Nye's Digital Lab is a weekly scribble on creativity at the intersection of AI & Distributed Systems.

This week I am mourning a past life in LA, and worrying about the economic future of an industry that sustained so many friends.

COLD OPEN

EST. CULVER CITY - DAY - 2004

I still remember how nervous I was walking into Sony Imageworks for the first time.

I had worked my ass off to become an animator, and there I was, a rookie amongst legends. Sunglasses, flip-flops, mobile phones and industry lunches were all part of my routine in no time.

For over two decades, I worked as an animator and visual effects artist, contributing to more than twenty films. I lived the so-called "dream." Venice Beach studio close to Abbott Kinney, Highland Park apartment in a neighborhood of screenwriters, eventually settling in Long Beach with my surfing wife and starting a family. I became a Dodgers fan, developed an unhealthy addiction to fish burritos, and attended west side cocktail parties where we'd argue about the latest producer blunder on some over-budgeted movie that (at least) paid all our bills.

We were part of something larger than ourselves, a creative ecosystem of digital artists, set people, showrunners, technologists and writers. But during COVID, seeing the writing on the wall, I transitioned into education. From that vantage point, I've looked west and watched the industry I loved transform with alarming speed.

My heart bleeds for Hollywood not out of nostalgia alone, but because I see clearly what is happening and what it means for the next generation I teach every day.

The jobs that sustained me in Los Angeles, that built communities and fed middle-class families, are fundamentally changing and moving. The city that was once the undisputed center of the entertainment universe is discovering that geography matters less than it ever has before.

EXT. DETROIT - INDUSTRIAL HEARTLAND - 1950

Before diving into "Tinsel Town," let's start with the "Motor City." Detroit's story offers a framework for understanding disruption.

In 1950, Detroit stood as America's fourth-largest city, with 1.85 million people and 296,000 manufacturing jobs.[1] The Big Three, which are General Motors, Ford, and Chrysler, controlled 90% of the U.S. automotive market through their unionized workforce of more than 650,000 workers.[2] The city was synonymous with American industrial might and middle-class prosperity.

Then everything changed.

The city's population declined by 60% between 1950 and 2010.[3] The Detroit Three's UAW workforce collapsed to just 135,000.[4] Manufacturing began relocating, first to suburbs, then to "right to work" states, and eventually overseas where labor and land were cheaper.[5] Japanese automakers capitalized on the oil crises with fuel-efficient vehicles. Their market share exploded from 1.4% in 1970 to 28% by 1989, while American automakers' dominance collapsed from 82% to 65%.[6]

Our traffic is insane. People still drive cars, billions of them. But Detroit doesn't make them anymore. The industrial advantages of geographic concentration evaporated when transportation costs fell, when information could be transmitted globally, and when expertise became portable.

The work didn't disappear. It moved.

TRANSITION - CUE SUNSHINE DISSOLVE

EST. EXT OVERHEAD HELICOPTER SHOT. LOS ANGELES. DAY.

When people talk about the 2023 Writers Guild strike, they often frame it as a win or a loss. But that misses the point entirely. The 148-day strike simply revealed the fundamental economics were already broken.

In the old broadcast model, successful shows generated rising residuals.[7] But in streaming, writers receive two fixed residual payments regardless of whether a show becomes a massive hit or barely gets watched.[8] The 2023 contract introduced a success-based bonus structure: writers now receive an additional 50% of their fixed residual if a show reaches 20% of a service's domestic subscribers in its first 90 days.[9] But we barely noted the Netflix monster already in the room. The entire economic model that sustained middle-class creative careers had been consumed by streaming platforms before anyone walked a picket line.

For the animation and visual effects industry, we've been dead men walking for a decade. Let's revisit Oscar night in 2013.

Rhythm & Hues Studios filed for Chapter 11 bankruptcy three months after releasing "Life of Pi," which earned $609 million against a $120 million budget.[10] Around 254 people were laid off.[11] When VFX supervisor Bill Westenhofer accepted the Oscar for Best Visual Effects and began thanking the bankrupted Rhythm & Hues, he was played off stage with the Jaws theme after less than a minute.[12]

We were left looking at a cutaway of Nicole Kidman making a "sad face" for us poor VFX artists.

Aw. Thanks Nicole!

Production delays cost Rhythm & Hues between $1.2 million to $1.6 million per month over twenty months. That's roughly $25 million in additional costs.[13] Why? Visual effects companies work on fixed bids. When production costs unexpectedly increase, the VFX house absorbs the overruns.[14]

Between 2003 and 2013, 21 VFX companies closed or filed for bankruptcy.[15] This isn't about one studio's bad luck. It's about an entire sector where the people creating the magic have no leverage, no backend participation, and no protection when timelines extend or creative direction changes.

Every VFX artist I know carries the memory of Rhythm & Hues like a warning. I still am dealing with it. (Clearly.)

We won the Oscar! We made the hit!

We went bankrupt?!?

EXT. VARIOUS CITIES - VANCOUVER, LONDON, MONTREAL - MONTAGE

The work isn't disappearing. It's moved.

But where?

Between 2018 and 2023, Canada's animation job market increased by 30%.[16] British Columbia offers a 39.5% effective tax credit rate for domestic productions and 16% for digital animation and visual effects.[17] Disney established a new Vancouver production facility in 2020 specifically for Disney+ content.[18] Many of my best animator friends have been eating back bacon for a decade.

California's share of highest-grossing animated films dropped from 67% in 2010 to 27% in 2023.[19] France offers 30-40% tax rebates with a €30 million cap per project.[20] The UK provides substantial incentives that have made it a major animation hub.[21]

Let's do an example.

When Disney moved Moana 2 to Vancouver, California lost 817 jobs, $87 million in wages, and $178 million in state GDP.[22] That's one movie. Multiply that across thousands of productions.

The migration isn't just to traditional competitors. Quebec, once booming, lost 3,400 VFX and animation jobs between 2022 and 2023. That's a 42% decrease.[23] This is boom and bust driven by tax incentives that pit regions against each other in a race to the bottom. Even Georgia, home to many of these subsidies, is under attack. The Marvel movies, as American as apple pie, once filmed in a booming Atlanta ecosystem, are now filmed in the UK.

Global politics is throwing gasoline on the fire. In 2025, Trump imposed 25% tariffs on Canadian and Mexican goods and 10-30% on Chinese imports, with retaliatory tariffs following.[24] A trade war with Canada could cause retaliation, rescinding tax credits or closing stages to U.S. studios.[25]

Uncertainty accelerates the flight to more stable production environments.

INT. BEDROOM STUDIOS WORLDWIDE - INTERCUT - DAY/NIGHT

Technology is both the problem and the solution.

The digital tools threatening Hollywood jobs are democratizing the ability to tell stories to everyone on the planet.

"Makemation," Africa's first AI-driven film, premiered in Lagos in 2025. Nigeria's Nollywood is already the second-largest film industry in the world by number of films produced annually.[26] When a talented animator in Bangalore can access the same tools as someone in Burbank, and do it for a fraction of the living costs, the geographic advantage evaporates. This isn't like Detroit losing to Japan because Japanese cars were better.

This is like everyone suddenly having access to the same automotive technology.

The crappy Venice studio where I started now rents for thousands a month. Highland Park median home prices are in the millions. Long Beach requires two solid industry incomes that are near impossible to find. My first job as a compositor on Celebrity Death Match could now be done by AI in minutes. The mid-level animation work that sustained my career is outsourced to Vancouver, Montreal, or Bangalore.

The U.S. animation industry employs more than 220,000 professionals and is expected to grow by just 5% annually, while Asia Pacific is the fastest-growing VFX market. Japan at 12% annually and India at 15%.[30]

The growth is happening. The industry isn't dying. It's just not happening in Los Angeles anymore.

But I see the counter.

Students using Discord servers as production offices, Unreal Engine as their virtual studio lot, and AI tools to handle grunt work that used to eat up massive percentages of production time. Games and short films getting festival attention with the entire budget the same as a single day of craft services in the studio system.

Unreal Engine is free. Blender is free. DaVinci Resolve is free.

AI tools can handle preliminary animation passes that used to require teams. The learning curve is steep as of today, but YouTube tutorials and online communities have democratized education in ways that would have seemed like science fiction when I started. Tomorrow AI will make it even easier.

Find your tribe. Find the people who share your vision and complement your skills. Make community your priority, not location. The cost of entry has never been lower, and the potential audience has never been larger.

It's not a consolation prize. It's a revolution. And I hate to say it, it might be the only option.

EXT. LOS ANGELES - GOLDEN HOUR - AERIAL SHOT PULLING AWAY

Cue: Randy Newman "I Love LA"

The big-time deals in the hills might stay there for a while, as the insanely wealthy rub shoulders with the last generation of movie stars. But middle-class working talent is being redistributed to the global industry.

There's more content than ever before. I just worry that the next Pixar competitor might not come from Emeryville. It might come from a collective in Bangalore who've never dealt with California rent, or a studio in Lagos that can leverage tools without the overhead of established pipelines, or a team in Mexico City that speaks to Latin American audiences better than any Hollywood executive ever could.

Maybe new models will emerge? Maybe California will find ways to compete that don't involve a race to the bottom on tax incentives. Maybe the next generation will build something better from the pieces. Every week I write about how AI is flipping everything on its head. Something has to give, right?

Right?!?

But right now, I'm watching the industry I spent my career in become unmoored from the geography that defined it since the days of MGM and Walt Disney. The career path that sustained us may no longer exist in the same form.

The opportunities are real, the demand for content has never been higher, and talented storytellers will always find ways to make stories.

My heart bleeds for Hollywood not because I'm nostalgic for the past, but because I understand what's being lost. The jobs that built communities and supported my friends' families are migrating globally, following incentives and technology to places where overhead is lower and ambition is just as high. Maybe higher.

The world has changed. And Los Angeles is discovering what Detroit learned decades ago: when geography stops being an advantage, tradition isn't enough to keep an industry in place.

The credits might be rolling, but I'm afraid no one is left to watch them.

FADE OUT.

That's it for this time. I do this every week. If you vibe with the ideas I express, consider subscribing or sharing with friends. Thanks so much for reading.

Nye Warburton is an ex-animator and creative technologist from Savannah Georgia who spent two decades in Los Angeles. This essay was outlined with human labor, and researched, improvised and developed using Claude Sonnet 4.0 and Manus.im.

For more information visit: https://nyewarburton.com

• Tech's Perfect Storm of Layoffs, July 13, 2025

• Reframing Crisis as Opportunity, April 13, 2025

• Why you should consider Savannah, GA, June 22, 2025

1. The Week. "Detroit's rise and fall … and rise?" February 10, 2025. https://theweek.com/articles/461968/rise-fall-detroit-timeline

2. MotorCities. "Autoworkers and Their Industry | Southwest Detroit Auto Heritage Guide." https://www.motorcities.org/southwest-detroit-auto-heritage-guide/autoworkers-and-their-industry

3. Brookings Institution. "Advancing future-forward mobility in Detroit's legacy automotive cluster." May 21, 2024. https://www.brookings.edu/articles/advancing-future-forward-mobility-in-detroits-legacy-automotive-cluster/

4. MotorCities. "Autoworkers and Their Industry."

5. Brookings Institution. "Advancing future-forward mobility in Detroit's legacy automotive cluster."

6. Abandoned Spaces. "Detroit's Decline: How the Automobile Capital of America Fell Into Poverty." July 12, 2022. https://www.abandonedspaces.com/towns/detroit-michigan-decline.html

7. Deadline. "Are Streaming Residuals Being Slashed? As WGA's Own Data Shows, It's Complicated." April 15, 2023. https://deadline.com/2023/04/hollywood-strike-streaming-residuals-wga-producers-1235325130/

8. Ibid.

9. Writers Guild of America. "2023 MBA Contract Changes FAQ."