Industry insiders know the story well.
Over the past few years, as Hollywood has restructured to meet the demand for streaming entertainment, and as major companies have seen fit to consolidate, the entertainment industry has cut budgets, shed jobs, and in some cases outsourced work overseas. This painful moment of deflation coincided with leaps forward in generative AI such as the release of ChatGPT In 2022, the same year Netflix and the rest of Hollywood began shifting their streaming models to focus on profitability.
But don’t blame generative AI for the recent devastating contraction in California’s creative workforce, says the latest report from the Los Angeles-based Otis College of Art and Design, which annually produces research covering the state’s film, fashion, gaming, media, advertising, arts and architecture industries.
“The pattern of job losses in terms of the types of jobs that are lost and when they are lost does not support the fact that there is this displacement of workers due to AI,” says Patrick Adler, co-author of this year’s research and a founding partner of Westwood Economics and Planning Consultants. “What we find is that AI, in the creative economy, has dramatically changed the way work gets done.”
Hollywood Reporter Check out the 2026 report, “Creative Disruption: Artificial Intelligence and the Creative Economy in California: 2022-2025,” before its release on April 7. The research was developed by Otis College of Art and Design in partnership with Westwood Economic and Planning Consulting. In addition to Adler, Taner Osman co-authored the report, which used public data to produce quantitative analyzes and interviews with creative professionals to produce qualitative assessments.
Between 2022 and 2025, California’s creative economy will lose 14% of its jobs, or 114,000 jobs. According to the report, these losses were: They were concentrated in two sectors in particular: film, television and audio (which saw a roughly 30 percent decline in jobs in that time period) and in traditional media (with a roughly 34 percent decline).
But, as the authors note, the jobs most exposed to AI in the state’s creative economy — jobs of writers, software developers, and artists — have been growing in number, rather than shrinking. Job postings for these occupations have also risen.
Instead of artificial intelligence, “Ans [for this job loss] “It is a combination of cost-driven displacement of lower-wage roles and structural changes within creative sectors that have hurt California harder than the rest of the country,” the report says. While people in low-wage occupations left California primarily because of the high cost of living, the state was also hit hard by budget cuts that followed Hollywood’s “peak TV” era.
The good news for Hollywood workers is that so far the use of AI in the creative industries appears to be replacing specific tasks rather than employees. After interviewing workers in California’s creative industries, the authors reported that “no participant described AI as replacing an entire role or workflow.” “Where AI is used, it is deployed in well-defined activities where outputs can be verified, time savings are evident, and the quality of outputs meets expectations,” they add.
One example used in the report is that of post-production in film and television, where AI can perform rotoscoping or wire removal but struggles with creative tasks. Furthermore, verifying AI output creates additional work for humans. One VFX company owner quoted in the report describes the use of AI in a large TV production: “They have 15 artists sitting at workstations fixing the AI… When you multiply the artist rate by 15 and put that against the cost of the work you do, it negates any savings that the AI gives you.”
The report also notes that creative workers have a significant ability to determine how much generative AI is used in their fields. While they may follow guidelines or rules set by supervisors, workers are usually the ones using AI directly. “A worker who believes in the technology will patiently iterate; a skeptical person may conclude that the AI is not yet capable of performing a particular task,” the authors write. “Both views were present among the interviewees.” The authors found that many workers were concerned about the ethics of using AI, while some concealed their use of AI, fearing they would be labeled as consumers.
While the research finds that AI is not replacing workers in the state’s creative economy, it finds that technology is already changing the nature of creative work. Interviewees said technology is raising productivity expectations, that managers are investing in AI tools rather than human collaborators, and that they face pressure to produce lower-quality work.
One of the movement’s creative directors in the report recalls one of the clarifying moments they had on the job: “The creative director said, ‘At a certain point, you just have to say it’s good enough,’ which I think is the biggest risk of AI. We’re lowering our standards.”
The authors recommend that creative organizations respond to this public skepticism and uncertainty about AI by not rushing to implement AI tools and combat the stigma that their employees experience when it comes to using the technology by implementing policies such as moratoriums. “Workers who know they won’t walk away from the job will experiment more openly, exchange ideas more freely, and invest real effort in making AI tools work,” the authors explain.
In other words, Adler says, “There is very good evidence that we are finding that adoption of AI would be much faster and much deeper if creative workers had more confidence in it.”
