The entertainment and media industries are undergoing a period of transformation marked by tighter budgets, evolving audience habits and growing pressure to operate more efficiently. At GHJ’s recent Entertainment and Media Industry Outlook event, industry leaders examined the latest in macroeconomics in entertainment and media, the impact of new tax legislation and more. From reduced film and television production to greater dependence on tax incentives and automation, the industry is facing a tougher market to make, publicize and profit from projects. Yet within these challenges, there are still opportunities – particularly for those embracing innovation, technology and strategic tax planning.

 

A TOUGHER MARKET FOR FILM AND TELEVISION PRODUCTION

Film and television production levels have dropped, with volume in the third quarter of 2025 the lowest since the pandemic, according to data from Variety. Fewer greenlit projects, tighter financing and slower deal flow have led to increased competition for both talent and distribution among studios and streaming platforms. This has prompted an intensified focus on financial discipline, where producers and studios are reassessing cost structures and production strategies.

The result is a leaner industry that rewards efficiency and strategic decision-making. Producers are leveraging data analytics, automation tools and AI-driven production workflows to manage costs, improve scheduling and maximize output quality. Technology now plays a central role in production, plus in marketing, distribution and audience engagement.

 

DISRUPTION IN ADVERTISING

The media industry is seeing increased disruption as advertising revenues decline and consumer attention becomes more fragmented across platforms. Traditional broadcasters and print publishers continue to face pressure from digital-first competitors and social media outlets that deliver real-time content tailored to individual audiences. At the same time, the rise of connected TV, podcasts and short-form video has created new revenue opportunities for brands that can adapt quickly. Media companies are investing in analytics, subscription models and audience segmentation tools to drive engagement and improve return on investment. However, the ongoing need to balance quality content creation with cost efficiency remains a defining challenge across the sector.

 

TAX CONSIDERATIONS RESHAPING PRODUCTION DECISIONS

With cost control top of mind, many entertainment companies are relying on favorable tax jurisdictions and credits to support profitability. Several key developments are influencing financial strategy across the industry:

  • Production Tax Incentives: States and countries continue to adjust film and television incentive programs to attract investment. Some jurisdictions are expanding credits, rebates or credit ceilings, while others are tightening eligibility or increasing reporting obligations. Understanding the nuances of these programs and their potential for transferability or monetization remains a large part of financial planning.
  • Tariffs and International Production: Recent public debate on tariffs has added uncertainty for studios that rely on overseas filming and post-production. Potential increases in tariffs on imported equipment, materials and even creative services could impact budgets and influence decisions on where to produce future content.
  • The One Big Beautiful Bill Act (OBBBA): This legislation introduces expanded deductions aimed at accelerating cost recovery and strengthening cash flow. Entertainment leaders will see significant benefits through these key provisions:
    • Special expensing for qualified sound recording productions
    • Permanent extension of bonus depreciation on qualified assets and enhancement of film, television and live theater expensing
    • Restoration of the EBITDA-based business interest deduction limitation

    • Full expensing of domestic research and experimental (R&E) expenditures

       

EMERGING AREAS OF GROWTH

Despite these challenges, opportunities are expanding in many sectors, and new technologies are emerging. Sports, live events, gaming and digital media continue to draw strong consumer engagement and investment. As streaming services seek to diversify content and attract loyal audiences, unscripted programming, sports documentaries and interactive content are proving resilient.

Los Angeles remains a creative hub for entertainment, despite the landscape of where film and television is being produced is changing. California’s newest tax credit for film and TV production is designed to stimulate on-location production in Los Angeles and boost the industry in this central region for entertainment. FilmLA’s vice president has even stated that the organization is beginning to see signs of the incentives encouraging LA-based production. This can ultimately create cost-saving opportunities for entertainment leaders that hope to produce in California. 

In addition, the rise of virtual production and sustainable production practices offers both environmental and financial advantages. Leaders who adopt these tools early can achieve cost savings while meeting growing expectations around sustainability and corporate responsibility.

 

MOVING FORWARD WITH STRATEGY AND INNOVATION

While the entertainment and media industries face economic headwinds, forward-thinking leaders can still find success by focusing on strategic tax planning, operational efficiency and innovation. By leveraging technology, exploring emerging sectors and aligning with new incentive structures, these companies can position themselves to withstand current pressures and capture the opportunities shaping film, television and media in 2026.

Going into the new year, make sure your strategy is set up for success. To talk to GHJ’s team of entertainment and media experts, contact its leaders.