For years, Gordon Ramsay and his hit MasterChef franchise called a converted soundstage in Los Angeles home. From there, contestants crisscrossed the 30-mile zone where Hollywood holds court to film on location at glitzy mansions and Michelin-starred restaurants. Tens of millions of dollars flowed into the economy across the Fox show’s 14 seasons.

Enter Australia, which has aggressively been courting the production to relocate. It was a tempting proposition. The burgeoning film hub, unlike California, allows unscripted programming to receive tax credits to shoot there. However, permitting issues with MasterChef’s L.A. soundstage emerged that would require major renovations. Starting next year, producers will fly dozens of home cooks — and the troves of cash that come with a big-budget network production — to shoot in Australia.

“It’s distressing,” says Paul Audley, president of the permitting office FilmLA. “We worked a lot to try to keep them here.”

The flight of production from L.A. started as a trickle — television shows relocating to Georgia, movies opting to film in the U.K. — now it borders on an exodus. Since the strikes ended last year, Hollywood has been holding its breath for a comeback worthy of the more flush days of power lunches at the Polo Lounge. However, a clearer picture is emerging that the rebound has yet to materialize. Recent data from FilmLA shows that filming in L.A. is approaching historically low levels, with the three-month period from July to September seeing the fewest number of shoot days this year, even lower than during the work stoppage last year.

Initially, there was hope that Hollywood would rally after the strikes, but now there is muted optimism for improvement in the coming year. Production and employment are both falling short of projections, with every category of filming for scripted content trailing historical norms.

Part of the downturn in filming in L.A. can be traced to the contraction from the era of Peak TV when studios were competing fiercely for subscribers to grow their streaming services. Yet, competing international film hubs are seeing flat or rising levels of production. Recently, the U.K. and Canada reported an increase in live-action, scripted titles being filmed within their borders, while the U.S. saw a staggering 35% decline.

“To the extent production has pulled back, the vast majority of that is happening to U.S.-based projects,” says ProdPro chief executive Alex LoVerde, noting that New York has proven more resilient compared to other states.

There are signs that L.A.’s share of the film and TV economy is shrinking. The region now accounts for 27 percent of employment in the sector, a stark decline from 35 percent the previous year. Additionally, fewer than 30 percent of the workforce in this business is Californian, down 10 percent from a decade ago.

Hollywood luminaries are increasingly concerned, lobbying for greater financial support and lamenting skyrocketing filming costs. Filmmaker Judd Apatow recently remarked that California will continue to cede productions to other states and countries without a “healthy tax rebate for our industry.”

Meanwhile, the pressures on budgets have reached unprecedented levels, forcing productions to scrutinize alternative locations to maximize tax credits. California’s film commission offers a 20% base credit to feature films and TV series, which falls short compared to other jurisdictions like New York and New Mexico. This budget-centric approach is impacting greenlights for productions that can’t leverage additional incentives to offset rising costs.

The dramatic decrease in unscripted programming shoot days is alarming, with reality TV suffering a one-third reduction in filming compared to the highs of 2022. States like Illinois and Georgia are expanding their tax credit programs to attract more of this lucrative genre.

Insiders are now reconciling with the impact of recent labor deals that structure annual raises in alignment with inflation. Some industry professionals suggest a moratorium on crew increases until demand rises again and argue for more competitive market conditions.

“There’s a very significant difference in California, which has been the hardest hit, and [other states] that have responded more favorably to the incentives landscape,” says Tony Vinciquerra, CEO of Sony Pictures Entertainment.

Rising costs related to filming permits further exacerbate the situation, with recent hikes impacting budgets seriously. Industry professionals describe the process of securing permits in California as increasingly difficult and costly, with some fees doubling.

Despite the challenges, there is some optimism as data suggests that filming’s downward trend may have bottomed out, showing a steady uptick in production starts in the U.S.

A version of this story first appeared in the Oct. 23 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.