Last year, 45% of all U.S. films and scripted television shows were shot internationally, a significant jump from just 33% in 2022, according to the Los Angeles Times. This dramatic shift reveals a fundamental challenge to the United States' traditional role as the primary hub for its own film and television content. The visual spectacle and narrative ambition once exclusively tied to American soil now frequently find their backdrops and production crews across international waters, painting a vivid picture of evolving industry dynamics. Filmmakers and television creators are increasingly seeking locations and specialized infrastructure outside the U.S. borders, driven by a complex interplay of cost efficiencies, diverse scenic offerings, and established international production ecosystems. This trend extends beyond blockbuster features to encompass a broad spectrum of scripted television, indicating a systemic reorientation of where American stories are being brought to life. The growing proportion of projects filmed abroad suggests a deep-seated change in how the entertainment industry operates, moving away from a purely domestic production model. The implications for local economies, creative industries, and the very fabric of storytelling within the U.S. are profound, as the flow of production capital and job opportunities increasingly bypasses traditional American production centers. This exodus highlights a critical juncture for domestic film and television, forcing a reassessment of strategies to retain creative talent and economic activity.
Despite this accelerating exodus, many U.S. states are escalating their film and television tax credit programs, attempting to draw projects back with increasingly aggressive incentives. However, the nation's overall production spending is simultaneously decreasing as more projects migrate overseas, creating a palpable tension between localized efforts and the sweeping currents of global economic forces. This dichotomy presents a stark challenge: individual states are fighting intense battles for economic relevance, yet the collective national picture suggests a losing war. The financial incentives, while substantial, appear to be a reactive measure against a more profound, irreversible shift in global entertainment industry economics.
Without a coordinated national strategy or more innovative, precisely targeted state-level approaches, the U.S. risks further erosion of its dominance in global film and TV production. This situation suggests that state-level tax incentives are proving to be a costly, ineffective band-aid against a fundamental shift in global production economics. This trend is actively consolidating production in specific, highly competitive international hubs, positioning them as the new centers of entertainment creation and development, thereby leaving many U.S. states in a losing battle for sustained relevance in the global media industry.
The Global Production Exodus
The United States still commanded the largest share of global production spending in 2025, registering $12.15 billion, but this figure represented a significant 20% decrease from 2024, according to the Los Angeles Times. The 20% decrease from 2024 signals a contraction in the nation's overall production capacity and a clear loss of market share in the global arena. The once-unquestioned financial supremacy of the U.S. entertainment sector is visibly eroding, with fewer projects choosing domestic locations for their principal photography and post-production. This downward trend impacts thousands of jobs across various disciplines, from set construction to visual effects artistry, creating a ripple effect throughout supporting industries. The economic output generated by these productions, which traditionally fueled local economies, is now being diverted elsewhere, prompting concerns about the long-term health of Hollywood's traditional infrastructure.
In stark contrast, the United Kingdom emerged as the second-highest production spending country in 2025, with an impressive $6.97 billion, marking a robust 15% increase, as also reported by the Los Angeles Times. The U.K.'s notable surge in market share underscores a clear and growing competitive threat to U.S. dominance. The U.K.'s consistent growth positions it not merely as an alternative, but as a primary destination for high-budget international features and television series. Its soundstages, skilled crews, and competitive incentive programs are attracting a steady stream of projects that might have once remained within U.S. borders. The disparity in these trends reveals that while the U.S. maintains a leading position in absolute spending, its trajectory is unequivocally downward, while key international hubs are experiencing significant upward momentum. This shift is not merely a redistribution of projects but a strategic re-centering of global entertainment production in specific, well-resourced regions. The implications extend to infrastructure development, the nurturing of local talent, and the long-term sustainability of domestic production ecosystems. As the industry recalibrates, the United States faces the pressing challenge of not only stemming its own decline but also contending with the rapid expansion of international rivals, which are actively consolidating market share and establishing themselves as the new centers of entertainment production, leaving U.S. states in a losing battle for relevance.
States Fight Back with Billions
Individual U.S. states are responding to the competitive pressure by significantly increasing their own film and television incentives. Texas, for example, passed a comprehensive film-incentives package allocating $1.5 billion from 2026 to 2036 to moving-image productions, according to Houston Public Media. Texas's $1.5 billion long-term investment reflects a commitment to establishing the state as a major production hub, aiming to draw a consistent flow of projects and associated economic activity. Similarly, Illinois saw its film production expenditures reach a record $703 million in 2025, as reported by Deadline. The figures of Texas's $1.5 billion and Illinois's $703 million illustrate how aggressively states are competing for projects, pouring billions into their local economies in an attempt to retain or attract production. The sheer scale of these investments underscores the perceived value of the entertainment industry to state treasuries and local job markets.
However, despite these record-breaking localized gains, such as Illinois's impressive $703 million, these individual state successes are insufficient to offset the national 20% decline in overall U.S. production spending. This fragmented domestic market struggles to compete with unified international strategies, demonstrating that while specific states might experience localized booms, these gains do not prevent a significant national decline. The tension between localized growth and national contraction highlights the limitations of state-level efforts against broader global forces. State-level tax incentives are proving to be a costly, ineffective band-aid against a fundamental shift in global production economics, as the collective impact of these programs fails to reverse the larger trend of projects moving abroad.
| State | Incentive Program Commitment | Reported Production Spending (2025) |
|---|---|---|
| Texas | $1.5 billion (over next decade) | N/A |
| Illinois | Specific program size not detailed | $703 million |
Data compiled from Houston Public Media and Deadline reports.
Targeted Incentives and New Frontiers
In an effort to differentiate their offerings and attract specific types of projects, U.S. states are exploring innovative approaches beyond simple cash rebates. Illinois, for instance, has introduced a 5% tax credit for film and television projects that adhere to certified green production standards, according to Crain's Chicago Business. Illinois's 5% tax credit aims to appeal to environmentally conscious productions, aligning economic benefits with sustainability goals and potentially attracting a growing segment of the industry focused on responsible filmmaking practices. This strategic move creates a unique selling proposition, drawing projects that prioritize eco-friendly operations alongside financial benefits. By offering this specialized incentive, Illinois seeks to cultivate a niche market and establish itself as a leader in sustainable production.
Similarly, California's updated film and TV tax incentive program has expanded its scope, now offering credits to animated feature films, a significant move reported by the Porterville Recorder. California's expanded program attempts to retain niche segments of the entertainment industry that might otherwise seek more favorable conditions elsewhere, particularly in countries with established animation studios and incentives. States are increasingly exploring such targeted incentives to remain competitive.ngly refining their tax credit programs to target specific types of productions or align with broader policy goals, such as environmental sustainability, to gain a competitive edge. This evolution in incentive design reflects a deeper understanding of the diverse needs of the modern entertainment industry, moving beyond a one-size-fits-all approach to attract specialized creative work.
Yet, the overall national trend indicates these tailored efforts are not addressing the core reasons for projects moving abroad. These reasons often encompass a broader calculus of overall production costs, access to diverse locations, a more favorable regulatory environment, and the established, unified infrastructure of international hubs, which individual state-level incentives struggle to counter. The shift represents a more complex challenge than simply offering financial inducements; it involves a global re-evaluation of production logistics and creative partnerships. This strategic pivot by individual states, while innovative, often operates within a larger economic framework that continues to favor international consolidation, suggesting that even highly refined incentives may not be enough to reverse the broader global movement.
The Shifting Landscape for Production Hubs
The global competition for film and television production is not uniform, leading to varied impacts on different international hubs. Canada, a longtime destination for U.S. productions, attracted $4.61 billion in high-budget production spending last year, but this figure represented a 13% decrease from the previous year, according to the Los Angeles Times. This decline suggests that even established international competitors are not immune to the broader shifts in global production economics, potentially facing new pressures from emerging or more aggressive hubs. Canada's dip highlights the intense, fluid nature of global competition, where even a historically strong market can experience a contraction as other regions enhance their offerings.
In contrast, within the U.S. California's targeted incentive program continues to yield results, with its latest round selecting 38 projects, including a notable number of animated films, as reported by the Porterville Recorder. This selective success highlights that while the overall U.S. industry faces challenges, specific states with well-defined and niche-focused incentives can still attract a significant number of projects. The global competition for production is not uniform, with some regions like Canada experiencing declines even as others, like California with its targeted approach, see continued project selection. This uneven distribution of production activity underscores the complexity of the global entertainment market, where success increasingly depends on specialized offerings and strategic incentive design rather than broad, undifferentiated appeals. The movement of projects is less a general dispersion and more a consolidation in specific, highly competitive international hubs, alongside targeted successes in U.S. states. This dynamic challenges the notion of a monolithic global production shift, revealing a more nuanced reality where some regions gain while others, including former strongholds, lose ground.
The Economic Ripple Effect
The relocation of film and television production creates significant economic benefits for the winning international regions, extending far beyond the immediate production budgets.
- International feature film and TV production spending contributed approximately $7.8 billion to the U.K. economy last year, according to the Los Angeles Times.
This substantial figure illustrates the broader economic implications of attracting major entertainment projects. It encompasses not only direct spending on cast, crew, and equipment but also indirect benefits such as tourism, local business support, and the development of specialized infrastructure and talent pools. The U.K.'s success in drawing this level of investment positions it as a robust global hub, fostering a sustainable creative industry ecosystem. The construction of new soundstages, the growth of post-production facilities, and the expansion of training programs all contribute to a self-reinforcing cycle of industry development. For the United States, this means that every project moving overseas represents a loss of not just production dollars but also the associated ripple effects that stimulate local economies. The long-term impact includes diminished job opportunities, reduced tax revenues, and a potential weakening of domestic creative industries. This consolidation of production in specific global hubs, exemplified by the U.K.'s significant economic gains, leaves U.S. states in a losing battle for relevance, as the benefits of a thriving production sector are diverted elsewhere. The challenge for U.S. policymakers is to understand that the competition is not just for individual productions, but for the entire economic ecosystem that grows around them, creating lasting prosperity for the winning regions.
What This Means for US Production
The ongoing shifts in global film and television production present a complex picture for the United States, marked by both national challenges and localized successes.
- The U.S. experienced a 20% decrease in overall production spending last year, despite still leading all countries with $12.15 billion, indicating a significant loss of market share to international competitors.
- International production in the U.K. increased by 15% to $6.97 billion in 2025, demonstrating a consolidation of market share in specific global hubs.
- Illinois's film production expenditures reached a record $703 million in 2025, representing a 25% jump from pre-pandemic levels, proving that targeted state incentives can achieve localized economic growth.
- Forty-five percent of U.S. films and scripted television shows were shot internationally last year, up from 33% in 2022, highlighting a fundamental reorientation of production logistics.
These trends suggest that while the overall U.S. film and TV production industry faces a decline in national spending and a continued exodus of projects overseas, strategic, well-designed state-level tax incentives can still generate substantial local economic activity. The challenge lies in scaling these individual successes to counter the broader global forces that favor consolidation in highly competitive international centers. The future of domestic production hinges on the ability of states and industry stakeholders to adapt to these shifting dynamics, potentially by fostering unique production niches or creating more collaborative, national strategies. For instance, by Q3 2026, the ongoing competition from international hubs like the U.K. will likely necessitate a re-evaluation of current U.S. state incentive models, particularly given the U.K.'s sustained growth in attracting major productions and its $7.8 billion contribution to its economy last year.
