Industry insiders are familiar with this story.
In recent years, as Hollywood has restructured to meet the demands of streaming entertainment and major companies have seen fit to merge, the entertainment industry has slashed budgets, cut jobs and, in some cases, offshored work. This painful moment of shrinkage happened to coincide with a breakthrough in generative AI, such as the release of ChatGPT. 2022 is the same year that Netflix and the rest of Hollywood began shifting their streaming models to focus on profitability.
But the recent catastrophic decline in California’s creative workforce shouldn’t be blamed on generated AI, says a new report from the LA-based Otis College of Art and Design. The university annually conducts research covering the state’s film, fashion, gaming, media, advertising, art and architecture industries.
“The pattern of job losses, in terms of the types of jobs being lost and when they are lost, does not support the fact that there has been AI replacement of workers,” said Patrick Adler, co-author of this year’s study and founding partner of Westwood Economics and Planning Consultants. “What we know is that AI has dramatically changed the way work is done in the creative economy.”
hollywood reporter viewed the 2026 report, titled “Creative Disruption: AI and California’s Creative Economy: 2022-2025,” ahead of its April 7 release. The study was developed by the Otis College of Art and Design in partnership with Westwood Economics and Planning Consultants. In addition to Adler, Tanner Osman was a co-author on the report, using publicly available data for quantitative analysis and interviews with creative experts to develop a qualitative assessment.
Between 2022 and 2025, California’s creative economy lost 14 percent of jobs, or 114,000 roles. According to the report, these losses They are particularly concentrated in two sectors: film, television, and audio (where employment has fallen by nearly 30% over the same period) and traditional media (which has seen a decline of nearly 34%).
Provided by Otis College of Art and Design
But the authors note that the number of jobs most exposed to AI in the state’s creative economy – writers, software developers and artists – is growing, not shrinking. Job information for these positions is also increasing.
“Answer” not AI [for this job loss] “People in low-wage jobs are leaving California primarily because of the high cost of living, but the state has also been hit hard by budget cuts that followed Hollywood’s ‘Peak TV’ era.”
Provided by Otis College of Art and Design
The good news for Hollywood workers is that so far, the use of generative AI in the creative industries appears to be replacing staff for specific tasks. The authors interviewed creative industry workers in California and found that “not a single respondent said AI has replaced their entire role or workflow.” They further add, “When AI is used, it is deployed in well-defined activities where the output is verifiable, the time savings are obvious, and the quality of the output meets expectations.”
One of the examples used in the report is film and television post-production. AI can do rotoscoping and wire removal, but it struggles with creative tasks. Additionally, checking the AI output creates additional human work. One VFX company owner quoted in the report explains the use of AI in major TV productions: “If you have 15 artists sitting at their workstations modifying the AI… If you multiply the percentage of artists by 15 and convert that into the cost of the work you’re doing, it negates all the savings that the AI provides.”
Provided by Otis College of Art and Design
The report also argues that creative workers have significant decision-making power in determining the extent to which generative AI is used in their fields. Although they may follow guidance and rules set by their managers, employees are typically the ones who use AI directly. “Workers who believe in this technology will be patient and iterate, while skeptical workers may conclude that AI is still unable to perform certain tasks. Both opinions were present among our interviewees,” the authors write. The authors found that many workers are concerned about the ethics of using AI, and some even hide their use for fear of being branded disposable.
While the study says AI will not replace workers in the state’s creative economy, it argues that technology is already changing the nature of creative work. Interviewees said technology is raising expectations for productivity, that employers are investing in AI tools rather than human collaborators, and that they are under pressure to produce lower-quality work.
One motion creative director quoted in the report recalls a specific moment he experienced while working. “The creative director said, ‘At some point, you have to say enough is enough.’ I think this is the biggest danger with AI: We lower our standards.”
The authors recommend that creative organizations respond to public skepticism and uncertainty around AI by not rushing to adopt AI tools and by implementing policies such as invoking freezes to combat biases that staff may have about the use of the technology. The authors explain that “workers who know they’re not going to be out of work will experiment more openly, share insights more freely, and put real effort into making AI tools work.”
In other words, Adler said, “We have pretty good evidence that if creative workers trusted AI more, the adoption of AI would be much faster and deeper.”
