The very public, and perhaps appropriately dramatic, stoush between Australian Media Entertainment and Arts Alliance (MEAA) and Warner Bros has the potential to derail a lot more than just The Hobbit movies, say people involved in Otago's film and tourism industry.
While it may be a small fish in the international, and even national, film industry, Otago is home to a substantial slice of Middle Earth.
Even today, several years after Peter Jackson's Lord of the Rings (LOTR) trilogy was released, the region continues to reap the benefits of the association in more screen production in the area, but probably most significantly in tourist dollars.
And, another two films, possibly again featuring the Queenstown-Lakes district as parts of Middle Earth, would keep the momentum going, and another successful film would maintain New Zealand's reputation as a great place to make films.
It is something Otago and Southland are keen to keep coming as well.
Local councils have seen the potential for several years, creating Film Otago-Southland to promote film activities in the region and raise the profile of the region as a world-class filming destination with a consistent and professional infrastructure.
The industry itself is worth millions to the region each year.
The most recent available figures, from Berl's 2008-09 Otago regional economic profile, show in the year to March 2009, it brought $23 million into the region, provided 206 full time equivalent jobs and supported 124 businesses.
Film Otago-Southland reported that in the first nine months of the 2009-10 financial year 43 productions were made in Otago and Southland - most (31) in Queenstown - including two feature films, six short films and 24 television commercials.
In the three months to the end of March this year, new film-related business worth $316,302 was brought to Dunedin alone, not including revenue generated by Taylormade, 38 Pictures or Natural History NZ.
Local industry people say most of the jobs on films in Otago are in providing production and post-production services.
Most productions have their own international camera crews, so locals largely supply services like gaffers, runners and providing lighting equipment and skills etc.
However, the possibly bigger economic impact for the region is in the associated income - the location fees, accommodation, catering, car, helicopter and property rental and entertainment for actors and crew.
If something as big as The Hobbit were to shoot in Otago, Film Otago-Southland executive manager Kevin Jennings said "thousands" of peripheral businesses would probably stand to gain something.
Certainly, tourism experienced a significant boost in the wake of the LOTR trilogy, which was shot in many locations in the Queenstown-Lakes district.
Destination Queenstown chief executive Tony Everitt said everyone knew the LOTR trilogy had brought a lot of economic growth to Queenstown and the Otago region, but specific research on how much was not completed.
"Qualitatively it would have been very significant ... we all know it's big, but we can't know how much."
The Tourism Industry Association and Tourism New Zealand have both said LOTR was of "profound importance" to New Zealand's tourism industry, and continued to attract visitors.
Many tourism businesses had developed or expanded their businesses to cater for demand from LOTR fans.
The films also raised awareness of New Zealand as a destination in several key markets.
The prospect of The Hobbit being filmed in New Zealand had been a bright spot in the outlook for the tourism industry through the economic downturn, and the industry would be deeply disappointed if it did not proceed, association spokeswoman Ann-Marie Johnson said.
Ian Brodie, former Wanaka resident and writer of a Lord of the Rings location guidebook which has sold more than 500,000 copies, said because the The Hobbit was even wider read than the LOTR trilogy, it had the potential to bring "much more" to the region in terms of economy and tourism than, for example, the Rugby World Cup.
There is deep concern across Otago at the film potentially being taken offshore.
Dunedin film and television director Robert Sarkies and NHNZ managing director Michael Stedman said locally-made films and documentaries would "absolutely" be affected if New Zealand's film-making reputation was tarnished.
Mr Sarkies said the New Zealand Film Commission sponsored up to 75% of the cost of local productions dependent on the film-maker securing the other 25% from a foreign investor, which secured international sales.
Any sense of instability, even slight, in the New Zealand industry, previously know as an cheap and efficient place to make films, would make those investors jumpy and harder to find.
While the MEAA was right to argue for better terms and conditions for actors, he totally disagreed with the "overly aggressive" way they had done it this time.
The same union had tried to disrupt several productions before this, including his television series This is not my life, however, it had chosen the wrong one in the The Hobbit, and, ironically, ended up waging war on itself, he said.
He did not buy their argument that something as small as a few actors arguing for their rights could not derail a major production.
"This is the way production works, they are delicate things and sometimes the smallest element can trigger that kind of reaction. If they had not raised that in the way they did, we would not be in this situation.
"There's one thing for sure, when you are making a drama, there is always drama."
Peter Jackson put New Zealand on the map and created its reputation as being at the forefront of screen technology and one of the best places in the world to make films, Mr Stedman said.
Every screen production company relied on foreign interest and investment to some extent and episodes like this had real potential to weaken New Zealand's reputation.
It was extraordinary the union had made this move in this manner, without fully understanding the implications, he said.
Dunedin camera man Stephen Downes said whether it was aggressive unions or opportunistic posturing from a studio trying to establish a moral imperative for the government to step in and financially help it, it was damaging to the industry.
Filmmaker Glen Standring said it was impossible to say which way the studio would go, but the union's stance had been "completely counter-productive".
"Studios are the least sentimental thing in the universe. They are utterly brutal and will be making a business decision."
He knew several people from Otago who were to work on the production and were now waiting to hear if they still had jobs.
In Queenstown, the mood remained hopeful.
"Nobody is sure what's going on at the moment ... It would clearly be a shame to see it go. A production like this can mean so much to the region," Mr Jennings, of Film Otago-Southland, said.
As part of her recent election campaign, Queenstown-Lakes district mayor Vanessa van Uden focused on establishing Queenstown as a "complete film centre".
Location scouts were understood to have visited Lake Wakatipu earlier this year, although nothing was confirmed before the debate about the film staying in New Zealand erupted.
If The Hobbit were to depart it would be "a great pity", but it would not be a "full stop" in terms of increasing economic diversity in the district, she said, and the council would keep working to develop the film industry.
Lake Wanaka Tourism chief executive James Helmor said it would be a disappointment if Warner Bros did pull the film.
