A recent decrease in shooting in the industry’s home city was largely driven by a drop in advertising work
Greater Los Angeles’ dramatic drop in on-location filming in recent months may have a variety of reasons, including a diminishing need to catch up on pandemic-delayed projects. But commercial production saw the biggest decrease in the final quarter of 2022, dropping by more than a third and signaling potential trouble for a key segment of the business.
As shoots for films, television, commercials and other media resumed in 2021 and 2022, FilmLA reported a rebound in shoot days to pre-pandemic levels that remained consistent through all of last year. But in Q4, 8,674 shoot days were reported, a year-over-year decline of 19.5%. In total, 36,792 shoot days were reported in 2022, 252 more days than in 2019 but down 2.4% from 2021. It is also 7.2% down from the all-time peak of 39,762 days recorded in 2016.

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Why the steep decline in L.A.’s commercial production is especially scary
The local decline in commercial production, measured in the number of shoot days, has not been linear, FilmLA spokesperson Philip Sokoloski noted. The highest levels recently seen were in 2018 at 6,033 shoot days for the year versus 4,119 shoot days in 2022, the second lowest level since 2020, when COVID-19 disrupted all manner of shoots.
Commercial production matters to Los Angeles because it generates production jobs and business revenue for “countless industry support vendors,” Sokoloski explained.
“Los Angeles is attractive to commercial producers because of that local production infrastructure, as well as access to LA-based celebrity talent,” he said.
A continuing decline in commercial production would result in fewer work opportunities for local production crew, and loss of business for industry-specific vendors, many of which are small businesses, that film production of all kinds helps to support, Sokoloski said. Commercial productions operate from a shared talent pool alongside other forms of production.
An ongoing challenge for commercial production, which finished 24.5% below its five-year annual average in the region last year and declined 33.7% in the fourth quarter alone, is its volatility.
Unlike local-based television shows, commercials are generally one-off projects that can move and adjust based on markets and other factors, said Matt Miller, president and CEO of the Association of Independent Commercial Producers, a trade association representing the interests of the commercial production industry.
The troubled economy includes an extra challenge for commercial production
“A factor that is affecting every region within the United States equally would be the economy,” Miller said. “An uncertain economy is never good for any business and definitely not for the advertising business.”
That’s because some marketers get timid and pull back on spending when the economy seems unstable, looking at quick fixes to budgets rather than continuing to invest in building brands, he said.
Total TV advertising for 2023 could slip as much as 8.2% in the face of economic concerns, according to S&P Global. That “should be a concern to all who are involved in the business,” Miller added.
Meanwhile, all filming locales in the U.S. are competing with foreign destinations that have cheaper labor costs, fewer union agreements, and less expensive COVID costs, he said.
Mexico City, Prague, Vancouver and Toronto are among the most popular filming destinations for commercial shoots today.
Commercial production can’t claim California tax credits like TV and film can
And while greater Los Angeles still has a large crew base, commercial production appears to be shifting outside of this region where producers can take advantage of tax incentives available in other states, Miller said.
California is not among the nearly two dozen jurisdictions that offer tax credits for commercial production, according to FilmLA. Conversely, television and feature film production has been able to take advantage of those state credits.
For decades, Los Angeles has enjoyed a commanding share of commercial production in the country: Southern California accounted for more than half of U.S. production as recently as 2007. Perhaps the feeling was that no incentive was needed in the state when the program was created in 2009 but “ultimately, the realities of finance hit,” Miller said.
“The other regions that have tax credits market them aggressively and are aggressive about extending them and making them attractive to filmmakers in various sectors, but specifically in commercials,” he said, adding that “New York, Georgia and Illinois have been very, very successful” in doing this.
Each time the California’s Film and TV Tax Credit Program, which is administered by the California Film Commission, comes up for renewal, the AICP pushes for “a greater acceptance of commercials” as a piece of that tax credit, Miller said. But commercial production has yet to be included in the program, he said.
Gov. Gavin Newsom’s proposed 2023-24 budget extends funding for the Film and TV Tax Credit Program an additional five years and proposes to make those credits refundable for the first time since the program’s inception in 2009. Refundable tax credits would enable applicants to claim a tax refund at a discounted value over multiple years. But that change wouldn’t benefit commercial production firms.
Miller argued that tax credits and other incentives are effective if legislatures are patient and supportive of them, though academics don’t agree on their efficacy in stimulating economic growth.
Colleen Bell, executive director of the California Film Commission, which administers the state’s film and television tax credit program, said the L.A. region’s slowdown in television and feature film production is a reason why the governor’s goal of extending the tax credit program another five years is so important.
She cited a recent Los Angeles Economic Development Corp. study that found that each dollar allocated by the commission’s tax credit program created $24.40 in economic output, plus $1.07 returned to taxpayers in state and local tax revenues.
“The continued commitment to our program from California’s leadership and the recognition of the positive economic benefits that a program like ours delivers to the state is very important as competition increases from other states and nations,” Bell said.
But the benefits may not always outweigh the cost. Arizona reportedly allowed a limited film tax credit it had from 2005 to 2010 expire after the state’s Department of Commerce found that the program cost taxpayers more than $6 million in 2008.
Tim Howell, a principal and executive producer of the full-service video production company Binary Pulse Studios that produces commercials and other video content out of offices in Southern California, Arizona and Texas, said his company is doing well overall after picking up clients that shifted productions to them from more expensive production companies. But some of their technology clients have recently put a few of their commercials on hold due to the uncertain economy and reduced venture capital funding.
“We deal with a lot of tech companies that have been told they need to pause and think more carefully about the decisions they’re making rather than go, go, go like it was 12 months ago,” Howell said.
If there were financial incentives that could encourage these companies to move ahead sooner rather than later, that might keep those in the commercial production industry busier right now, he said. Since the company has an office in Scottsdale, they’re also keeping “a close eye” on new tax credit incentives for filming that Arizona is slated to roll out following a public comment phase that’s in process.
Non-union workers are much more prevalent in commercial production
Besides the economy and global competition, commercial production is laden with other unique hurdles, including new break-in entities willing to work at cut rates, often without union employees, as well as some competition by entities owned by advertising agencies, Miller said. There’s also competition for stages, equipment and crew from longer-term employers in the TV and feature film sectors.
“There are many challenges in this extremely fast-paced and on-off project environment,” he said.
Commercial production matters to film regions like Los Angeles because it has a low environmental impact and a high economic one, Miller said.
“Because of the short duration, all vendors and crew command a higher rate per day — and because of the quick in-and-out, we have less of a disruptive footprint,” Miller said. “This has always been a formula most attractive to film centers.”
A continued decline in commercial production could have a significant impact on the region because it’s the “bread and butter” for many vendors and the crew base, he said. Since commercial shoots need to be very flexible, clients tend to have their go-to vendors, locations and crew in order to work quickly.
“When commercial companies move to other locales and have good experiences, they tend to return to what has worked in the past,” Miller said.
While commercials are generally a small percentage of production — between 10%-15% in many regions — the economic effect on the overall economic infrastructure is generally much greater, which adds “to the health of the overall film ecosystem,” Miller said.
The double-edged sword of rising TikTok and other short-form video production
Meanwhile, some video production companies say they have not been negatively affected by the economy or other external factors. Many such companies in the L.A. region do a variety of filming — not only commercial filming but also branding videos as well as TikTok and Instagram clips.
FilmLA’s data is derived from permits, and might categorize such work as “commercial,” “TV” or “other” if it requires permits; shoots that don’t require permits might not be reflected in the data. As a result, the impact of this diversification isn’t immediately clear, but it appears to be buoying some production firms.
“We’re getting a lot of inquiries from companies that want to kind of boost their marketing and social media presence so we’ve actually been pretty busy,” said Ryan Corcino of Anaheim-based Corcino Productions, a modern media marketing company. “It seems like as I ask more people, they budget a lot more now for marketing — that’s where it’s trending, toward social media.”
Even when it comes to producing commercials, they’re still getting retainers “here and there” to do weekly, monthly or bi-monthly film shoots to produce commercials, Corcino said. In fact, they’ve seen an increase since the start of the pandemic.
“It seems like that’s when people for some reason said, ‘Hey, let’s [step up] our marketing since no one is coming to the office. No one is really doing anything. Let’s get some media done, or commercials done, so we can push them out later in the year,’” he said.
Brenda Gazzar