New Zealand Prime Minister John Key has announced in a press conference that The Hobbit films will be filmed in the country following a new deal with New Line/Warner Bros.
The government is expected to pay up to $25 million and make changes in its incentive program for big budget films which would result in an additional rebate of $15 million for the studio, depending on how each of the two films perform.
"I'm delighted we have achieved this result. Making the two movies here will not only safeguard work for thousands of New Zealanders, but will also allow us to follow the success of the 'Lord of the Rings' trilogy in once again promoting New Zealand on the world stage," Key said.
"The industrial issues that have arisen in the past several weeks have highlighted a significant set of concerns for the way in which the international film industry operates here in New Zealand. We will be moving to ensure that New Zealand law in this area is settled to give film producers like Warner Brothers the confidence they need to produce their movies in New Zealand."
The Hobbit films are expected to cost about $500 million to make. Peter Jackson will direct both films starting in February for a release in December 2012 and December 2013.