The Lord of the Rings: Ownership and Profits of Video Games

The rich narrative of The Lord of the Rings (LOTR) has captured the imaginations of millions of fans across the globe. Over the years, various parties have sought to capitalize on this literary treasure, and the question of ownership and profit distribution has often been a point of contention. This article delves into the complex interplay between the Tolkien Estate and Warner Bros., specifically focusing on the rights and revenue from video games like 'Shadow of War.'

The Rights and Their Owners

After J.R.R. Tolkien passed away in 1973, the film stage and merchandising rights for LOTR were sold to United Artists in 1969. By the 1970s, these rights were transferred to The Saul Zaentz Company, which formed Middle-earth Enterprises. In 2007, Embracer Group acquired Middle-earth Enterprises, thereby consolidating Warner Bros.’s ownership over broader LOTR-related rights.

Equally significant is the Tolkien Estate's control over the literary rights. In 2012, a legal battle erupted between the Tolkien Estate and Middle-earth Enterprises (now owned by Warner Bros.) over the unauthorized production of casino and video games. The estate sued, alleging that Warner Bros. had exceeded the bounds of the license granted. This lawsuit was eventually settled amicably in 2017.

Origin and History of the Conflict

The conflict over LOTR rights is not new. Significant issues first arose in the 1970s and have evolved over the decades. As of 2020, the death of Christopher Tolkien, J.R.R. Tolkien’s son and legal guardian of the estate, further complicated the situation. Christopher Tolkien had opposed Warner Bros.’s interpretation of his father's works. Warner Bros. claimed 'artistic license,' while Christopher Tolkien and his descendants argued that they retained significant copyright and rights, particularly as the property had been published over 50 years ago.

Warner Bros.'s stance was that the rights to profit from LOTR-related content, including video games, often fell under their control. This was especially true after the release of the films, which brought significant revenue and renewed interest in the literary works. However, the Tolkien estate and its heirs continued to assert their rights, leading to various legal challenges and negotiations.

Revenue Distribution and Licensing Agreements

A fundamental aspect of the LOTR rights dispute is the distribution of profits from video games. Typically, when a video game is developed, the rights to use characters and settings are licensed separately. The terms of these agreements typically dictate how profits are split between the licensee (the game developer/publisher) and the rights holders (Tolkien Estate and Warner Bros.).

The Tolkien Estate would generally receive a percentage of the profits from the games, given their ownership of the literary rights. Warner Bros., on the other hand, would also take a cut due to their involvement in film rights and marketing. Royalty payments are a common form of remuneration. For instance, the Estate has received around $100 million out of the $1 billion in earnings generated by gaming revenue, Lego revenue, and other property-related assets.

More recently, Warner Bros. has consolidated its control over video game rights through strategic acquisitions and licensing agreements. In 2007, Warner Bros. acquired the rights to create new video games based on LOTR. The creative commons law established that the production company would own all rights, while the artist would receive a union-agreed salary. Monolith Productions, a subsidiary of Warner Bros., is involved in developing and publishing various games using LOTR properties.

Conclusion

In summary, both the Tolkien Estate and Warner Bros. have ownership over different aspects of LOTR, and profits from video games are divided based on specific licensing agreements. The exact terms of these agreements can vary and are often confidential, making it difficult to ascertain the precise financial split. However, the evolution of the rights landscape has seen Warner Bros. gaining significant control over video game development and production, while the Tolkien Estate continues to assert its literary rights.

The legacy of LOTR is not just a storytelling phenomenon but a complex business model that reflects the shifting dynamics of intellectual property rights and revenue distribution in the entertainment industry.