Issue 16

By David Thomas Graves

The Disintegration of a Decentralized Economic Engine

The American film industry is collapsing, not metaphorically, not creatively, structurally.

And that matters.

What we’re witnessing isn’t just fewer greenlights or lower box office revenue. It’s a systemic breakdown of a historically decentralized economic engine that once supported hundreds of thousands of jobs across the country. That engine is evaporating, piece by piece, as production consolidates under fewer entities, in fewer locations, with fewer incentives aligned with the way the business actually operates.

Here’s the technical reality: film production was never designed to be centralized. The structure of the business, with its use of single-purpose LLCs, per-project financing, temporary workforces, and regional spend distribution, depends on local ecosystems to remain viable. Each production acts as a short-term economic stimulus package, dropping tens of millions into local economies through direct employment, vendor contracts, location fees, hotel bookings, fuel purchases, food services, and dozens of other sectors.

But that model only works if decentralization is protected.

Right now, it’s not.

Instead, we’re seeing the centralization of content creation into a handful of monopolized, vertically integrated corporations who are cutting back on risk, halting development, and shifting production to regions with more favorable tax structures, often overseas. At the same time, many U.S. states have either capped or cut back their incentive programs, completely misreading how fragile this industry’s economic model actually is.

The result is clear:

Below-the-line labor is being decimated.

Regional vendors are going under.

Taxable income from production-related spending is shrinking.

Local workforces are dispersing, aging out, or leaving the industry entirely.

This isn’t just a cultural loss, it’s a collapse of a replicable, proven economic model that once allowed cities like Atlanta, Albuquerque, New Orleans, and Pittsburgh to build entire economic identities around film.

When you remove the incentive structures that made those economies viable, the work doesn’t disappear, it migrates. And once it's gone, it rarely comes back.

The downstream effects are spreading. And the shockwaves don’t just hit film workers, they hit electricians, carpenters, caterers, florists, furniture rental companies, insurance brokers, accountants, and every small business that once fed off the film economy’s gravitational pull.

Which leads us to the failure of government to understand the value of this industry, even as foreign nations outmaneuver us.

The Hypocrisy of American Capitalism, How We Subsidize Everything Except  What Works

Let’s get something straight: Film has always been subsidized.

Since the earliest days of Hollywood, the U.S. government supported the film industry, sometimes directly, often indirectly, because it understood that motion pictures weren’t just entertainment. They were soft power. They were propaganda, diplomacy, psychological warfare, and national branding all rolled into a single exportable commodity.

From World War II through the Cold War, American cinema was seen as a tool, one that reinforced democratic ideals abroad, solidified cultural dominance, and sold the American dream to global markets. And it worked. The Marshall Plan didn’t just rebuild Europe’s infrastructure, it rebuilt its cinemas, too. Hollywood filled those screens. That wasn’t an accident. It was strategy.

But that strategy ended when the Cold War did. Suddenly, the industry was expected to fend for itself in a global market that had now learned how to copy us, and beat us at our own game.

And while other countries doubled down on subsidizing film as a national interest, Canada, the U.K., Australia, South Korea, and most of the EU, the United States walked away from its own cultural product. It handed off an essential part of its economic and ideological identity to Wall Street and said, “Make this work without help.”

That’s the hypocrisy: America subsidizes oil, agriculture, real estate, pharmaceuticals, tech infrastructure, but when it comes to film? The answer is, “The market should decide.”

Except here’s the reality: the market doesn’t work for film.

It can’t. The business model is structurally irrational. Tens of millions are invested in a product with no guaranteed return. There’s no inventory, no pre-sale trend data, no scalable iteration. You make it, market it, pray it lands, and often lose money doing it.

Meanwhile, foreign governments have optimized their systems:

They understand pre-sales.

They understand rebates.

They understand holding company structures.

They’ve designed their tax codes to support the entire lifecycle of production, not just the sexy parts.

They do this not just to attract jobs, but because they understand something we’ve forgotten: Cultural production is strategic.

Which brings us to how the industry actually works and why that structure matters.

The Business of Illusions, Why Film Is Structurally Dependent by Design

Every production is a house of cards.

And that house is built on:

1. Risk capital

2. Temporary labor

3. Multi-layered corporate shells

4. A single-use, per-project business model

Each film is its own legal entity. One LLC. One title. One bank account. One insurance policy. It exists to make a film, and then it vanishes. That structure isn’t random — it’s there to manage risk, taxes, and liability. And that’s why tax credits must be accessible at the LLC level or they are functionally useless.

Ownership is layered through holding companies. The LLC is controlled by a production company. The production company is often controlled by a studio. Rights are licensed. Revenue is split. Everything is vertically and horizontally integrated through licensing, IP rights, and backend points.

Incentives must align with risk, not infrastructure. You can build all the studio campuses you want, but if the film’s operating entity can’t access the benefit, the project will go elsewhere.

Pre-sales and financial engineering matter. The film isn’t funded after it’s made, it’s sold in pieces before it even exists. Territories are sold off. Insurance is used to secure loans. Credits are collateralized. Every producer is running a complex, high-risk hedge fund.

The business is fundamentally unbankable without a safety net. No rational investor puts up $20M for a product that may return nothing. That’s why government support exists. Not to pad profits. To make risk survivable.

And yet, our systems treat it like it’s a pizza franchise.

Subsidizing the Wrong Parts, How Incentives Are Failing the Film Industry

The problem isn’t a lack of incentives. The problem is where those incentives are aimed.

We keep subsidizing what doesn’t need help: studio campuses, equipment purchases, and post-production infrastructure. We’re propping up the illusion of success while the foundation crumbles.

If you want to save the industry, incentivize the risk, not the real estate.

Transferable, refundable tax credits that flow to the LLC

Loan guarantees for mid-budget, union-certified productions

Completion bond support like other countries provide

Federal bridge funding for pre-production and development stages

And while we’re at it, stop asking studio holding companies how to fix the industry. Studios are spreadsheets. Talk to the working producers. The ones maxing out credit cards, taking second mortgages, and grinding through development hell to build something original. The ones with skin in the game.

If you want innovation, fund the firestarters.

When Risk Becomes the Product, How Market Logic Destroyed American Film

Remove every stabilizer from a high-risk industry and what do you get?

Comic book sequels. Endless reboots. Prequels to spin-offs to franchises that should’ve ended 10 years ago.

We didn’t just kill mid-budget cinema. We killed the ecosystem that made it possible.

The $15M to $30M range used to be the engine of American cinema, rich enough to look good, lean enough to take risks. That space is gone. Why? Because it doesn’t merchandise. It doesn’t pre-sell. It doesn’t get global streaming rights from day one. It’s risky. And we’ve told the private sector to handle risk with no help.

So the private sector did what it does best: eliminated risk.

Now the industry is structured around:

Intellectual property: Studios prioritize projects based on existing IP,  books, comics, games, or past hits, because built-in recognition lowers marketing risk. Original ideas are often ignored unless they can be retrofitted into a recognizable brand. This reliance limits creativity and narrows the range of stories being told.

Franchisable assets: Projects are greenlit based on their potential to become franchises, not stand-alone films. If it can't spawn sequels, spin-offs, or merchandise, it’s often considered financially irrelevant. The industry now chases long-term monetization over immediate cultural impact.

Pre-existing audiences: Studios target built-in fan bases to guarantee ticket sales, which means content is tailored to what’s already popular. Marketing departments often hold more sway than creative teams. As a result, we get more of the same, rather than new voices or fresh narratives.

Algorithmic storytelling: Streaming platforms and studios now use data models to shape scripts, predict engagement, and decide what gets made. Creativity is increasingly filtered through audience behavior metrics. This reduces storytelling to formulas, erasing nuance in favor of predictability.

Risk-aversion disguised as profitability: Executives tout financial responsibility, but what they’re really doing is avoiding anything that isn’t a guaranteed win. This “safe bet” strategy leads to cultural stagnation, profitable in the short term, destructive in the long run. It’s not business discipline; it’s creative cowardice.

And what do we lose?

Creative freedom: When everything must be a sure bet, storytellers lose the freedom to take risks. Studios interfere earlier, pushing rewrites, recasting, or shelving anything that doesn’t align with pre-approved formulas. The result is a film slate that’s more product than expression.

Labor demand: Fewer productions and more centralized shoots mean fewer jobs for crew, craftsmen, and vendors. Instead of hundreds of regionally spread projects, work is concentrated into mega-productions that require less total labor. The economic ripple of film is shrinking fast.

Regional spending: Cities and towns that once thrived on film production, from hotels and restaurants to hardware stores, now see nothing. Without incentives, shoots leave, and local economies collapse with them. The disappearance of location-based filming guts entire creative ecosystems.

Innovation: New ideas are buried under legacy franchises and risk-averse greenlights. Filmmakers can’t explore bold concepts or unconventional formats because the system punishes anything that deviates from what’s already proven. Without innovation, the industry ages in place.

Relevance: Films used to shape the cultural conversation; now they chase it. As stories become safer and more generic, audiences disengage, not because they don’t care about movies, but because the movies don’t care about them. America’s most powerful cultural export is losing its voice.

A Blueprint for Revival

Rebuilding What We Should’ve Never Let Fall

The American film industry doesn’t need saving, it needs restoration. Not to a nostalgic golden age, but to a functioning ecosystem built on smart economics, real jobs, and cultural courage.

We fix this industry by fixing the foundation.

Incentivize the Risk, Not the Real Estate

If we want to rebuild this industry, we have to stop mistaking architecture for economics. The big mistake policymakers keep making is pouring incentives into studio real estate and post-production facilities while ignoring the actual structure of how movies get made. Steel and drywall don’t create jobs, movement does. Production is where the risk lives, and if you’re not reducing that risk, you’re not reviving anything. The answer isn’t to subsidize the illusion of activity. The answer is to stabilize the people still brave enough to move a story from a blank page to a finished cut. The real fix isn’t about making things easier, it’s about making things possible.

Transferable tax credits

Film production lives inside single-purpose LLCs, tiny, temporary business entities formed for one project and designed to vanish once the film is finished. They don’t carry forward tax liability. They don’t have long-term assets. They’re not built to hoard value, they’re built to pass it along. But most states design their film tax credits as if the recipient were a permanent corporate entity. That means the credits often go unused or must be sold off at a discount to larger financial institutions, cutting into the budget and pushing producers further into debt. Making tax credits transferable and refundable, the way Louisiana once did, or how Canada does at the provincial level, would inject real liquidity into the phase of production that needs it most. This isn’t theoretical. It’s practical. It gives the people who are actually spending the money the ability to stay afloat while they create jobs, generate local economic activity, and build the thing the audience will one day see.

Completion bond support

One of the most overlooked tools in the entire film ecosystem is the completion bond. It’s a form of insurance that tells investors, “No matter what happens, this movie will get finished.” Without it, most financiers won’t touch a project, especially a mid-budget one. But for many independent producers, the cost of securing a bond, or worse, the cash collateral required to back it, is a dealbreaker. A government-backed guarantee for completion bonds wouldn’t just help independent producers look more credible. It would literally enable films to exist that otherwise wouldn’t. And we’re not reinventing the wheel here, other industries already do this. Construction, agriculture, energy… they all use bond guarantees to de-risk complex projects. If we can do it for pipelines, we can do it for stories.

Loan guarantees

Cash flow is the silent killer of most independent productions. Even when tax credits are approved, they don’t arrive until long after the shoot wraps, sometimes months or even a year later. That gap, between when you spend and when you’re reimbursed, has to be bridged with real money. Most producers do this by taking out loans against the projected value of the credit, but unless you have perfect paperwork, a big name, or a major studio backing you, the loan terms are brutal, if you can get one at all. A government-backed bridge loan program, collateralized by approved tax credits, would change that instantly. Suddenly, smaller producers could access capital at fair rates and actually compete. It wouldn’t just fund more projects, it would revive the entire mid-budget tier we keep talking about saving.

Union-linked incentives

There’s a simple truth about this industry that often gets left out of policy conversations: real productions run on union labor. Union crews are the standard-bearers of safety, quality, and reliability, and they’re the ones building careers, not just jobs. Yet many incentive programs are completely agnostic to whether a film uses trained union workers or flies in a cheaper, less experienced crew. That’s not neutral, it’s damaging. If the goal of film incentives is to build long-term economic stability, then they need to reward projects that support sustainable, local employment. Incentive programs should include bonus tiers for productions that use union labor, hire within the region, and invest in skills training. This isn’t about punishing anyone. It’s about reinforcing the parts of the ecosystem that actually grow the economy and pass knowledge forward. You want a thriving industry ten years from now? Then reward the people doing it right today.

Treat Film as a Strategic Export

If we’re serious about restoring the power of American film, we need to stop treating it like an indulgence and start treating it like what it actually is: a global product with economic, cultural, and political value. We already know this to be true when it comes to agriculture, aerospace, and defense. These industries have federal agencies that exist for one reason, to push American goods into foreign markets. Film should be no different. We don’t just export stories, we export identity, influence, and ideology. And right now, we’re losing that global influence to countries that figured out long ago that cultural production is a form of economic warfare. While we’re cutting arts budgets and defunding incentives, other nations are propping up their industries with strategic funding, tax neutrality, and government support.

National Film Export Initiative

We need a federal agency whose job is to represent and promote American film abroad, full stop. Not a footnote buried in a trade commission, but a real, funded entity with diplomatic reach and creative understanding. The same way the U.S. Department of Agriculture helps American farmers enter foreign markets, this agency would help filmmakers navigate international distribution, negotiate licensing deals, and protect their rights across borders. It would work in partnership with festivals, embassies, and global buyers to ensure that American films don’t just exist, they get seen. Because right now, international markets are dominated by films that know how to work the system. We invented that system. We just stopped using it.

Global promotion grants

Making a great film isn’t enough, especially in the independent space. If it doesn’t travel, it dies in obscurity. Right now, international sales agents, festival travel, translation, and subtitling often fall entirely on the shoulders of the producer, and most can’t afford it. As a result, only the most privileged or studio-backed projects make it onto the global stage. A grant system for global promotion would level that playing field. It would fund everything from airfare to festival marketing to foreign press outreach. These aren’t luxuries, they’re launchpads. They’re how American filmmakers earn international recognition, secure distribution, and build careers beyond their ZIP code. If we care about exporting culture, we have to actually fund the act of crossing the border.

Bilateral film treaties

Other countries have figured out how to partner smartly, Canada, Australia, the U.K., France, using film treaties to reduce costs, share resources, and increase global reach. The U.S. has lagged far behind. Our existing treaties are limited, outdated, and rarely optimized for creative industries. We need a new generation of bilateral co-production agreements that allow American producers to partner with foreign governments and studios without losing tax benefits or triggering double taxation. These treaties should include mutual recognition of incentives, access to workforce training, and unified standards that make cross-border collaboration seamless. It’s not about outsourcing. It’s about expanding the American footprint, using partnerships to stretch dollars, deepen markets, and reclaim the global space we once owned by default.

Build a Federal Incentive Framework

Right now, the American film incentive system is a patchwork of conflicting rules, inconsistent definitions, and competitive undercutting between states. It’s the Wild West, and not the cinematic kind. One state defines “local hire” one way, another calculates labor caps differently, and some don’t require labor standards at all. For producers, that means added risk, extra legal costs, and constant recalculation. For policymakers, it means missed opportunities. And for workers, it means watching jobs leapfrog to the cheapest bidder, even if the production started in their own backyard. We don’t need more chaos. We need structure.

National minimum standards

To stabilize the system, we need to establish a federal baseline, a common-sense floor of consistent definitions and eligibility requirements that every participating state can use. This doesn’t mean taking away state autonomy. It means creating clarity. When everyone plays by the same basic rules, what counts as qualified spend, who qualifies as a local hire, what labor protections must be in place, producers can budget with confidence, and workers can plan for long-term careers. Right now, there’s more legal consulting than creative planning happening in most pre-production offices. A national standard won’t stifle flexibility, it will enable mobility, accountability, and trust.

Stackable structure

One of the most powerful tools in the tax incentive world is the ability to stack benefits, combining federal credits with state or local programs to close the funding gap on challenging or mid-budget projects. But currently, there’s no federal framework that allows that kind of synergy in film. What we need is a stackable, centralized structure that allows federal support to layer neatly on top of state-level programs without duplicating red tape or disqualifying productions from one program when they apply to another. Think of it like matching funds in education or housing. The federal incentive doesn’t replace state efforts, it amplifies them. That kind of predictable, scalable support would immediately make the U.S. competitive with countries like Canada, the U.K., and Australia, all of whom already run coordinated federal/provincial incentive models that put ours to shame.

Labor transparency

If public dollars are being used to support private projects, and they are, then the public has a right to know how that money is being spent. That’s not ideology. That’s accountability. Any production receiving taxpayer-backed incentives should be required to report on key labor data: who’s being hired, how much they’re being paid, where they’re coming from, and whether the production reflects the workforce and communities it impacts. This isn’t about checking boxes. It’s about making sure the money is doing what it’s supposed to do, create real jobs, support local economies, and diversify opportunity in an industry that has historically fallen short. Labor transparency isn’t bureaucracy. It’s how you build public trust, and how you make sure we’re not just funding more of the same under a shinier brand.

Protect and Rebuild the $15–$30M Budget Range

This is the heart of the collapse, and it’s where the real rebuild begins. The $15–$30 million film isn’t just a number. It’s a space. It’s the zone where bold creative choices used to live. Where new directors became household names, where serious actors stretched their craft, where risks were taken because the budget allowed for beauty without needing to guarantee billions. It’s the tier where stories mattered more than spectacle, and jobs were plentiful because these films were big enough to hire real crews, but small enough to be nimble and locally produced. It was the soul of American cinema, and it’s vanished.

Federal mid-budget fund

We need a dedicated federal fund that specifically targets this vulnerable tier, not just with tax incentives, but with direct investment tools like subsidies, grants, and forgivable loans. Think of it like an arts-based version of the SBA (Small Business Administration), because that’s what these productions are: small businesses that operate temporarily but employ dozens to hundreds of people, often in regions that don’t have much else coming in. This fund would allow producers to take creative risks without being forced to chase franchise tie-ins or compromise their vision for the sake of investor pressure. And more importantly, it would bring back a level of cultural production that’s become almost extinct, the thoughtful, ambitious, socially relevant film that actually says something.

Matched financing

No one is asking the government to bankroll entire slates. But the government can, and should, meet private investors halfway. Matched financing is a simple and powerful way to encourage investment into films that are ready to go but need one final push. If a film secures a certain percentage of private capital, the government could match a portion of it, especially if the production meets public-interest criteria like union labor, domestic locations, or emerging filmmakers. This doesn’t just encourage private equity participation. It validates it. It tells investors, “You’re not alone in this risk. We believe in this story too.” And when the government co-signs on creative risk, it changes the math entirely.

Regional requirement

If we want to talk about revitalization, we need to stop thinking in terms of zip codes and start thinking in terms of economic reach. So many cities across the country have lost their production bases, not because the talent disappeared, but because the incentives dried up and the economics got too fragile. Prioritizing mid-budget funding for films that shoot in economically distressed or underutilized areas isn’t just smart politics, it’s good economics. These productions don’t just show up with a camera and leave. They book hotels, hire locals, rent equipment, buy materials, and often train new workers. They leave behind skills, income, and infrastructure. If we want to talk about real economic stimulus through culture, this is how you do it.

Institutionalize Film as Part of Economic Reporting

If you don’t count it, you can’t protect it. That’s been the quiet tragedy of the American film industry: it’s been one of the most powerful economic and cultural engines this country has ever created, and yet, it’s barely recognized in the federal systems that track, fund, and report on national economic activity. Film is still treated like a luxury or a side hustle when in reality it’s a trillion-dollar sector globally, and a core part of our soft power, regional economies, and job markets. We need to stop treating film as a creative afterthought and start reporting on it the same way we do agriculture, energy, and tech.

Cultural sector inclusion

First, film needs to be directly embedded into federal GDP, labor, and employment data, not buried under “arts and entertainment” as a vague subcategory. We should be measuring production volume, tax revenue, regional spend, labor hours, and export impact with the same rigor we use for other major sectors. This kind of visibility doesn’t just help tell the story, it strengthens the case for inclusion in economic policy, recovery packages, and long-term planning. You can’t defend what you refuse to track. And right now, we’re allowing a vital piece of the American economy to bleed out in the blind spot of our own spreadsheets.

Economic impact modeling

Second, film must be factored into infrastructure and urban redevelopment plans. When a city lands a major production, it triggers ripple effects across real estate, hospitality, transportation, logistics, and retail. Yet almost no economic forecasting models include film as a recurring, strategic industry. That’s a missed opportunity. We should be designing economic development zones that are film-ready. We should be funding location upgrades that match production needs. And we should be folding production impact into long-term urban planning, because film doesn’t just bring art. It brings income, investment, and visibility to places that need it most.

Workforce development

Finally, we need to treat film labor like we do other trades, with training pipelines, apprenticeship programs, and career pathways built into workforce development policy. Right now, there’s no national infrastructure to help the next generation of lighting techs, sound engineers, location managers, or costume designers enter the business unless they’re lucky enough to live near an active production hub. That has to change. Film is a unionized, skill-based industry, and it should be included in everything from vocational school funding to labor department grants. When we build formal pathways into this work, we don’t just create jobs, we create careers. Lifelong, middle-class, creative careers.

From Collapse to Comeback

We don’t fix this by hoping the market finds a conscience. We fix it by building the damn scaffolding ourselves, one policy, one job, one story at a time. We fix it by treating the people behind the scenes like the foundation they’ve always been, and by demanding that film be seen not as a luxury, but as labor. Real labor. Skilled, essential, irreplaceable labor that has fueled this country’s cultural engine for over a century.

Because what we’re losing isn’t just content, we’re losing communities. We’re losing regional economies that used to thrive off location shoots. We’re losing the ladder that helped working-class kids become working-class creators. We’re losing the middle, not just of the budget range, but of the industry itself. And once the middle goes, so does everything else. We become a machine that only feeds the top, tells the safest stories, and forgets everyone who ever carried the weight of this business on their backs.

But here’s the truth: it’s not gone. Not yet. We still have the people. The talent. The know-how. The passion. And we’ve already written the blueprint to rebuild it, if we have the courage to act.

We can create national incentives that actually reach working producers. We can protect mid-budget cinema and stop rewarding the race to the bottom. We can back completion bonds, match private capital, and export our stories with pride. We can bring filmmaking back to the cities and towns that built it. We can count film in our economic reports, train the next generation, and make sure the jobs we create are careers, not just gigs.

All of this is within reach.

But only if we stop waiting for permission and start making policy. Only if we stop mistaking silence for strategy. Only if we fight, not just for jobs, but for the right to tell stories that matter.

Because without stories, we lose the plot. And without the people who know how to tell them, we lose the soul of a nation.

This isn’t just about nostalgia. It’s about identity. It’s about power. It’s about making sure the next generation grows up in a country that still believes in the value of imagination, and the dignity of the workers who bring that imagination to life.

Let’s bring it back. All of it. Cinema. Craft. Community. Let’s choose to fight for it, together.

© David Thomas Graves 2025