Warner Bros.’ faith in director Peter Jackson to make The Hobbit films has paid off in nearly $2 billion in global box office receipts for the first two films, but the cost of the trilogy has bumped up to $745 million, according to financial documents filed in New Zealand this month, AP reports.
Warner Bros created a subsidiary company in New Zealand to make the movies and their annual financial reports are publicly available. The latest financial statements show that production costs through March 2014 had reached $745 million (NZ$934 million). The films were made in the never-before-seen frame rate of 48 frames per second and shot in 3D. The cost of production on The Hobbit films is three times as much as Jackson spent on making The Lord Of The Rings trilogy.
When The Hobbit films were first announced in 2007 as a two-film package it was estimated that they would cost around $150 million each. Jackson shot the films back to back in New Zealand and had enough material to convince Warner Bros. to turn the films into a trilogy. The first film, The Hobbit: An Unexpected Journey grossed $1.011 billion worldwide, while The Hobbit: the Desolation of Smaug fell just shy of the billion dollar mark, taking $958 million globally.
The studio has recouped $122 million from New Zealand taxpayers through NZ’s incentive scheme designed to attract big-budget movies to the country, the report says. Its unclear if worldwide marketing and distribution costs were included, and there are no costs estimated for the final eight months of the film leading to the release of The Hobbit: The Battle Of The Five Armies in December.
The next test for big-budget productions will be James Cameron’s upcoming Avatar trilogy, also due to be shot in New Zealand. The NZ government last December upped the incentives provided to James Cameron to secure the shoot. An MoU signed between 21st Century Fox, Cameron’s Lightstorm Entertainment and the NZ government showed there’ll be spending of at least $412 million on production activity in New Zealand on the films, including live-action and visual effects. The MoU also marked changes to New Zealand’s range of incentives, with Lightstorm and Fox getting 25 percent rebates on their spend in the country — an increase of 10 points.