People forget or don't know that Hollywood is the Silicon Valley of films. You need a special effect? There's a guy down the street who can do that. You need a special lens or lighting? You can rent that, today, for a hundred bucks at the shop around the corner.
That's why films, and the people who make them, congregate in Hollywood.
The guy down the street is not a big studio/distributor providing the cash. As I said, people aren't talking about Hollywood-the-place. It's a metonym, like "Wall Street" and "Fleet Street", and in this case it's specifically about a few companies (mainly the MPAA members).
People forget or don't know that Hollywood is the Silicon Valley of films. You need a special effect? There's a guy down the street who can do that. You need a special lens or lighting? You can rent that, today, for a hundred bucks at the shop around the corner.
That's why films, and the people who make them, congregate in Hollywood.