The announcement of a possible fourth Avatar movie will be welcome news for the New Zealand film industry, after the sector was shown this week to have lost $333 million in film revenue in a year.

Director James Cameron, talking at the CinemaCon convention in Las Vegas on Thursday (local time), said there were now four planned follow-ups to his 2009 Oscar Award-winning film.

Cameron, who lives part-time in the Wairarapa, told cinema executives there was too much material for his original plan of two sequels, and even too much for his adjusted plan of three.

His announcement was especially timely for the Kiwi film industry, with figures released this week showing a 41 per cent drop in nationwide feature film production revenue from 2014 to 2015 ($816 million to $483 million).


The Statistics New Zealand figures also showed Wellington, traditionally the hub of feature films in New Zealand, had dropped 55 per cent in film production revenue during that year ($645 million to $289 million).

Reacting to this $356 million decrease, Chris Whelan, chief executive of Wellington Regional Economic Development Agency, said film production was a project-based industry and that revenue streams were inherently "lumpy".

Speaking on behalf of Screen Wellington, Mr Whelan said: "This week's data relates to a year immediately following the conclusion of one of Wellington's mega-projects, so a relative reduction in revenue is to be expected."

These "mega-projects" were Sir Peter Jackson's Hobbit trilogy, which made almost $3 billion at the international box office.

A Hobbit hangover is one of the reasons being given for New Zealand's sudden decline in film revenue.

The Wall Street Journal this week ran a story with the headline "With No Hobbits, New Zealand Movie Industry Is Hobbled".

The Journal article also said the strong Kiwi dollar had pushed up production costs in recent years, making New Zealand less attractive for filmmakers, and that the film industry's "cyclical nature" and a shortage of studio space after the boom were other reasons for the revenue decrease.

Mr Whelan would not be drawn on Cameron's Avatar announcement and said in terms of facilities, locations and expertise, Wellington's credentials as a feature film destination were "world class".

He said credit had to go to the New Zealand Government, "whose reformed incentives programme was very timely".

Mr Whelan said the programme had helped Wellington attract an number of major production and post-production projects to the region, whose impacts stretch from the last financial year into this one.

"We are in demand for current and future projects, and film production - on a scale up to and including 'mega-projects' - is set to be an important contributor to the Wellington economy for the foreseeable future."

In 2013, the New Zealand Government lifted its film incentives to strengthen the local industry and protect it from slow periods in between big blockbusters - periods like this one.

The increased incentives ultimately secured James Cameron's Avatar movies.

Changes to the incentives for both overseas and local film makers included raising the tax rebates from 15 per cent to 20 per cent - and those which provided extra benefits to New Zealand would get extra "points" entitling them to an extra 5 per cent on top of that.
Cameron has previously spoken of the importance of the 25 per cent rebate he received in the three-movie deal.

Meanwhile, deputy chair of Film Auckland, Felicity Letcher, said Cameron's Avatar announcement was "fantastic news for the whole country".

Ms Letcher, also the general manager of props and make-up effects company Main Reactor, said another Avatar film would not only mean more headlines for the New Zealand film industry around the world, but possibly some work for Auckland film businesses too.

"Really, this isn't a regional situation. What happens in Wellington is really great for us here in the Auckland industry and vice-versa. It's a New Zealand film industry."

From 2014 to 2015, while Wellington and New Zealand as a whole had a drop in film production revenue, Auckland saw a rise of $22 million ($166 million to $188 million).
Film production revenue for rest of the North Island stayed static at $2 million and the South Island grew from $3 million to $4 million.

Ms Letcher said she was "really, really pleased" with the recent growth of the Auckland screen industry.

"It's been a really good upturn since the increase in the incentive, and certainly the incentives are working."

She said the biggest constraint to growth was a lack of studio space. "And that would apply nationwide."

Despite the bad news about feature film revenue, New Zealand's overall screen industry has grown by nine per cent ($66 million) to $3.22 billion.

The increase is mainly due to a 241 per cent rise in revenue from the production of commercials (from $160 million to $545 million) as well significant increases in revenue from television production and production of music videos and short films.

Wellington is still number one for feature film production but Auckland leads the way for television - there was a $150 million increase in revenue in Auckland-based television production from 2014 to 2015.

Film Auckland's Felicity Letcher said television production is in some ways a lot more beneficial than film production and that Auckland has benefited from that over the years.

"From our point of view, television production is fantastic because you get five years' worth of work, or a longer pipeline of work, which is what we're looking for. A film can come in and be fantastic for a year but then it goes away again."

Some of the recent high profile and long-standing projects shot in Auckland include Power Rangers, Ash vs Evil Dead, The Shannara Chronicles, and the sequel to 2000 movie Crouching Tiger, Hidden Dragon.

The capital still has big-budget Hollywood films on the go, however, with Scarlett Johansson currently in Wellington filming Ghost in the Shell, and a Wellington-made remake of Pete's Dragon will be released sometime this year.

Weta Workshop and Weta Digital are also currently working on several high profile projects.

Overall, there were 35 feature films completed in New Zealand in 2015, which is down from 40 in both 2014 and 2013.

Revenue from production and post-production businesses increased by 13 per cent to $1040 million and international revenue increased by 4 per cent ($20 million) to $515 million.

Statistics New Zealand senior manager Nicola Growden said there was strong growth from Asian countries and Australia, but revenue from North America had decreased.

There were only three North American co-productions last year, after nine in 2014 and 15 in 2013.

The Statistics New Zealand figures also showed 95 per cent of screen industry businesses in New Zealand made less than $1 million in total revenue in 2015.

The first of the four Avatar films will be released in 2018, with the others coming in 2020, 2022, and 2023.

Cameron said the films will standalone and also be part of a bigger saga.

The Herald made several calls to the New Zealand Film Commission for comment, but did not receive a response.