Industry insiders know the story all too well.
Over the last few years, as Hollywood restructured to meet the demand for streaming entertainment and as major businesses saw fit to merge, the entertainment industry whittled down budgets, shed jobs and in some cases outsourced work overseas. This painful moment of contraction happened to coincide with leaps forward in generative AI like the release of ChatGPT in 2022, the same year that Netflix, and the rest of Hollywood, began shifting their streaming models to focus on profitability.
But don’t blame generative AI for the devastating recent shrinkage in California’s creative workforce, says the latest report from the L.A.-based Otis College of Art and Design, which produces research annually encompassing the state’s film, fashion, gaming, media, advertising, arts and architecture industries.
“The pattern of job loss in terms of the types of jobs that are being lost and when they’re being lost does not support the fact that there’s been this displacement of workers by AI,” says the co-author of this year’s research Patrick Adler, a founding partner of Westwood Economics and Planning Consultants. “What we do find is that AI has, in the creative economy, dramatically changed how work is being done.”
The Hollywood Reporter viewed the 2026 report, titled “Creative Disruption: AI and California’s Creative Economy: 2022–2025,” before its release on April 7. The research was developed by Otis College of Art and Design in partnership with Westwood Economics and Planning Consultants. In addition to Adler, Taner Osman co-authored the report, which used public data to produce quantitative analyses and interviews with creative professionals to produce qualitative assessments.
Between 2022 and 2025, California’s creative economy lost 14 percent of its jobs, or 114,000 roles. According to the report those losses were concentrated in two sectors in particular: film, television and sound (which saw a nearly 30 percent decline in jobs in that time period) and in traditional media (with a nearly 34 percent decline).
But, the authors note, the jobs most exposed to AI in the state’s creative economy — those of writers, software developers and artists — have been growing in number rather than shrinking. Job postings for these occupations have been up as well.
Rather than AI, “the answer [for this job loss] lies in a combination of cost-driven displacement of lower-paying roles and structural changes within creative sectors that have hit California harder than the rest of the nation,” says the report. While people in lower-paying occupations have left California due primarily to the high cost of living, the state has also been hit hard by budget cuts that followed the “Peak TV” era in Hollywood.
The good news for Hollywood workers is that so far generative AI use in creative industries appears to be replacing specific tasks instead of staffers. After conducting interviews with workers in California’s creative industries, the authors report that “No single respondent described AI as having replaced an entire role or workflow.” They add, “Where AI is used, it is deployed for well-defined activities where the output is verifiable, time savings are clear, and the quality of output meets expectations.”
One example used in the report is that of postproduction in film and TV, where AI can accomplish rotoscoping or wire removal but struggles with creative tasks. Moreover, checking AI outputs is creating additional work for humans. One VFX company owner quoted in the report describes the use of AI on a major television production as “They have 15 artists that are sitting at workstations fixing the AI… When you multiply the rate of the artists by 15 and put that against the cost of the work you’re doing, it negates any savings that AI is giving you.”
The report also argues that creative workers have significant agency in determining how much generative AI is used in their fields. While they might follow guidance or rules set by supervisors, the workers are usually the ones using the AI directly. “A worker who believes in the technology will iterate patiently; a skeptical one may conclude that AI is not yet able to perform a particular task. Both views were present among interviewees,” the authors write. The authors find that many workers were concerned about the ethics of using AI, while some even hid their use of AI, fearing it might brand them as expendable.
While the research finds that AI is not displacing creative economy workers in the state, it argues that the technology is already changing the nature of creative work. Interviewees said the tech was raising productivity expectations, that managers were investing in AI tools rather than human collaborators and that they were facing pressure to produce lower-quality work.
One motion creative director quoted in the report recalls one illustrative moment they experienced at work: “The creative director said, ‘At a certain point, you just have to say it’s good enough,’ which I think is the biggest danger of AI. We lower our standards.”
The authors recommend that creative organizations respond to this rank-and-file skepticism and uncertainty around AI by not rushing the implementation of AI tools and by fighting the stigma that their staffers have when it comes to using the technology by implementing policies such as firing freezes. The authors explain, “Workers who know they will not be adopting themselves out of a job will experiment more openly, share insights more freely, and invest genuine effort into making AI tools work.”
In other words, says Adler, ”There’s pretty good evidence that we’re uncovering that AI adoption would be a lot faster, a lot deeper if creative workers had more trust in it.”
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