Film-maker Sir Peter Jackson has agreed to sell Wellington-based Weta Digital's tech division by the end of the year to a 3D game-development company based in the United States.
The deal is worth nearly NZ$2.3 billion.
US-based Unity Software has said it will use the purchase to "unlock the full potential of the metaverse" by "democratising" Weta Digital's sophisticated visual effects tools, which it described as currently being "incredibly exclusive". The goal, the company said, will be to make the tools available to creators and artists around the world.
In a statement released by Unity - whose technology is used in games such as Pokémon Go and Call of Duty: Mobile - Jackson touted the forthcoming sale as "nothing short of game-changing".
"Weta Digital's tools created unlimited possibilities for us to bring to life the worlds and creatures that originally lived in our imaginations," he said. "Together, Unity and Weta Digital can create a pathway for any artist, from any industry, to be able to leverage these incredibly creative and powerful tools.
"Offering aspiring creatives access to Weta Digital's technology will be nothing short of game-changing, and Unity is just the company to bring this vision to life."
Jackson co-founded Weta Digital in Wellington in 1993 alongside Sir Richard Taylor and Jamie Selkirk to help bring his special-effects-heavy movie Heavenly Creatures to life.
Since then, the company has won industry acclaim, including six Oscars for visual effects on movies including the Lord of the Rings trilogy and Avatar. The company has also played a large role in digitally savvy remakes of King Kong, The Jungle Book and the Planet of the Apes series.
In a company blog announcing the acquisition, Unity said today the Weta Digital service teams "will continue as a standalone entity known as WetaFX and will become Unity's largest customer in the media and entertainment space".
Jackson will still majority own WetaFX, and current Weta Digital CEO Prem Akkaraju will run it.
Unity, meanwhile, will be the new employer for 275 of Weta Digital's current engineers "known for architecting, building, and maintaining Weta Digital tools and core pipeline" as well as current Weta Digital chief technology officer Joe Marks.
The company will also control a number of digital effects tools developed by Weta Digital over the years - including Manuka, Gazebo, Barbershop, Lumberjack, Loki, Squid and Koru - and "a foundational data platform for interoperable 3D art creation, making it easy for hundreds of artists to work seamlessly together;".
Unity senior vice president and general manager Marc Whitten described "the brilliance of Peter Jackson and the entire team at Weta Digital" as "incredibly inspirational" to his company.
"I remember when the first preview of Fellowship [of the Ring] landed in the theatres — just the preview, mind you, not the actual film — and how the hair on the back of my neck stood up," he wrote today. "It's an experience that I would find myself having over and over again with Caesar, the Na'vi, King Kong, and in many films where I didn't even know Weta Digital was behind the great work.
"I was a fan before I fully appreciated the genius of Peter Jackson and knew the depth of the expertise and talent housed in this New Zealand-based studio."
Jackson and wife Fran Walsh currently control about 60 per cent of Weta Digital's shares, according to the New Zealand Companies Office. Senior visual effects supervisor Joseph Letteri owns just over 8 per cent of the company.
Today's announcement comes amid a flurry of deals over the past year in which New Zealand tech companies were sold to overseas buyers. Just over a month ago it was revealed that Wellington's A44 Games - one of New Zealand's top video gaming developers, founded by Weta Digital alumnus Derek Bradley - was sold to UK-based venture Kepler Interactive.
Other offshore tech sales this year have included robotics-specialist Rocos' sale to a US firm, the $100m+ sale of EzyVet, plus the sale of Vend ($455m), Timely ($135m), Seequent ($1.45b), mobile gaming outfit Ninja Kiwi ($203m), Education Perfect (in a majority-control deal valuing the firm at $455m) and the $500m Hawaiki Cable, while December saw the sale of local retail hero Mighty Ape to Australia's Kogan for $128m.
Gareth Sutcliffe, lead analyst for games at Enders Analysis in London, predicted today the Weta Digital sale will result in Wellington-based operations - particularly research and development - to be "ultimately hollowed out and moved to North America".
Weta Digital has been approached for comment.
It's been about a year since the company underwent an independent review by Miriam Dean QC following allegations of a toxic work culture. She received 80 complaints from crew about incidents they regarded as bullying, 120 complaints of inappropriate conduct going back many years and 19 complaints of sexual harassment dating back to 2001.
In addition, Dean said "the gender pay gap is real" at the company, which was described by some as an "old boys' club" with unconscious bias and sexist banter. However, the
company's infamous "porn Friday", in which explicit content was shared on the internal network, probably ended around 2014, she noted.
"The company's workforce is not toxic, but as my interviews and survey results revealed, there is a problem in pockets of the organization, and it has manifested in these complaints," Dean said in her report, which was commissioned by the company and shared with the media. "The company's culture needs considerable improvement, some departments and realms more than others."
Dean described the company as "in the top league of the world's digital effects companies" but still, at heart, acting like "the teenage start-up that opened its doors all those years ago".