The intellectual property map of J.R.R. Tolkien’s The Lord of the Rings and The Hobbit

The rights to The Lord of the Rings and all things Middle-earth are complicated. This primer brings us up to date.

There’s a video that Lee Guinchard, CEO of Embracer Freemode, showed me that is helpful for those exploring the rights and licensing for The Lord of the Rings and The Hobbit, the works of author J.R.R. Tolkien. Embracer Freemode currently owns the rights previously held by Middle-earth Enterprises. And it has just licensed Peter Jackson and Warner Bros. to make The Lord of the Rings: The Hunt for Gollum coming in 2026.

“This is a map. Not of a place. This is a map of intellectual property. More precisely, this is a map of the history of the copyrights, trademarks, and service marks for Middle-earth as described in The Hobbit and The Lord of the Rings books,” the video begins.

It shows how John Ronald Reuel Tolkien, a professor at Oxford University, started the vast franchise of Middle-earth. One day, while grading papers, the professor stopped and wrote down a single line, “In a hole in the ground, there lived a hobbit.”

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He set that aside and started telling his children bedtime stories about the hobbit. He set that aside and came back to it. He started telling his children bedtime stories about the hobbit.

After more time, these stories turned into a manuscript. That manuscript found its way to publishers, Allen & Unwin, who, in 1937, published 1,500 copies of the book, The Hobbit.

A history of Tolkien games.

Those copies almost immediately sold out. The Hobbit turned into a massive hit. Allen & Unwin liked books that sell out. So they asked Tolkien if he could write something else about Middle-earth.

Ten years later, he gave them 9,250 pages. They knew that would be hard to sell. So they turned the manuscript into three books, The Fellowship of the Ring, The Two Towers, and The Return of the King. Together, the three books became known as The Lord of the Rings trilogy.

Time passed, and as Tolkien became older, he wanted to provide financial security for his family. In 1969, four years before his death, Tolkien made a deal with a movie studio in Hollywood called United Artists, selling United Artists all the trademark and service mark rights to The Lord of the Rings and The Hobbit books. He gave them the film rights, merchandising rights, stage rights and options for other rights such as television and theme parks.

In the decade before the professor’s death, in the 1960s, The Lord of the Rings and The Hobbit books experienced a surge in popularity, the themes of struggle between good and evil, addiction to power, the horrors of war and environmental destruction resonated throughout society, particularly with younger generations. The books went on to sell 265 million copies and have been translated into 38 languages. The stories of Middle-earth are already the fourth largest entertainment franchise in the history of the world, generating more than $5.8 billion.

And as the 1970s began, counterculture animation director, Ralph Bakshi, spent several years trying to persuade United Artists to let him make an animated film of The Lord of the Rings. It almost worked. But that deal fell apart in 1976. But then Saul Zaentz, an independent movie producer who made One Flew Over the Cuckoo’s Nest, a film starring Jack Nicholson that won five Academy Awards. (He also won Oscars for Amadeus and The English Patient), entered the scene.

Magic: The Gathering has a Lord of the Rings
Magic: The Gathering has a Lord of the Rings set on the market.

Bakshi asked Zaentz if he would produce the film about The Lord of the Rings, and Zaentz said yes. Zaentz purchased all the rights from United Artists for the Saul Zaentz Company.

One of the first things that Saul Zaentz approved was the ill-fated Bakshi film, which combined live action and animation at time that predated the excellence of computer-generated special effects. The film didn’t do as well as expected, and it never got a sequel. But Guinchard noted that the nostalgia craze means the Bakshi film now generates more money today than it did back in its early days.

“Fans today love it as a heritage piece,” he said.

The film made an impression on the young Peter Jackson. In 1983, Zaentz was obliged to pay the Tolkien Estate an option fee to retain TV rights to the Tolkien Estate. Nobody was interested in a television series related to The Lord of the Rings.

middle earth products
Middle-earth products.

Zaentz said no and decided not to acquire television rights and they reverted back to the Tolkien estate. Instead, Zaentz focused on merchandising Tolkien goods, “including board games, stickers, maps, T-shirts, belt buckles, more board games, collectible calendars, jigsaws, more board games, and even a new type of product called an electronic game,” the video said.

In 1995, Peter Jackson and his partner Fran Walsh began their quest to make films inspired by The Hobbit and The Lord of the Rings. Eventually, New Line Cinema acquired the rights from the Saul Zaentz Company, doing business as Middle-earth Enterprises to make new films of The Lord of the Rings books directed by the now not so young Peter Jackson, followed a decade later by three films of The Hobbit.

The films were produced by New Line Cinema’s parent company, Warner Bros., and Middle-earth enterprises retained all the underlying trademark and service mark rights to those films and associated merchandise, as well as Middle-earth rights to licensed merchandise, video games, and other rights inspired by the four Tolkien books. The films generated nearly $6 billion in revenues.

The films came out and were a success, and Electronic Arts made some successful video games based on The Lord of the Rings films. The TV series option, which was kind of a loophole in the Middle-earth Enterprises’ control of the franchise, became important in 2017. The rights had reverted back to the Tolkien Estate in 1983, and so it cut a deal with Amazon Studios to make The Rings of Power multi-season streaming show.

Zaentz passed away in 2014. Middle-earth Enterprises continued to maintain its ownership in the trademarks, service marks, live stage theme park, merchandise and electronic game rights to that Amazon TV series. Around this time, the owners of Middle-earth Enterprises, like Professor Tolkien before them, wanted to provide a financial legacy to their families. So they decided to sell the rights to Middle-earth.

In 2022, Embracer Group’s Freemode bought Middle-earth Enterprises for $395 million. Guinchard said the company is focused on reinvigorating the brand and the many relationships throughout the world of Tolkien. Freemode is focusing on the long term with the goal of nurturing community and fellowship and tapping “some of the great creative minds of our time.”

Tolkien in media

For the Third Age and the Second Age, there are no issues as to what Embracer Freemode can authorize on games or movies, as the Second Age had a considerable amount of material included in the appendix to The Lord of the Rings: The Return of the King. That is clearly within the license that Saul Zaentz received and passed on to Middle-earth Enterprises.

“This is all in our control,” he said. “We’re the stewards of this. There are no rights issues.”

But when it comes to The First Age and the stories in The Silmarillion (an unfinished tale that was published after Tolkien’s death) and The Unfinished Tales of Numenor and Middle-earth, the Tolkien Estate still has ownership. The heirs of Tolkien will be the ones to decide when and if they want to explore anything further when it comes to films, TV, merchandising and games. So far, they haven’t.

That’s where I think most of the creativity and potential of the unexplored Tolkien universe lies. The First Age captures the mythology of the wider world beyond Middle-earth. As noted before, The Lord of the Rings and the tales of the Third Age are like Homer’s The Iliad. And The Silmarillion captures the stories of all of the Greek gods and their mythology.

It turns out there was another agreement that gave Middle-earth Enterprises limited matching rights to The Silmarillion and The Unfinished Tales of Numenor and Middle-Earth — the tales of the First Age of Morgoth and the theft of the Silmarils, according to a story in Variety. If the Tolkien Estate decides to license The Silmarillion and The Unfinished Tales of Numenor and Middle-earth, the limited rights might result in more things being created.

middle earth map
The map of Middle-earth

Embracer Freemode is anxious to explore the wider world of Middle-earth. But it will have to move in step with its partners on that front.

Embracer Group recently announced it will split itself into three companies: Asmodee, Coffee Stain & Friends, and Middle-earth & Friends. The latter will include the Tomb Raider IP and Embracer Freemode and the rights to the Middle-earth Enterprises. Asmodee, which publishes tabletop games, will carry the debt load that Embracer Group is refinancing, while Middle-earth & Friends will not have that debt when the transaction is completed, perhaps sometime in 2025.

These rights were once the subject of litigation between various parties. But Guinchard is optimistic about the opportunity now that peace has broken out among those parties. Everything has come a long way across 87 years of IP history.

“And all of this began with a single sentence written by a professor probably smoking up pipe while he was grading papers. In a hole in the ground, there lived a hobbit,” the video said.

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