Tech Policy at Duke University

Decades before artificial intelligence (AI) became a reality, Hollywood depicted a future living among the technology defining our current age. Movies like 2001: A Space Odyssey, Minority Report, and Her foreshadowed the contemporary issues of agentic AI, digital surveillance, and AI companionship discussed by scholars and policymakers today.

Now, AI is coming to make its mark on the industry that first introduced the public to the concept and its potential capabilities. Investments in AI are shaping the future of the film industry. Netflix recently announced the acquisition of InterPositive, a company developing AI tools to alter existing footage, for up to $600 million. Amazon MGM Studios is developing its own proprietary AI tools to “streamline the creative process.” Disney, which just exited its partnership with OpenAI after the collapse of its Sora application, is in conversations with over a dozen partners about how to proceed with AI tools.

As studios forge ahead with advances in AI, other stakeholders will need to grapple with how the technology might impact their roles in the pre-production process.

State governments provide incentives for film production

For decades, state governments have offered incentives to film productions, in hopes of promoting a local film industry and boosting economic activity. Georgia is notable for its Film Tax Credit program, a 20% base transferable tax credit provided to production companies whose projects are certified by the Georgia Department of Economic Development. The program offers an additional 10% uplift credit for promoting the state of Georgia (via inclusion of the Georgia logo in the credits of the completed production) and a post-production tax credit. North Carolina also offers incentives, administered through a Film and Entertainment Grant program which offers a capped 25% rebate on qualifying expenses made in-state by production companies. Qualifying expenses include goods and services purchased and used in-state, some wages, fringe benefit contributions, stipends, and living allowances.

The economic benefits of these programs to states are varied. The Georgia Film Office reported that productions spent $2.6 billion in the state during fiscal year 2024, and $11 billion total from fiscal years 2022 to 2024. Productions spent $185.5 million in North Carolina in 2025. Yet, government incentives have not proved sustainable, given increasing foreign competition. While Georgia has seen a boom in private investment in studio development, it has also seen studios like Marvel scale back on productions as costs abroad become cheaper than costs in the United States. Despite continued multi-billion dollar production spending, Georgia’s spending by production peaked in FY 2022. North Carolina productions are also anticipating a loss of investment due to international competition.

Many states have commissioned economic impact studies of film incentives, demonstrating tax-incentive programs have a negative return on investment. In North Carolina, the estimated return on investment ranges from 22 to 61 cents per dollar of state incentives. States may still receive indirect benefits in the form of increased local economic activity, particularly associated with the hospitality and service industry, and increased tourism. The current economic impacts of government incentives on film production remain complex.

AI changes the landscape for location scouting

While governments offer incentives to attract productions to their states, AI has the potential to change production studios’ calculus on location selection. Pre-production use cases for AI are highly developed. In particular, AI-enabled analytics of scripts allows for more targeted location selection. Companies like Massif are beginning to offer AI products for “location intelligence” by using script analysis, database matching, and external search to more quickly offer recommendations for filming locations. These products offer film studios a significant cost reduction by increasing access to location information and potentially replacing the need to physically scout locations. For localities seeking to attract productions, the use of AI in location scouting increases competition, especially by providing increased access to non-U.S. locations. AI may also improve the efficiency of production once on location. AI’s ability to analyze scripts and shots, and replace already shot footage, reduces the amount of takes needed for filming, the time spent in a location, and the indirect benefits associated with production. State governments must consider these impacts as they forecast future economic impacts of incentive programs.

Recommendation: State governments need to reexamine incentive programs

As the use of AI in pre-production shifts to allow studios to efficiently scout locations, state governments offering incentive programs should rethink their strategy to maintain a local creative economy. Agencies like the Georgia Film Office and the North Carolina Department of Commerce should consider partnering with production studios and companies deploying location intelligence AI tools to offer location intelligence to the studios. Such partnerships would ensue that state incentives and other attractive production elements (diversity of geography, labor force, etc.) are accurately represented in the data powering these platforms, enabling states to have a more competitive posture.

States should also reevaluate the economic benefits of their incentives altogether. The economic benefits are far from settled and, in some cases, offer minimal, if any, returns for the state. State governments might consider other methods of supporting creative economies. Other countries have experimented with direct support for creatives within their jurisdiction, such as Ireland’s Basic Income for the Arts. The program supplements income for active creative artists. After an initial pilot that found a 1.31x return one year after launch and a 1.75x return three years after launch, the program is expanding. Applied to the film industry, basic income programs could help encourage grassroots expansion of the film industry by encouraging talent to settle in the jurisdiction of the program. A shift from encouraging productions that temporarily contribute to the local economy to supporting talent residing in the state can provide more sustainable economic benefits as AI changes the landscape of the pre-production process.

The next blog will focus on how AI is impacting those who work on film productions—both on-screen talent and behind-the-scenes technical workers. Learn more about the AI & Creative Economy Project at Duke.