SAYit Blog
Have we got value for money from the Hobbit?

Most New Zealanders will be aware of the controversy over government support for the Hobbit films.  Now the first film has been out for a while and the movie awards season is over for another year, we thought it would be a good time to ask New Zealanders how they felt about government support for the films.  First, some information on the films:

  • Our government gave the Hobbit films subsidies worth $67 million
  • They also changed the labour laws, supposedly to keep the films in New Zealand (although some dispute whether the changes were really necessary to keep the films here)
  • John Key claimed in January that the Hobbit movies created around 3000 jobs, although there is controversy about whether that figure was accurate (Wingnut Films said that 3000 people worked on the films, which may or may not be the same as saying 3000 jobs were created).
  • The films were also supposed to be good for New Zealand tourism, although it is difficult to quantify exactly what effect they have had.
  • The Internet Movie Database (http://www.imdb.com/title/tt0903624/business?ref_=tt_dt_bus) states that the first film cost an estimated US$180,000,000 and has since grossed US$980,644,732.
  • The first film was nominated for three Oscars and won none.

The 'worldwide gross' figure presumably includes charges by local distributors etc. - I think it's the total sum for all the cinema tickets purchased in the world rather than the money received by the film-makers themselves.  It's reasonable to assume though that the film-makers have made a profit out of the film. 

In February 2013, we asked New Zealanders on SAYit whether or not they believe that NZ taxpayers have got value for money from the $67 million subsidy.  The question didn't mention the change to the labour laws as it's hard to quantify 'value for money' from a law change - it therefore only measures attitudes towards the subsidy.  New Zealanders are pretty evenly split on the topic:

  • 42% believe that the subsidy has been good value for money, while 38% feel it has not been good value for money.
  • Men (48% good value, 35% not good value) are more positive than women (37% good value, 41% not good value).
  • There is a clear relationship between support for the subsidies and age.  34% of under 30s think the subsidies were good value for money, compared with 39% of 30-44 year olds, 46% of 45-59 year olds and 48% of over 60 year olds.

A follow-up question pointed out that much of that subsidy went to Warner Brothers, the studio.  It then asked whether companies like Warner Brothers should have to pay subsidies from the New Zealand government back if they are successful.

  • 70% of New Zealanders thought that companies should have to pay back subsidies, while 19% did not and 11% were unsure.
  • 75% of women thought that subsidies should be repaid, compared with 64% of men.

Clearly there's a difference between saying that companies should pay it back and actually getting them to do so.  Movie studios are notoriously opaque with their accounting, with films that are apparently highly successful declaring only tiny net profits (despite many of the people involved making considerable sums of money out of it).  There is also the possibility that productions would shift elsewhere if NZ tried to force them to repay subsidies.  It does seem to be a fairness debate - if government subsidies have helped companies make more money, then it's only fair that they reimburse taxpayers.

Perhaps it also suggests that New Zealanders aren't really convinced by the argument that the production has created jobs, encouraged tourism and / or improved the economy?  If we were convinced that the production has boosted the economy by more than $67 million, then would we be more comfortable with the studio keeping their subsidies (almost as if we've 'bought' a $67 million boost to the economy by subsidising the production with $67 million)?

That could be an interesting question to debate - what real impact do you think the Hobbit films have had or will have on the economy?  Do you think they really will lead to a substantial increase in the numbers of tourists coming to New Zealand?  Have you ever considered going to a country because that's where a specific movie was filmed?

You may also be interested in the results of an earlier poll on the Hobbit (November 2012) - did people think it would be a success?  Results are available at http://umr.co.nz/updates/will-optimism-about-hobbit-mean-people-go