On a bright and sunny day in Wellington, a giant billboard moves across the blue sky, flying as low as 300 metres above the ground.

The Boeing 777-300 is emblazoned with images promoting The Hobbit: An Unexpected Journey, the first of three mega-budget Hobbit movie adaptations from blockbuster director Peter Jackson. The 73-metre canvas took six days and 400 hours to apply. The exhibitor of this gargantuan flying advertisement, Air New Zealand, claims it is the largest graphic ever applied to an aircraft.

On the ground below, tens of thousands of fans — some camped out overnight — gather around Embassy Theatre and its long red carpet. A 9.4-metre tall sculpture of Gandalf, which took contractors more than 12 hours to erect, looms like a frozen Greek god above the entrance.

Some have in their pockets commemorative Hobbit-themed coins, which they can use to purchase jewellery and merchandise at the Hobbit Artisan Market. In days leading up to the event some will have sent letters and postcards to friends and family using Hobbit-themed stamps.

Those who have recently landed by plane would have seen a four-minute airline safety video starring elves, dwarves, hobbits and a famous wizard. They would have walked past a 12-metre sculpture of Gollum, which cost some $250,000, and picked up their luggage from “Baggins Services”.

Nearby the Embassy, overlooking Wellington’s harbour, figures of 13 giant dwarves — reportedly the world’s tallest — and one Hobbit cast shadows on the water below. They stand on the fifth story of a 12-floor office building, designed to withstand winds of up to 178 kilometres an hour.

The city, New Zealand’s capital, has been temporarily renamed “The Middle of Middle Earth”.

This is a movie premiere that has, you might say, stopped the nation. Predictably, the international press relished the spectacle from afar. The cost has been colossal, the profits likely to be greater. And the road to get here has been anything but smooth.

The ribbon cutting of The Hobbit #1 signifies a tale of many things: laws and business models circumvented, a federal government bending to the whims of a film crew, a production that spiralled out of control and a director who raised his already titanic profile to levels of power and responsibility befitting a king — and on the way attempted nothing less than changing the way movies are created.

In 2005 Jackson was — to say the least —  in no hurry to work again with New Line, the Warner Bros subsidiary that owns the rights to The Lord of the Rings franchise. After collecting what New Line chairman Bob Shaye claimed to be over US$250 million for his work on the hugely successful trilogy, Jackson filed a law suit accusing New Line of committing fraud in relation to the films’ ancillary markets and of underpaying him to the tune of US$100 million. The case was settled, as was a case from the Tolkien estate in 2008.

All was eventually forgiven, or at least brushed aside. In 2007 it was announced Jackson would return to The Lord of the Rings fray but in a different capacity: he would produce and write two Hobbit movies, with Mexican filmmaker Guillermo Del Toro signed on to direct. After two years working on the project, stymied by a seemingly endless series of delays, Del Toro signed off. “After nearly two years of living, breathing and designing a world as rich as Tolkien’s Middle Earth, I must, with great regret, take leave from helming these wonderful pictures,” he said, describing it as “the hardest decision of my life”.

Direction of the films fell back to their grand daddy, as co-financer MGM edged towards bankruptcy but remained unwilling to sell out its stake in the franchise. When the go-ahead was finally given, Jackson couldn’t secure the only Bilbo Baggins he had in mind, British Office star Martin Freeman, because of a scheduling conflict with BBC series Sherlock. Eventually a deal was struck, with a production schedule to accommodate.

When filming was finally officially green-lit, a nasty brouhaha erupted between Jackson and a handful of unions that would mire the trilogy in controversy. New Zealand Actors’ Equity and Australia’s Media and Entertainment Arts Alliance organised protests, proposed boycotts and urged actors not to take on the series without union-backed agreements. Livid, Jackson shot back a number of angry statements.

“Whatever damage MEAA is attempting to do — and it will do damage, since that’s their principal objective in targeting The Hobbit — we will continue to treat our actors and crew with respect, as we always have,” he wrote in one. And another: “Seemingly overnight, NZ Actors Equity shredded the reputation of a burgeoning industry, which has been over 40 years in the making.”

Headlines such as “Australian union blamed for killing New Zealand Hobbit“ emerged. Just as it seemed likely production would move offshore, NZ Prime Minster John Key (also tourism minister) dramatically intervened. The government introduced new laws to reduce union power to ensure the film would not be threatened by legal action. It piled on sweeteners, from a 15% tax break to at least $25 million in government initiatives. In return, Warner would help advertise New Zealand as a tourist destination.

Principal photography began in Wellington in March 2011 and ground to a halt in May, as Freeman flew back to England to play Doctor Watson. “He wouldn’t have been in The Hobbit unless Sherlock could be accommodated. It’s not exactly a small deal these days, Sherlock,” gloated the show’s writer/producer Steven Moffat. Earlier this week, Jackson told Radio Zealand:

“The Hobbit came very close to not being filmed here … They literally had The Hobbit script broken down into scenes, and in each scene there were pictures of the Scottish Highlands and Endland and this and that, to convince us we could easily go over there to shoot the film.”

And shoot the film he did. In fact, Jackson shot too much to fit into two movies. In July the director confirmed on his Facebook page the two-part project would expand into three separate instalments.

Jackson, a high-minded and fiercely ambitious auteur, decided somewhere along the line that he had greater intentions than merely working on a trilogy that cost the better part of a billion dollars. In early 2011 he announced The Hobbit films were being shot at 48 frames per second, double the normal rate. “The result looks like normal speed, but the image has hugely enhanced clarity and smoothness,” he wrote, again on his Facebook page.

A 10-minute preview of the new format at America’s CinemaCon this year drew mixed responses. One projectionist said it “looked like a made-for-TV made … too accurate — too clear”. Another viewer called it a “totally difference experience. Not all will like the change.”

How the general public will react, of course, remains to be seen — and will depend on which version they see. The Hobbit films will be released theatrically in not one, two or even three formats, but six: 2D in 24 frames per second, 2D in 48 frames per second, 3D in 24 frames per second, 3D in 48 frames per second, IMAX 3D in 24 frames per second and IMAX 3D in 48 frames per second. One ring to rule them all, and six different ways to see it.

The common perception is that movies — particularly those financed from the top end of town, and those as large and expensive as Jackson’s — are finished months before audiences see them. This is almost always the case; sometimes they are shelved for years. Astonishingly, Jackson claimed last Saturday on this video blog that The Hobbit: An Unexpected Journey had still not been completed and was scheduled to finish “literally two days before the premiere”. The film’s official website claims editing was completed three days before the curtain was raised at the Embassy on Wednesday.

As he was hunkered in an editing bunker overseeing final touches, storms were still surrounding the director. Earlier this month a group of animal wranglers involved in the making of the trilogy went public with accusations the film was responsible for the deaths of 27 animals, allegedly a result of poor conditions on a farm in Wellington. Stories surfaced in news outlets around the world about chickens mauled by dogs, goats and sheep contracting worms and/or falling into sinkholes and “death traps”. There were several about horses; a horse called Molly “got caught in a fence and ripped her leg” while Rainbow reportedly “broke his back after falling off a bank” and Clare “was found dead, its head submerged in a stream”.

Jackson and his co-producers shot back, acknowledging in a joint statement the animals had died but vehemently denied any mistreatment. They also questioned the timing of the whistleblowers, who were dismissed from the film over a year ago. Elijah Wood, star of the original trilogy, lept to their defence.

To add to Jackon’s woes, the Tolkien Estate this week launched another suit claiming Hobbit-themed video and gambling games had caused Tolkien’s legacy “irreparable harm”.

Not all those who gathered in The Middle of Middle Earth, looking to the sun and squinting as the Hobbit plane flew above them, were wearing plastic elvin ears and Gandalf beards, giddy with excitement. Members of PETA, dressed in spooky black cloaks, dangled over the security fence holding signs reading “3 HORSES DIED FOR THIS FILM” and “THE HOBBIT: UNEXPECTED CRUELTY”.

Ever the perfectionist — a director who draws big pictures to fill with small details — Jackson became the central character in a narrative that spiralled well out of his control.

Three-and-a-half decades ago, beset by an avalanche of disasters including extreme weather, a drunk and overweight star (Marlon Brando), a heart attack from the central actor (Martin Sheen) and the death of a crew member, Francis Ford Coppola, in the thick of shooting Apocalypse Now in remote areas of Manila, with much of his own money on the line, broke down. “This film is a $20 million disaster. Why won’t anyone believe me? I am thinking of shooting myself,” he cried. He would never make a great film again.

Jackson — more introverted and media savvy, perhaps a product of the times — has kept his cards closer. The final video blog for The Hobbit: An Unexpected Journey shows him casually talking about sleep-deprived editors and effects they are working on. There is a sense he’s performing for the camera, guarded in a way Coppola wasn’t.

The Hobbit plane will presumably be redecorated in the lead-up to the premieres of the next two movies. Perhaps new coins and stamps will be issued. Maybe the extravagant sculptures will be trundled back out, or left collecting dirt and pigeon dung until the franchise completes.

But Wellington will never again rename itself after a Lord of the Rings movie; the excitement won’t return to this level of fever pitch. Jackson must know, or soon will when the excitement dissipates and the nation catches its breath, that blockbuster premieres don’t get any bigger than this.