Los Angeles commercial production dropped 18% year-over-year and 40% below its five-year average as producers move shoots to Texas, Prague, and Mexico City for better tax incentives. AI video tools and the shift to phone-based ads are shrinking demand for traditional crews, and California's $750M film tax credit excludes commercials entirely.
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Ad work flees Los Angeles and Hollywood safety net Tears in Hollywood commercial shoots have long been the steady bread and butter that kept crews working between movies, films and TV shows. Now that safety net is ripping apart. The New York Times reports that Los Angeles commercial production fell 18% from last year and 40% below the five year average. Producer Diane McCarter says she's now filming in Glasgow, Prague, Mexico City and Toronto. Millions of dollars leaving California money. Other states, like Texas, offer huge incentives, While California's expanded $750 million film and TV tax credit leaves commercials out entirely. Matt Miller of the Producers association calls that shortsighted. Radical Media's Frank Sherma says rising location fees and a lack of community support are driving shoots away. Producer Ali Brown says clients now demand out of state locations even when Los Angeles crews are better and cheaper. Before incentives, the question for Sacramento will California fix the hole or watch the safety net unravel completely? Okay, so what's the real message here about all the commercial producers, directors, assistant producers, gaffers not having any work in Southern California anymore? The problem is cost. They cost too much. Other locations around the world are dangling money, free money to producers to go there. But the biggest problem of all, artificial intelligence, is now doing a faster, cheaper, sometimes better job of creating captivating video. If you've made a living in Los Angeles or New York making commercials, it may be time to dust off your resume, go back to school and find another industry. Because days may be numbered where you are. Okay, let's dig a little deeper here. I don't relish telling people that they're going to become unemployed, but you just look at the numbers, the onslaught, it is unrelenting. 40% decline in just the last handful of years. Double digit declines this year. And let me say this, I have a lot of respect for people who have the creativity and, and the patience to make a great 30 second commercial. I don't have that patience. I want to do it once and be done with it and put it out there. I used to be a commercial maker. I did political ads for many campaign cycle. I produced hundreds of ads. Frankly, I wasn't that good because I didn't have that patience, that craftsmanship. The problem is these days you can't just film great ad, spend $3 million on an ad making it something beautiful and then spending $4 million to run it during the Super Bowl. And then you see all of a sudden $50 million more of sales for your product and everybody wins. Those days are gone. For so many ads these days, people are looking at it on a little cell phone. So the things that make a huge difference on a movie screen or a big TV screen are completely lost when someone's looking at it on a cell phone or a tablet. And yes, there are people who like watching TVs. I have a big TV. I like watching things on my 100 inch TV. But I'm not the target demo for most advertisers. Advertisers want to reach young people 18 to 34, 25 to 55. And those people, by and large are consuming media on their phone. All the nuance of having the set director figure out, okay, this piece is supposed to be from 1968, but this looks like a 1972 clock. Let's, let's spend another $5,000 finding the perfect clock. It's all lost. It doesn't mean it has no impact on the public when shifting opinions and generating more sales. The Mad Max or not the Mad Max, the TV show with Jon Hamm, the advertising show is simply not reality anymore. That was supposed to be the 1960s. And we're not going to live in that world where advertisers can sit around and smoke filled rooms, drink martinis, come up with a brilliant idea, and then spend six months creating a TV commercial that airs once or twice and changes the market. One thing is certain. Whether you're a small business or a large business, you gotta have a lot more ads. There's quantity now because you can target every single demo. And the idea of reaching the whole world with one ad doesn't work anymore. Yes, there are a few shows, live sports, where you can still reach people for the most part. That's not what marketers are doing. So look, Southern California has had a tough, tough time in the last few years between all the fires, between an invasion by a military and with so many people who've had nice middle class, upper middle class jobs, and the video production, movie production were losing their jobs or seeing their income drop by 2/3. It's a tough time and I have a lot of sympathy for them. But if they are looking for some magic legislative change through tax cuts, I don't think tax cuts are going to do it. If you're a company and you're told, okay, if you're the head of marketing for Procter and Gamble and you're told, okay, you've been spending, let's say, $100 million on TV and video production and now your boss says, hey, your budget's now 7 million. And instead of creating 400 ads a year, we need 4,000 ads a year, a tax credit. Reducing the cost of anyone commercial but by 30% isn't going to help. You're going to have to use artificial intelligence programs to create your ads. When you do shoot stuff, you're going to have to do things where sorry to say this because I'm a fan of unions. I think they help build a middle class in America. You're going to have to use people who aren't unionized or you will lose your job as the marketing director at a place like Procter and Gamble. So there's no simple solution for that that I can see.
