Hollywood Built the Movie Business. Now Other States Want It
For more than a century, California stood as the unquestioned center of film and television production. Hollywood became synonymous with entertainment, attracting studios, actors, directors, writers, and crews from around the world. But today, a growing war is underway for movie production, and California may be losing ground. Other states, Canadian cities, and even foreign countries are aggressively competing to lure productions away with lucrative tax incentives, cheaper operating costs, and promises of fewer bureaucratic headaches. California, long the king of the industry, is now fighting to hold onto its crown.
At the center of this battle is one simple idea: money.
Film production incentives have become one of the most powerful forces shaping where movies and television shows are made. These incentives often come in the form of rebates or tax credits that return a percentage of qualified in-state spending, including wages, lodging, rentals, post-production, and crew costs. More than 35 states now offer some version of these incentives, effectively turning production decisions into a high-stakes bidding war.
States are openly competing for Hollywood business. Georgia offers a 20% tax credit plus an additional 10% uplift. Louisiana can go as high as 40%. Kentucky offers between 30% and 35%. New York provides 30%, while New Jersey now offers between 30% and 35%, with digital post-production incentives climbing as high as 40%. Even Texas lawmakers recently boosted film incentives to $300 million every two years through 2035 as cities like Houston launch local incentive programs to compete for productions.
The message is unmistakable: if California will not make filming financially attractive, someone else will.
New Jersey’s Rise: The Garden State Goes to War
Perhaps no state better represents Hollywood’s changing geography than New Jersey.
Once an unlikely player in the entertainment business, New Jersey has aggressively positioned itself as one of America’s hottest production destinations. Officials there openly boast about beating California at its own game.
“We’re kicking California’s ass,” New Jersey state Sen. Declan O’Scanlon bluntly told the Hollywood Reporter, highlighting the state’s aggressive strategy to pull productions eastward.
The numbers help explain the confidence.
New Jersey offers up to 35% tax credits for production expenses and up to 40% for digital post-production work. It has committed to keeping incentives active through 2039, signaling long-term stability to studios looking to make billion-dollar decisions.
The state has also attracted enormous investments. Netflix recently broke ground on a sprawling $900 million production complex at Fort Monmouth, a former Army base transformed into a 500,000-square-foot movie hub complete with sound stages, post-production suites, offices, and backlots. The project reportedly received roughly $387 million in tax credits. Netflix executives openly credited those incentives as a major reason for choosing New Jersey.
Netflix co-CEO Ted Sarandos framed the move as both emotional and financial.
“I was in love with this idea from the very first conversation,” he said while emphasizing the project’s expected job creation and economic impact.
New Jersey’s ambitions go beyond a single studio. According to reports, the state authorized as much as $430 million annually in incentives through 2049 and has tied enhanced incentives to long-term commitments from major companies such as Netflix, Paramount, and Lionsgate. Productions are increasingly moving there because executives believe the math simply works better.
One executive summarized the shift plainly: “For anything that makes sense to be ‘tri-statey,’ we’re now shooting in New Jersey.”
New Jersey’s rise also comes at New York’s expense. New York officials admit they lost more than 20 productions to neighboring New Jersey over just 18 months because of stronger incentives.
Vancouver and Canada: Hollywood North Keeps Growing
California is not only battling rival states. It is also competing against foreign countries, particularly Canada.
The California Legislative Analyst’s Office warns that California’s biggest competition increasingly comes from outside the United States, especially Canada, the United Kingdom, and Australia, all of which often offer more generous incentives alongside lower labor costs. As a result, these places have gained market share at America’s expense.
Vancouver, long known as “Hollywood North,” has benefited heavily from this trend. While the supplied material focuses broadly on Canada rather than a detailed Vancouver case study, the report specifically notes that Canada’s incentives are generally more generous than most American programs and are helping shift production away from California. Combined with lower costs, this has made Canadian production increasingly attractive for studios trying to cut budgets.
For Hollywood executives facing investor pressure and rising costs, saving millions by filming in Canada rather than Los Angeles has become difficult to ignore.
California Strikes Back
California sees the threat clearly.
The state’s own Legislative Analyst’s Office acknowledges that California’s dominance is slipping. Since 2010, California’s share of U.S. motion picture employment has fallen from over 54% to roughly 46%, with the decline becoming more volatile after COVID-19 and the 2023 writers’ and actors’ strikes. Production activity has struggled to recover, and lawmakers fear that continued erosion could weaken California’s status as the center of entertainment.
Governor Gavin Newsom and lawmakers are responding with a major escalation.
The governor proposed increasing California’s annual film tax credit cap from $330 million to $750 million beginning in fiscal year 2025-26, instantly placing California among the most generous state programs in America. The idea is simple: if productions are leaving because of money, California must become more competitive on money.
California also points to high-profile wins to prove the strategy can work.
Perhaps the biggest example is The Mandalorian & Grogu, a major Star Wars production that California officials describe as the largest blockbuster in the history of the state’s tax credit program. Lucasfilm plans to shoot the film entirely in California, with officials projecting roughly $166 million in economic activity through qualified wages and expenditures. The broader round of tax credit projects is projected to generate approximately $408 million in economic activity and support thousands of jobs.
Governor Newsom argued that California remains unmatched for filmmaking.
“From Earth to Arvala-7 to Mandalore, there is no place to film like California,” Newsom said while promoting the program. “We’re making sure the state continues producing, while generating billions of dollars for our communities, creating thousands of good-paying jobs, and training our future workforce.”
Lucasfilm echoed that view, stating it was “thrilled” to film in California and praised the state’s world-class crews. Producer Charles Roven also praised the tax credit, saying it allows productions to work with local talent while letting workers “go home to their own bed at the end of day!”
Critics Say Taxpayer Subsidies Are a Losing Deal
Not everyone believes Hollywood deserves a taxpayer rescue.
Critics in New York have blasted subsidy programs as corporate giveaways. Watchdog groups point to studies suggesting state incentives often return less than a dollar for every dollar spent. New York’s own financial review reportedly found only about 31 cents returned per dollar of subsidy, while critics calculated taxpayers spent roughly $75,000 for every supported film job. One critic called the system a “pay-to-play toilet.”
California’s Legislative Analyst’s Office expresses similar caution. It acknowledges that tax credits probably increase production activity and may help California maintain its market share, but it also warns there is “weak evidence” that such programs improve the broader economy overall. The state faces looming budget deficits, and expanding subsidies could deepen fiscal pressures.
Still, California lawmakers face a difficult reality. Hollywood may be iconic, but productions today are mobile. Studios increasingly choose locations based on spreadsheets, not sentiment.
That means California is no longer competing with just itself. It is competing with New Jersey, Georgia, Texas, Canada, and anywhere else willing to roll out tax credits, cheaper costs, and open arms.
In this production war, Hollywood may still be the king, but the challengers are closing in fast.
