studios, prop warehouses, costume shops, technical equipment suppliers, and transportation businesses—and the reality on the ground is tough.

Projects are being halted, employees laid off

This crisis didn’t happen overnight; it’s a gradual decline that started in 2019. Streaming companies like Netflix invested billions in new content to attract subscribers, but in 2022 they realized they were burning cash without profits and began to cut back. By March 2023, the number of productions had already dropped dramatically. Paul Audley, president of FilmLA, said in the spring of 2025: “We’ve just come out of the worst year in the industry, except for the coronavirus period, in terms of filming. And as we finish the first quarter of 2025, it looks like this year is even worse.” The prediction came true: last year ended with only 19,694 filming days—the lowest since the pandemic year.

Music recording studios for films reported in 2025 an average of only a few days of activity, compared to about 140 days in 2022. Even businesses not directly connected to Hollywood felt the impact: restaurants that relied on catering orders for film crews saw their orders come to a complete halt, stores that rented out costumes went through dry seasons lasting consecutive months, and even parking lots that worked with productions had to lay off employees due to lack of work.

The DEI and the price of compliance 

Alongside the economic crisis, a punishingly strict progressive politics of representation has changed the rules of the game. Since 2024, any film seeking to compete for the "Best Picture" Oscar must meet at least two out of four DEI (Diversity, Equity, and Inclusion) criteria, according to the standards of the Academy of Motion Picture Arts and Sciences. According to Standard A, for example, the film must include a lead actor from a minority group, ensure that at least 30% of secondary actors are women, minorities, members of the LGBTQ community, or people with disabilities, or the film itself must focus on the stories of these groups.

The paradox is that iconic films like "Schindler's List" (1993), which focuses solely on Jews and not on the horrors visited by the Nazis on other oppressed groups, or "The Godfather" (1972) and "Gladiator" (2000), which mainly center on the stories of white men, as well as a variety of other films that won the "Best Picture" award and are still considered works of art by today's standards. And yet they would likely have struggled to meet the above requirements had they been submitted today. The Oscars, always a self-consciously prestigious brand, have also become an exercise in compliance. The problem is that when films are planned around quotas rather than artistic questions, quality suffers—and the audience, which in recent years has stayed away from movie theaters, is sending the clearest message.

The impact of technology and artificial intelligence

The underlying problem is much deeper than the writers' and actors' strikes in recent years or Oscar quotas. Technology is changing the rules: artificial intelligence can already write basic scripts, create images of dead actors, and even replace living actors with digital pictures. Producers have realized they can create content at significantly lower costs with fewer workers. The union strikes, encouraged by California's liberal leadership, only exposed how fragile the system already was—and instead of leading to a swift recovery, in 2023 they accelerated the shift to production in other states, where there are fewer labor complications and more tax benefits.

They fled to Toronto

In the first quarter of 2025, only 24 out of 87 filmed projects were produced in Los Angeles, while 46% of American movies began filming outside the United States. Los Angeles still holds the top spot in the world with 18.3% of productions, but its closest competitor is within the United States—Georgia in the South, with 9.8% of productions. Filming in Toronto or Vancouver in nearby Canada can be 30-40% cheaper than in Los Angeles, and the production will still receive generous tax benefits from the local government.

The problem is that it's not just in California.

Hollywood is considered a liberal stronghold, and therefore it represents a broader problem for the Democratic Party: Americans do not like punishing success, and they do not like when this is done to others through high taxes that paralyze industries. Gavin Newsom, the governor of California and the leading contender among Democrats to be the party’s presidential candidate, is at the forefront of this policy. Some of the highest taxes in the United States, a rise in crime, and a homeless problem that has spiralled out of control—all are all laid at Newsom's door and the Democratic Party that controls the state and the city. Of course, it’s not only from Hollywood that creators are fleeing, a similar picture can be found in New York, but that is a different story.

Los Angeles built its entire economy around a single industry, like Cleveland with the steel industry or Detroit with the automobile industry. “Hollywood” was the perfect example of centralization: everyone in the same place, in the same climate, with the same suppliers. It worked perfectly as long as there was a reason to stay in Los Angeles. But when the reasons to leave outweigh the reasons to stay, disintegration happens quickly. Writers, editors, directors, and composers move to other cities, and with them go the customers of restaurants, clothing stores, and apartment suppliers.

Antisemitism and boycotts

Of course, Los Angeles was not spared from the wave of antisemitism that swept America since October 7. As antisemitic incidents surged across the United States, Hollywood—in whose creation Jews played a central role from the outset—became a stage for criticism of Israel that often crossed the line into blatant antisemitism. The Israeli actress Gal Gadot became a prime target: pro-Palestinian demonstrations disrupted her Hollywood Walk of Fame ceremony in March 2025, as pro-Palestinian and pro-Israel crowds clashed at the Hollywood Boulevard. 

Calls to boycott Disney's "Snow White" film because of Gadot's participation spread on social media, with messages such as "she is a trained killer who served in the depraved Israeli forces." Many Jewish talents in the industry felt that the climate was no longer welcoming. Some of the best talents—Jewish directors, producers, and writers—are considering their future elsewhere. Gadot herself attributed part of "Snow White's" box office failure to the antisemitic campaign against her.

What Hollywood can't forget

The irony is that just when Hollywood needs creativity and artistic freedom in order to survive, it is sinking into a system of quotas and requirements that restrict who can tell which story, and to whom. The policies intended to encourage creative diversity have become an obstacle to creativity itself. Instead of searching for the best stories, studios look for stories tick the right diversity boxes. The result: formulaic movies that feel stillborn and predictable, ones for which there is no reason to leave the house, especially not with today's prices. Anyway, they will arrive on some streaming service in a few weeks, and if not, who will remember?

And as if all this wasn't not enough, the city is still dealing with recovery efforts after the devastating fires that destroyed entire residential neighborhoods in January 2025. Hundreds of industry workers lost their homes, productions were halted, and insurance companies are already raising insurance costs for filming in the area during the lengthening fire season. Los Angeles has already proven that it can survive and renew itself, but the data tells a worrying story. If California continues to burden Hollywood with regulations, and Hollywood keeps insisting on producing content that caters to diversity quotas instead of the imagination, the famous sign may turn into a monument to an industry that destroyed itself.