Middle-earth Enterprises to Auction Off Rights
In 1969 J.R.R. Tolkien sold the motion picture, merchandising, stage and other rights to The Hobbit, The Lord of the Rings and other literary works to United Artists. UA were riding high at the time with the success of In the Heat of the Night and The Graduate. Allegedly Tolkien made the deal to pay off a tax debt, although this may be apocryphal. He was paid £100,000 which is equivalent to £1,680,000 today. He also retained a 7.5% royalty interest that has now been transferred to the Tolkien Estate. UA toyed with the idea of adapting The Lord of the Rings and many cinematic luminaries were associated with the project. In the early seventies British film director John Boorman was tasked with writing a screenplay. Boorman, an established director with a track record of being experimental, set about developing a script with his long term collaborator, Rospo Pallenberg. However, the project was cancelled due to costs and the studio getting “cold feet”.
In 1976 United Artists sold most of their rights to Tolkien's work to the Saul Zaentz Company. Zaentz, an established film producer best known for One Flew Over the Cuckoo's Nest, then established Tolkien Enterprises to manage the rights that he'd acquired. Two years later, he produced Ralph Bakshi’s animated adaptation of The Lord of the Rings. The company name was later changed to Middle-earth Enterprises to avoid confusion with the Tolkien Estate. Over the next two decades Middle-earth Enterprises entered into various licensing and merchandising deals for both video and tabletop role-playing games. In 1997,a deal was struck with New Line Cinema for a live-action film adaptation of The Lord of the Rings. The trilogy of films released between 2001 and 2003, made over $3 billion at the box office. A further trilogy of films were made between 2013 and 2015, based upon The Hobbit.
Since the success of Peter Jackson’s films, you would have thought that Middle-earth Enterprises would have capitalised more upon the intellectual property that they controlled. Yet Saul Zaentz was quite a Tolkien purist and along with Christopher Tolkien (Tolkien’s son), was not keen to see the brand “debased”. However, Zaentz died in 2014 and in his last years Christopher Tolkien stepped from the Tolkien Estate, down due to ill health. Tolkien’s grandchildren apparently have a more innovative approach to the running of the Tolkien Estate. Hence in 2017, they made a deal with Amazon for the global television rights for The Lord of the Rings. Jeff Bezos is a consummate fan of Tolkien and beat Netflix and HBO in the bidding war for the TV rights, paying $250,000,000. Apparently, the Tolkien Estate is so pleased with the development of The Lord of the Rings: The Rings of Power that they have provided access to material from The Silmarillion and Unfinished Tales.
Which brings us neatly to yesterday’s announcement by Middle-earth Enterprises that they are to auction off the rights they own pertaining to Tolkien’s work. Episodic, big budget, fantasy television shows are a very lucrative business. If you want verification then cast your mind back to a popular HBO series based upon the works of George R.R. Martin. Hence, with The Lord of the Rings: The Rings of Power due for release in September of this year, Middle-earth Enterprises obviously thought it was the right time to sell their rights. Note that these include merchandise and video games. Two lines of business that have great commercial potential. It is logical to assume that Amazon will want to acquire these rights as it will compliment their existing Tolkien based portfolio perfectly. Middle-earth Enterprises rights are currently valued at $2 billion.
However, business is seldom black and white. I’m sure there may well be other interested parties such as Disney, Netflix or HBO. They may be “curious” about the intellectual property and what it can yield. Or they may be interested in curtailing the business ambitions of a competitor. Buying rights, intellectual properties and patents and then sitting on them is a thing. It’s not always about your own products but sometimes stopping other people’s. Furthermore, if Amazon do buyout Middle-earth Enterprises, what impact would that have upon existing licensed products? Daedalic Entertainment is currently developing a Gollum themed game. And then there is the long standing MMORPG, The Lord of the Rings Online. If the licence that Standing Stone Games currently rely upon isn’t renewed then it would mean the closure of the game. Yes, we’ve endured such shenanigans before. But last time Amazon wasn’t involved.
It’s also worth remembering that Amazon were developing their own MMORPG in conjunction with Athlon Games. However Athlon Games were bought out by Tencent Holdings and Amazon was “unable to secure terms to proceed with this title”. This raises some interesting questions. Was the game completed? What has happened to the code? Was it scuttled purely due to legal issues IE who got what percentage? If these “problems” were resolved, IE Amazon bought out Tencent’s stake, could the game go ahead? If Amazon did launch its own MMORPG based upon Tolkien’s work, would they want a competitor? Remember that Star Wars: Galaxies was closed to clear the path for Star Wars: The Old Republic. The auctioning of Middle-earth Enterprises rights at this time is not a coincidence. I have a suspicion that when the dust settles Amazon will be holding all the cards. And where there’s a winner there’s also a loser or losers.
