The Government will no longer go ahead with part of the deal to support The Lord of the Rings TV series, after Amazon Studios decided to quit New Zealand and shift production to the United Kingdom.
In a statement, Economic Development Minister Stuart Nash said he was disappointed by the decision.
"The Government was informed of the decision yesterday.
"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. 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.
Nash revealed that Amazon would lose the incentive it had been offered but was still eligible for a 20 per cent rebate for the work done in New Zealand.
"The previously agreed Memorandum of Understanding [MoU] with Amazon Studios will no longer proceed in its current form. The 5 per cent incentive previously offered on top of the standard 20 per cent rebate for all international film productions is withdrawn," Nash said.
"As with every other international production, Amazon Studios is eligible for a 20 per cent rebate on its qualifying production expenditure in this country, under the terms of the International Screen Production Grant.
"It is estimated that Amazon Studios' qualifying local expenditure totals around NZD $663.74 million so it could potentially be eligible for a NZD$132 million rebate under the 20 per cent rule.
"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."
In a statement, Amazon Studio's VP and Co-Head of TV, Vernon Sanders, thanked New Zealanders for their hospitality.
"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," he said.
"We are grateful to the New Zealand Film Commission, the Ministry of Business, Innovation and Employment, Tourism New Zealand, 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."
Filming has just wrapped on the first season of the series in West Auckland, and it's been announced the series will premiere on September 2, 2022.
The drama promises to bring to life JRR Tolkien's Second Age of Middle-Earth's history for the first time, set thousands of years before the events of The Hobbit and The Lord of the Rings take place.
The ensemble cast includes Cynthia Addai-Robinson, Robert Aramayo, Owain Arthur, Maxim Baldry, Nazanin Boniadi, Morfydd Clark, Ismael Cruz Córdova, Charles Edwards, Trystan Gravelle, Sir Lenny Henry and Ema Horvath.
NZ Film Comission CEO: "Business as usual"
New Zealand Film Commission CEO David Strong says Amazon's decision to pull the production out of NZ was a "a shame" but declared it was "business as usual" for the local film industry.
"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," Strong said in a statement.
"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."
"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," the statement read.
Strong added: "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."
Elijah Wood weighs in
The biggest star of the original Lord of The Rings franchise has weighed in on the news production is moving overseas.
Elijah Wood who played Frodo Baggins in the film trilogy directed by Sir Peter Jackson reacted to the new with just a single emoji: