The Oscars’ Best Picture category exposes a harsh new reality for Hollywood

This Sunday will be the biggest night of the year for Los Angeles: Tinseltown’s stars will turn out en masse for the Academy Awards at the Dolby Theatre on Hollywood Boulevard, to celebrate the magic that only this storied city can create.

But a look into the field for the Best Picture Oscar reveals an uncomfortable surprise: Not a single one of the 10 nominated movies was produced on the famous soundstages or studio lots of Hollywood. While some post-production was done in L.A.-based facilities, all were entirely or largely filmed elsewhere, from Marty Supreme (New York) to Sinners (Louisiana) to Hamnet (U.K.).

Hollywood, the name for the entertainment industry headquartered and operating in Los Angeles County, is disintegrating. Production measured in Los Angeles shoot days is plunging, down from 36,792 in 2022 to just 19,694 in 2025, according to FilmLA research. Some 41,000 of the workers who make the industry function left from 2022 to 2024, the most recent data available—some by choice, some by necessity. The industry’s most powerful person is not a traditional studio boss but Ted Sarandos, co-CEO of streaming giant Netflix, which is headquartered in Silicon Valley.

And yes, that remains true even after Paramount Skydance’s David Ellison outbid Netflix to purchase the legendary studio Warner Bros. Discovery. Indeed, the outcome of that intensely watched deal negotiation looks likely to be another nail in the coffin for the film industry as a dominant economic force in Los Angeles—with Ellison, Hollywood’s newest mogul, promising to find $6 billion–plus in “synergies” following the acquisition. He has promised that the majority of these cost cuts will affect “nonlabor sources”—but the Town (as the film industry based in Los Angeles is often called) is bracing for large-scale layoffs.

Meanwhile, the threat of AI reshaping the business of making films looms, and the specter of industry collapse, of American cities hollowed out by manufacturing jobs going overseas and workers made obsolete by new technologies, hangs heavy over the boulevards and palm trees of Los Angeles. “The sunny version of Detroit,” was the assessment of Michael Lynton, former CEO of Sony Pictures Entertainment, on a recent visit to his previous stomping ground. “It was crickets,” he told The Hollywood Reporter. “There’s nothing going on.”

The collapse of an entire industry is a sad story no matter how you slice it. The collapse of Hollywood is also something more. For years, movies were a major American export, sending not just celluloid film but also an American worldview around the globe. Now, measured strictly in dollars, the $20 billion–plus the U.S. earns from exporting films and television shows each year is dwarfed by other exports—oil, cars, and industrial machinery among them. But still, these quintessentially American products—action movies, bingeable streaming shows, and a bevy of dashing superheroes and impossibly glam movie stars—punch far above their weight in establishing the nation’s “soft power” internationally, seeding American language, culture, fashion, and societal mores into living rooms from Seoul to São Paulo in a way no container ship full of LNG can match. When we say, “an offer he can’t refuse” or “I don’t think we’re in Kansas anymore,” everyone knows what it means, and where it came from.

For 100 years Hollywood was among the world’s most successful and famous examples of what is called an “industry cluster.” The Harvard Business School’s Michael Porter, who coined the term in 1998, described such clusters as “critical masses—in one place—of unusual competitive success in particular fields.” Other examples are high-performance car companies in southern Germany; pharmaceutical companies near Philadelphia; and high-fashion shoe companies in northern Italy. But in his writings, Porter singled out the two starriest examples: “Silicon Valley and Hollywood may be the world’s best-known clusters.” 

Such clusters foster success because they create virtuous circles: When an industry’s best people and companies become concentrated in an area, the industry’s other people and companies want to be there. Those who join the cluster gain knowledge, relationships, and motivation “that distant rivals cannot match,” Porter said. The result is an upward cycle that draws in more industry players and further strengthens the industry.

Hollywood emerged as an industry cluster when early 20th‑century filmmakers fled New York and New Jersey to escape Thomas Edison’s aggressive enforcement of his patents on motion‑picture cameras, projectors, and other technologies, and to take advantage of Southern California’s cheap land and year‑round sunshine. Between roughly 1910 and the early 1920s, dozens of independent producers consolidated into vertically integrated studios—Paramount, MGM, Warner Bros., Fox, Universal—concentrating production in and around Los Angeles and locking in a dense ecosystem of stages, back lots, labs, equipment houses, and skilled labor. Worldwide distribution and exhibition were likewise managed from L.A. By the late 1920s and 1930s, this agglomeration had become a self‑reinforcing cluster: The “Golden Age” studio system produced hundreds of films a year; recruited and developed “bankable” stars beloved around the world; and drew in talent and suppliers from everywhere, elevating Hollywood from geographic neighborhood to dream factory.

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