Tax Incentives Won't Solve Hollywood's Problems

Tax Incentives Won't Solve Hollywood's Problems

Andy Marken March 18, 2025

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Taking the wrong boy was a lucky break. In other words, this doesn't count. But you have to pay anyway. You're a fool to pay, but pay you must. Ginjiro Takeuchi, High and Low, Toho Studios, 1963

California, or more specifically LA (Los Angeles), or even more specifically Hollywood, has been the center of the video content industry since C.B. DeMille directed/shot the first feature-length movie in the area in 1913.

It took ten years before city fathers christened the area with its now famous (infamous) Hollywood sign (originally Hollywoodland but )

Since then, the town has been the self-anointed movie/show capital of the world.

For years, it did an outstanding job of hiding secrets and hyping the overnight success of stars, directors/producers, production crew members and post-production magicians who stuck it out and survived.

TV was going to be the movie industry's demise, but it only boosted the industry.

The networks needed content to fill their weekly schedules with scripted/unscripted series, talk/game shows, ad work, movies, stuff.

Nearly everyone with talent, expertise and ability was working.

The town was running on all cylinders and quickly became the center of the creative content industry while controlling as much as 40 percent of the world's video content.

People stood in lines to get their seats in theater seats. Other folks turned on their sets the minute they got home and watched whatever was on until they dragged themselves into their beds. What no studio head would tell Wall Street, his (yes, it was usually a male) shareholders or the public at large is that it is at best a marginally profitable business.

Coin Flip - The content industry promotes its major hits (moneymakers) like crazy while quickly overlooking the red ink projects but it's about a 50/50 chance of a film/show making money.

People cost money. Equipment costs money. Studio/location shoots cost money. Sets/lighting/electrical cost money. Feeding folks costs money. Hyping the shows/movies costs money. Money costs money.

Source - Warner Bros

It's only because studios have some of the most creative accountants who do things with numbers, columns, rules and regulations that enable them to make Wall Street/shareholders happy and keep their bosses out of jail.

The studio heads were free to hob nob with the rich, famous, politically connected people who like to associate with folks in the fun, profitable business.

Okay, maybe just a kinda' fun business, but it's the best paying job studio execs could find.

None of them gave much thought to the guy in Silicon Valley who determined he could sign people up to download shows/movies from the internet so they could watch the stuff when they wanted, where they wanted and on the screen they wanted.

In fact, when Reed Hastings switched from sending discs to subscribers in red envelopes to streaming, they probably said, Sure we'll license our stuff to his little company and make even more money because folks want it, we got it. After all, we rule the creative universe!

Under Hastings and Ted Sarandos and later Sarandos/Greg Peters, home entertainment changed.

As FX's CEO, Fred Landgraf, has said they marked the beginning of the slow demise of peak TV.

With that modest beginning, Netflix had more than a decade to spend at a loss, build scale (capturing an estimated 80 percent of households in the Americas and then move internationally) and achieve profitability.

Studios and networks had become masters of theatrical distribution, syndication sales/channel programming.

But those channels are different from building a streaming platform and making it work efficiently, effectively.

At the same time, they often had to do it to the detriment of their proven money sources.

Despite the streaming red ink, they were learning rapidly, painfully and making inroads until the year-long pandemic.

Then they were hit with the six-month plus strikes of the WGA (Writers Guild of America), SAG/AFTRA (Screen Actors Guild/American Federation of Television and Radio Artists) and associated trade unions.

Source - Paramount

The strikes delivered major concessions/agreements for the working stiffs and the union leaders about their victories and were ready for people to go back to work.

The problem is the world has changed over the years and most rapidly in recent times.

Global Entertainment - Probably from the outset, Netflix set its goal of being not just a video service for people in the Americas but for folks around the world. They knew great films/shows ignore country borders.

As quickly as two years after Netflix began streaming services in the Americas, they made it known they were going to be a global streaming video service.

They left few countries off their map - Syria, China, North Korea - and shortly after that the Russians found it difficult to watch their films/shows.

Today, they have 84.8M subscribers in the Americas and more than 283M globally.

One of the key agreements to deliver entertainment in the 190 countries was that 30-40 percent of the projects had to be created/produced locally.

No prob!

Global Facilities - In countries and cities around the globe, new modern film studios are being built incorporating advanced technologies. At the same time, countries are training their citizens in the latest creative/production techniques to attract projects such as Hungary's Korda Studios (l) and Dubai Studio City (r).

While studios and networks had focused on investing in projects, not facilities, many of the studios/sets were showing their age.

However, organizations and governments had been busy building new state-of-the-art facilities in England, France, Poland, the Middle East,

LINK:	https://creativecow.net/tax-incentives-wont-solve-hollywoods-problems/...
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