A Newsroom report that Amazon could terminate its deal to film all five seasons of its Lord of the Rings TV series here has been borne out – it's moving the entire billion dollar production to the UK
The screen production industry has received the devastating news that the world's biggest budget TV production is abandoning New Zealand, prompting a swift and disappointed response from the Government.
Economic Development Minister Stuart Nash has pulled an estimated $33m of rebates that had previously been agreed – a move Amazon says it won't contest. However, the studio says it will consult its production partners on the next steps, and defer to them.
The Lord of the Rings TV series wrapped shooting of season one in Auckland last week. Newsroom revealed worried crew were warned there were no guarantees it would return to film the next seasons here – despite signing a memorandum of understanding with the Government.
Now, Amazon Studios has announced it will film season two in the UK.
Amazon and the Government had done a deal that the studio would get a 25 percent rebate on all its qualifying expenditure on season one – an estimated $664 million. That is 5 points higher than the usual 20 percent deal.
Last week, Nash said he hoped Amazon would be back for season two. Today, he said he was disappointed by the studio's decision, and the Government would no longer proceed with the deal to provide the extra rebate.
That cuts Amazon's rebate from $165m to $132m – a $33m penalty.
"As we look to relocate the production to the UK, we do not intend to actively pursue the season one Memorandum of Understanding five percent financial uplift with the New Zealand government or preserve the terms around that agreement, however we respectfully defer to our partners and will remain in close consultation with them around next steps." – Albert Cheng, Amazon Studios.
“The Government was informed of the decision yesterday,” Nash said. “Amazon Studios advised that post-production work on season one will continue in New Zealand till June 2022. However season two will be filmed in the UK as part of a strategy by the studio to expand its production space and consolidate its footprint in the UK.
“I am enormously proud of the New Zealand screen sector," he added. "The Amazon Studios’ decision in no way reflects the capabilities of our local film industry or the talents of the people who work in it. This is a multi-national company that has made a commercial choice."
Amazon Studios chief operating officer Albert Cheng said the company would not "actively pursue" the 5 percent financial uplift, or seek to preserve the terms around that agreement. "However we respectfully defer to our partners and will remain in close consultation with them around next steps," he added.
The decision was made by Amazon Studios to create a studio production hub in the UK and relocate its flagship series there. The Los Angeles-based studio expressed in a written statement its gratitude to the New Zealand Government and its business partners here. It is still confident and stands by its decision that New Zealand was "the perfect place" to shoot season one – but it couldn't make it work for season two.
More than half the season one cast members were from the UK; just eight of the main actors were from New Zealand. And the company already has several other big shows in production there: Citadel, The Power, Neil Gaiman’s Good Omens and Anansi Boys.
“The international film sector is incredibly competitive and highly mobile. We have no regrets about giving this production our best shot with government support. However we are disappointed for the local screen industry." – Stuart Nash, Economic Development Minister
As with other Hollywood studios, the company is constantly assessing production locations. When selecting a location for a production, it's understood to consider a variety of factors. These include geography, infrastructure, talent access and mobility, the entertainment ecosystem – as well as the cost of doing business, and government support and partnership opportunities.
The shift from New Zealand to the UK aligns with the studio’s strategy of expanding its production footprint and investing in studio space across the UK, creating a centralised hub where many of the company's main series and films already are already produced.
“We want to thank the people and the Government of New Zealand for their hospitality and dedication and for providing The Lord of the Rings series with an incredible place to begin this epic journey,” said Vernon Sanders, vice-president of Amazon Studios.
"Friday the 13th of August 2021 will be a date firmly embedded in New Zealand screen industry history with the largest television production in the history of the world shunning New Zealand after only one season." – ShowNews
He acknowledged the NZ Film Commission, the Ministry of Business and Innovation, Tourism NZ, Auckland Unlimited, and others for "their tremendous collaboration that supported the New Zealand film sector and the local economy" during the production of season one.
Post-production would continue in New Zealand through to June 2022, he said, and meanwhile pre-production on season two would begin in the UK early 2022.
New Zealand will still hope to capitalise on its Middle Earth tourism brand. Season one is to go to air on September 2, next year, in more than 240 countries.
One silver lining is that Amazon's departure should free up space for other screen production work in Auckland. Newsroom reported last week that Amazon had retained its lease on Auckland's biggest fit-for-purpose studios, Auckland Film Studios and Kumeu Film Studios, and possibly also Studio West, for the duration of the one-year hiatus between wrapping season one and beginning filming season two.
That allowed Amazon to keep its reportedly vast sets, like city-scapes from the Second Age of Tolkien's Middle Earth.
Now, with the move of shooting to the UK, sets, costumes, props and more will be crated and shipped there as well.
And according to The Hollywood Reporter, that means it's a major shift, given that Amazon has invested heavily in sets and facilities in New Zealand. "The show’s steep cost was a key factor in the decision, with sources saying that the UK will be a more economical choice moving forward," writes editor at large James Hibberd.
"Another factor was that the country has a very strict pandemic lockdown policy. Insiders credit the policy with helping keep the production safe during unprecedented times, but it’s also resulted in certain logistical challenges – especially given that roughly half the cast is from the U.K. For instance, any time a member of the cast or crew left the country, they would have to quarantine for 14 days upon returning to New Zealand and there were limits as to how many people could come and go from the production at any given time."
ShowNews, a local screen industry publication, issued a grim alert to the industry. "Friday the 13th of August 2021 will be a date firmly embedded in New Zealand screen industry history with the largest television production in the history of the world shunning New Zealand after only one season," it said.
But Film Commission chief executive David Strong insisted things were still "business as usual".
“It’s a shame and I feel for everyone who has put their hearts into this production. Season two was expected to begin later in 2022, so our role now is to work hard to keep the Kiwi screen sector employed.” – David Strong, NZ Film Commission
This country's international reputation continued to attract global interest, he said. “We’re an easy country to do business in and New Zealanders have a reputation for being highly skilled, innovative and creative. Our locations are legendary, and we have competitive incentives and infrastructure.
"This coupled with the Government’s management of the Covid-19 pandemic positions us as an attractive partner for international productions.”
While New Zealand would have welcomed Amazon back to these shores, he said they were a big business, and their decision was commercial and aligned with their strategy of UK expansion. “In a year of Covid they brought in around NZ$650 million and employed nearly 2000 New Zealanders,” he added.
Strong acknowledged the New Zealand cast and crew who worked on the series and in particular their dedication to excellence. “It’s a shame and I feel for everyone who has put their hearts into this production. Season two was expected to begin later in 2022, so our role now is to work hard to keep the Kiwi screen sector employed.”
Amazon's departure did open the door wider to others to come in, Strong said. “Other internationals have interest in shooting here, and that is an acknowledgement of our strengths.”
Amazon Studio confirmed that post-production on season one will continue in New Zealand through to June 2022 and that they will continue to explore and invest in New Zealand.
Strong said that through the production, crew have continued to innovate and work with leading film techniques and technologies, and they can now apply those to future New Zealand and international productions.
“Every production from a short film to a studio streamer is important to us and we will continue to nurture and support all filmmakers to create great shows.”
Stuart Nash concluded: “The international film sector is incredibly competitive and highly mobile. We have no regrets about giving this production our best shot with government support. However we are disappointed for the local screen industry. Work will continue across government on ways to keep supporting the sector."
