New Zealand says only 50-50 chance of keeping 'Hobbit'

New Zealand's government said on Tuesday it had only a 50-50 chance of keeping production of the "Hobbit," adding it could not meet the financial offers on the table from other countries for Warner Bros to relocate the project.

In the wake of a short-lived union boycott that rattled the Hollywood studio, executives said last week they would consider shooting local filmmaker Peter Jackson's $500 million adaptation of the J.R.R. Tolkien fantasy elsewhere.

"We made it quite clear that we can't bridge the gap that is on the table from other countries. It is simply too large and they understand that position," New Zealand Prime Minister John Key told a news conference after talks with studio officials.

The government was seeking to clarify labor laws which resulted in union boycotts of the film, sparking the crisis.

"They're out of here if we can't give them the clarity, no question about that," said Key. "We have an opportunity to put the pieces back together. But there are no guarantees. I would say, at best, it is still very much 50-50."

Economists said losing the project could cost the country up to $1.5 billion. Thousands of protesters -- some dressed as hobbits -- took to the streets on Monday to convince the studio New Zealand was the only valid location for the two-part series.

Jackson's adaptation of Tolkien's "Lord of the Rings" proved beneficial to everyone: New Zealand received priceless international publicity, Warner Bros. sold nearly $3 billion worth of tickets at the box office, and the filmmaker and his team won armfuls of Oscars.

Studio executives will decide on the location for "The Hobbit" after meeting this week with government officials.