Runaway production
Runaway production is a term used by the American Hollywood industry to describe filmmaking and television productions that are intended for initial release/exhibition or television broadcast in the U.S., but are actually filmed outside of the immediate Los Angeles area, whether in another country, another U.S. state, or in another part of California.
In a 2005 production report by the Center for Entertainment Industry Data and Research, the trend of runaway productions is more frequently linked to American films and television being lured away from U.S. locations to out-of-country locations. A large reason for these productions leaving are foreign subsidies offered to American companies ultimately reducing the cost of making the film. According to the CEIDR report, "The analysis reveals that, while there are certainly general economic factors at play, such as relative labor and exchange rates, the data over the past several years strongly suggests that proliferation of production subsidies around the globe has been one of the most significant factors affecting the choice of production venues for a significant volume of production."
The report further states that "the connection between the advent of Canadian Production subsidies in late 1998 and the dramatic increase in production that occurred in the following year appears unassailable as there were no appreciable changes in exchange rates or labor rates to justify this dramatic shift from one year to the next, other than the subsidy programs".
Hollywood
Los Angeles has traditionally played a large role in the history of the film industry, both in the United States and internationally. The first American film production companies emerged in New Jersey and New York. The relatively poor quality of early recording media and lighting systems meant that films had to be shot in sunlit glass studios. In turn, the unstable weather typical of the northeastern states frequently hampered production. Eventually, a trend developed towards using the western states as ideal locations for shooting.During the early 1910s, Los Angeles was an advantageous location for filmmakers. It featured clear, dry weather that allowed them to film outdoors much of the year. Southern California also offered a broad variety of terrain. More importantly, its distance from New York City meant distance from the Motion Picture Patents Company and its patent enforcers.
Camille Johnson-Yale has argued that from a semantics perspective, the term "runaway production" arises from an implicit interpretation of Hollywood as "the authentic home to global film production, and all others as its inauthentic, even criminal, harborers." Throughout the rest of the 20th century, Hollywood remained the dominant global filmmaking center in part because the aggregate cumulative experience of its film crews made the process so much more efficient. Runaway productions have to cope with the time-consuming mistakes and inefficiencies that inevitably arise from hiring novice film crew members. For example, Rob Lowe has noted that on one film production he worked on in Atlanta, the dolly grip was having trouble hitting his marks. It was the dolly grip's first time on a set: "He'd applied for the job because he'd worked a dolly at Costco."
Early attempts
Runaway production is almost as old as Hollywood itself. During the 1940s and 1950s, American studios experimented with some of the earliest forms of runaway productions in Continental Europe, where they sought to access cheap labor in economies devastated by World War II and also make use of box office revenue frozen in place by foreign exchange controls intended to protect those fragile economies.The term "runaway" as applied to Hollywood productions shooting overseas first appeared in press coverage of union hostility to such outsourcing in Motion Picture Daily and Daily Variety in September 1949. It is unclear who coined the term and when they first started using it, but it is clear that by that point, outsourcing was already "creating enough anxiety among unions that they needed an expression to anchor a campaign to fight the phenomenon".
An additional incentive for Hollywood to go abroad accidentally arose in 1951, when Congress amended Section 116 of the Internal Revenue Code to exempt money earned abroad from income tax as long as the taxpayer resided abroad for 17 out of 18 months. This was originally intended to benefit American construction and petroleum engineers, and then American movie stars discovered Section 116 could help them escape the high income taxes then in effect in the United States. Congress later capped the Section 116 exemption, but not before "numerous films" were made overseas during the 1950s which would not otherwise exist.
However, Hollywood soon discovered that a major limitation on outsourcing productions overseas was the language barrier, in an era when fluency in the English language was far less widespread than it would become by the end of the 20th century and machine translation had not yet been invented. American directors found themselves struggling to effectively manage film crews who did not speak English. Managing through interpreters was slow and expensive. Important nuances were constantly lost in translation. All the documents necessary to make a movie had to be translated, not just the screenplay. Hollywood studios also discovered that travel and accommodation costs for above-the-line American workers often outweighed any savings from hiring below-the-line local personnel. Some American producers spent too freely while working far from home with frozen funds and local subsidies, and ended up losing money. Despite these problems, runaway productions filmed in Europe were still viable into the mid-1960s because the late arrival of commercial broadcasting in Europe meant that the loss of cinema attendance to television was also late to occur there. Hollywood studios continued to film in Europe to make their products more attractive to the "foreign market".
Since the 1970s, the runaway production phenomenon has continued to be driven by tax policy, but its effect is increasingly concentrated on the film finance side, rather than movie stars' interest in limiting their liability for personal income tax. The first "significant example" of this occurred in the United Kingdom in the early 1980s: the "sale and leaseback" arrangement in which a studio or producer would sell a film to a group of British investors, then lease back the film for 15 years at a below-market interest rate. However, this was shut down by Inland Revenue in 1985.
The race to the bottom
To undercut Hollywood's traditional advantage of having more experienced and competent crew members than anywhere else, other jurisdictions starting with British Columbia in the 1990s began to offer generous tax incentives to attract American film and television productions. By the 2010s, British Columbia's innovations had resulted in a wild "race to the bottom" around the world, in terms of how jurisdictions were competing to hand out subsidies in the form of tax deductions or tax credits. On the one hand, bringing film and television work to one's home jurisdiction is a quick way for politicians to create a lot of jobs, because shooting on location can happen much faster than building a factory. On the other hand, those jobs are temporary and transient, and they will readily flee to the next jurisdiction willing to offer more.Hollywood-based cast and crew traditionally prefer to film close to home when possible, but that is no longer financially feasible for most projects. During its many decades of prosperity in the late 20th century, California implemented some of the strongest labor protections in the world, while failing to recognize that it was now in direct competition against numerous jurisdictions who were offering "shockingly generous" tax incentives on top of other advantages like lower costs of living and less stringent labor protections. In other words, competing jurisdictions' film crews may be inexperienced, incompetent, and inefficient, but they are cheaper and can be forced to work longer hours in more arduous conditions, and their home governments will handsomely reward American producers and directors for their patience. As long as the director can coax at least one good shot per scene out of a locally hired crew, the audience will never know or care about all the bloopers left on the cutting room floor. Thus, filming in California in the 21st century often means that a film or television project is more likely to lose money or barely break even, while filming in another state or country in exchange for a tax credit greatly increases the chance that a project will be profitable. Filmmakers often find that balancing production budgets in California means trimming down production values or reducing the number of shooting days, while projects shot elsewhere can splurge on more lavish sets, costumes, and special effects, as well as longer shooting schedules.
By 2025, the cost of filming in California was so out of control relative to other jurisdictions that it was cheaper to fly Lowe all the way to Dublin, Ireland and back to host the game show The Floor, along with 100 American contestants, than to simply film the show in California. About that, Lowe said: "It’s criminal what California and L.A. have let happen — it’s criminal. Everybody should be fired.'"
The unfortunate side effect of outsourcing film and television work is that denying apprenticeships to the next generation of California filmmakers is slowly eroding the massive concentration of accumulated experience and know-how which had made Hollywood unique and special. As show business jobs continued to steadily evaporate during the 2020s, Los Angeles was widely seen at risk of becoming the next Detroit. The January 2025 wildfires pushed many filmmaking professionals to their breaking point. Financially, it made more sense for many of them to flee to the places where their jobs had gone, than to try to stay and rebuild.
From a legal and financial perspective, American film and television executives have no choice but to focus on short-term profits over the long-term interests of the American entertainment industry as a whole. Most executives with greenlight power are part of publicly traded media conglomerates whose corporate directors have a fiduciary duty to the shareholders to earn a profit, and that duty has crushed any sentimental attachment to the tradition of shooting films in Hollywood.