Amazon Studios’ decision to shift production of its untitled “Lord of the Rings” series from New Zealand to the U.K. has left the Kiwi production sector in shock. The country’s film commission went into damage limitation mode after losing what is possibly the most expensive TV series of all time. Others blamed ineffective government policies.

Filming of the first season started in April 2020 and ran for 18 months including a hiatus enforced by the coronavirus. Filming wrapped on Aug. 2. Season 1 post-production will now continue in New Zealand through June 2022, while pre-production on Season 2 will begin concurrently in the U.K. from early 2022. The first season will air on Amazon Prime Video from September 2022.

Crew in New Zealand were informed just 20 minutes before the decision was announced on Friday morning local time (Thursday afternoon in the U.S.).

“It’s a shame and I feel for everyone who has put their hearts into this production. Season two was expected to begin later in 2022, so our role now is to work hard to keep the Kiwi screen sector employed,” said David Strong, CEO of the New Zealand Film Commission. He said that the series’ departure “opens the door wider to others to come in” and that the NZFC will continue to work closely with government on assisting these productions to shoot in the country.

New Zealand offers one of the most generous location incentive schemes in the world. This includes a 20% rebate scheme and, for especially large productions that deliver an infrastructure or other long-lasting benefit to the country, there is a discretionary additional subsidy known as an “uplift” equivalent to a further 5% of location spending.

According to government documents published in April this year, Amazon was estimated to be spending about NZ$650 million ($455 million) filming the first season of the show. It would have been eligible for a rebate of about NZ$162 million ($114 million), the government said, though it later reduced that figure.

Amazon’s statement makes it clear that it will walk away from the NZ$33 million ($23.1 million) of uplift that was agreed in April, when the company indicated, but did not commit to shooting the second season in the country.

“As we look to relocate the production to the U.K., we do not intend to actively pursue the Season one MoU five percent financial uplift with the New Zealand government or preserve the terms around that agreement, however we respectfully defer to our partners and will remain in close consultation with them around next steps,” said Albert Cheng, COO and co-head of TV for Amazon Studios.

The U.K. also offers substantial location incentives — 25% of qualifying film and high end TV production expenditure, regardless of budget, with 10% of that required to be spent in the U.K. –- but it has the additional attraction of being the site where Amazon is building physical studios to be the base of multiple other productions.

The decision “aligns with the studio’s strategy of expanding its production footprint and investing in studio space across the UK, with many of Amazon Studios’ tentpole series and films already calling the U.K. home,” according to an Amazon statement.

Nevertheless, there have been recriminations in New Zealand, particularly over why the government did not secure a firm multi-season commitment from Amazon, especially when agreeing to the 5% bonus.

Amazon has previously indicated that the series could run for six or seven seasons. Some in New Zealand had assumed that they would all shoot in the country, which was previously the location for the New Line Cinema’s Peter Jackson-directed “Rings” film trilogy and the related JRR Tolkien adaptation “The Hobbit.” The country is also home to the multi-Oscar-winning post-production and digital effects firm Weta Digital and props maker Weta Workshop.

Todd McClay, National party spokesman on economic development spokesman, blamed Stuart Nash, Economic and Regional Development Minister, who only months ago had hailed the production as bringing work and local spending.

“Stuart Nash has shown a lack of interest in negotiating with Amazon, despite the huge impact the production could have on our economy. Stuart Nash needs to be transparent with Kiwis about why he didn’t even ask for future seasons of the show to be filmed in New Zealand,” said McClay.

“The Amazon Studios’ decision in no way reflects the capabilities of our local film industry or the talents of the people who work in it. This is a multi-national company that has made a commercial choice,” said Nash. He confirmed that he had been told of Amazon’s decision only one day earlier.

“We’re an easy country to do business in and New Zealanders have a reputation for being highly skilled, innovative and creative. Our locations are legendary, and we have competitive incentives and infrastructure. This coupled with the government’s management of the COVID-19 pandemic positions us as an attractive partner for international productions,” said Nash.

Some in the industry, however, have suggested that New Zealand’s almost hermetic border closure policy, known in some quarters as “Fortress New Zealand,” in response to the coronavirus may have been a factor in Amazon’s decision. It may also have caused other productions to turn away in favor of less restrictive locations, such as Australia or the U.K.

In March, New Zealand lost another Amazon series. The second season of “The Wilds” switched from New Zealand to Australia, which is now grappling with a new wave of COVID infections and lockdowns.

On Thursday, the Jacinda Ardern government said that it may start to ease inbound travel restrictions and start allowing fully vaccinated travelers coming from countries deemed low-risk from early next year.

The Amazon decision may have long term implications for New Zealand’s tourism industry. The country has draped itself in ‘Middle Earth’ legacy. Air New Zealand previously repainted a Boeing jet plane with characters from “The Hobbit” and has used “Lord of the Rings” for its passenger safety videos. The country has also built location-based entertainment assets, including the Hobbiton theme park, around the Tolkien legacy. The New Zealand Herald newspaper called the series exit a “tourism nightmare.”

The U.K. government was unsurprisingly quick to claim credit. “Delighted to hear that Amazon will be making their blockbuster second series of ‘Lord of the Rings’ right here in the U.K.,” said Culture Secretary Oliver Dowden in a statement.

“With our strengths in talent, production and the great environment created by UK Government initiatives including the creative tax reliefs and the Film and TV restart scheme, it’s clear that we are attracting the very best content makers in the world to our shores. Thousands of high-quality jobs all across the U.K. will be created and supported by ‘The Lord of the Rings’ television series so this is very exciting news as we build back better.”

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