Unless you’ve been living in Gollum’s cave, you’re probably aware that before The Lord of the Rings was a trilogy of films, it was a set of books.

J.R.R. Tolkien became a popular author quite by accident when The Hobbit, a story he had written for his children, came by chance to the publishing firm George Allen & Unwin. It was published in 1937 and became an instant classic, leading fans (and the publisher) to ask for a sequel. After many years of hard work (and procrastination), Tolkien finished The Lord of the Rings, and it was published in three volumes in 1954 and 1955.

By the time of Tolkien’s death in 1973, the books had become popular enough to capture the attention of the film industry. Hollywood didn’t understand the books, of course, but saw dollar signs in the property, and various studios looked into the possibility of a film adaptation. Ralph Bakshi, a director and Tolkien fan, thought three animated films were the way to go, and he successfully got the rights into the hands of producer Saul Zaentz, whom he had worked with before. However, a trilogy was an ambitious idea, and Bakshi was quickly asked to make it two films. Despite deadline pressure, Bakshi delivered Part One on time, but that’s about all that went well. The distributor, United Artists, figured more people would want to see the whole Lord of the Rings than half of it, so they dropped “Part One” out of the title and marketed the film as if it were the complete story. In 1978 it hit the theaters, and the duped audiences made Denethor look like a happy guy by comparison. Meanwhile, Zaentz decided not to go through with Part Two, forcing Bakshi to spend the next three decades answering questions about why he didn’t finish what he started.

However, as one director’s quest ended, another began. During the film’s run at the Old Plaza Theatre in Wellington, New Zealand, a curly-haired seventeen-year-old was introduced to Middle-earth, and shortly afterwards the young man bought a copy of The Lord of the Rings featuring the film’s tie-in cover art. His name was Peter Jackson, and a couple decades later he would become an established writer and director in the film industry while simultaneously witnessing a change in the business. Back when Bakshi made his film — and throughout the ’80s — if films needed special or visual effects they had to use an expensive, experienced company, or the effects would look silly next to Star Wars and the other big budget films. (You can see why Bakshi, who didn’t have a lot of money to spend, bypassed the problem by using animation.) Furthermore, the effects were limited by both physics and the ingenuity of these contracted workers, and writers were forced to consider this when writing scripts. However, in the early 1990s, Jackson saw that digital technology was about to change this. Effects were moving into a new realm, that of hardware and software. In 1993, Jackson bought a computer, cofounded his own effects house, Weta Digital, and began preparing scripts with his own company in mind.

Two years later, Weta had thirty computers, and Jackson and his partner Fran Walsh, who were working on The Frighteners (1996), began to wonder what an ambitious project for Weta could be. They thought about a fantasy film, agreeing that the story had to have depth. “Like The Lord of the Rings.” It needed a sense of reality. “Like The Lord of the Rings.” And yet have an element of magic. “Like the… Hang on, could we do The Lord of the Rings?” They assumed the rights were sure to be tied up or unavailable, but made an inquiry nonetheless.

At the time, Jackson and Walsh had a “first look” deal with Miramax; practically anything they wanted to do had to be offered to this studio first. By coincidence or fate, Miramax was busy at that time with The English Patient (1996), produced by a guy named Saul Zaentz — who still controlled all rights for The Lord of the Rings. Jackson talked to Miramax, Miramax talked to Zaentz, and Zaentz, of course, said… “not interested” to Jackson’s and Walsh’s idea.

Right now, you’re probably saying something along the lines of Fred Savage’s character in The Princess Bride: “You’re reading the story wrong!”

In fact, Zaentz had said no to many people who had made inquiries over the years. The producer did not want to be burned again. This was a guy who was used to winning the Oscar for Best Picture, and he once said the only production of his he wasn’t satisfied with was that darn animated Lord of the Rings.

It would have been the end for Jackson’s and Walsh’s idea, but they had Miramax interested, and this studio had a trump card to play. You see, The English Patient was supposed to be financed by 20th Century Fox, but just as filming was to begin that studio backed out. It was Miramax stepped in and saved the day. The film went on to win nine Oscars, and Zaentz knew he owed Miramax big-time. After nine months of negotiations, Miramax acquired the rights to make The Lord of the Rings, and in 1997 preproduction began on the greatest film adventure in history.

Jackson and Walsh wanted to begin with The Hobbit and (assuming that was a success) move on to the Lord of the Rings. But Zaentz didn’t own all the rights to The Hobbit, so Miramax decided to skip it and get right into The Lord of the Rings. With no successful prequel, the studio wasn’t willing to finance three films right out of the gate; it gave the green light for two. (This sounds familiar, doesn’t it?) Not that Miramax’s owner, the Walt Disney Company, looked at as two. To Disney’s chief executive officer, Michael Eisner, Miramax was making one film, and he wouldn’t allow the studio to spend more than $75 million on it.

In the past, $75 million had been a lot of money. (And to most of us it still is.) But as previously mentioned, the film industry was changing, and by the late 1990s nine figures was no longer a monster budget. Indeed, films such as Titanic (1997) and Star Wars: The Phantom Menace (1999) made $100 million budgets look downright modest. As the Rings project progressed, $75 million began to look woefully inadequate for two films heavily dependent on special effects.

Miramax, under pressure from Disney, had no choice but to ask Jackson to make one two-hour film. When he refused, the project threatened to unravel for everybody. Jackson’s agent, Ken Kamins, knew Miramax was going to bring in a new writer and director; so he came up with a proposal he hoped would please all sides. He asked that Jackson be allowed to find another studio willing to finance two films as well as pay Miramax the millions already spent. Ready to pull out, Miramax agreed to these terms and gave Jackson four weeks to find a new backer.

In the ten years preceding this, New Line Cinema had earned a reputation as a maverick studio, making experimental films that were slightly different from the mainstream. Sometimes this was profitable; Dumb and Dumber (1994), The Mask (1994), and Austin Powers (1997) struck a chord with filmgoers and made millions. Sometimes this was less so; repeated attempts to make Hulk Hogan a movie star never worked. The bigger problem for New Line was that when it made a blockbuster, the stars often wanted much more money to reunite for a sequel. Hence, audiences were given new casts for Dumb and Dumberer (2003) and Son of the Mask (2005). Sequels, with their built in audiences and bankable opening weekends, are the lifeblood of the film industry, and New Line Cinema was looking for a solution to the problem. What the studio really needed was a property that already had a devoted audience, with a chance to film the sequels before the actors became big stars.

New Line executive Mark Ordesky, a Lord of the Rings fan who had worked with Jackson previously, arranged for Jackson to give New Line a presentation. But it was Ordesky’s boss, Bob Shaye, who ultimately decided the films’ fate. When the presentation came to a close, Shaye looked at Jackson and said, “I don’t get it. Why would you want to charge nine dollars to see this when you could charge twenty seven?”

A confused Jackson needed moment to work out what Shaye was talking about. “You think there should be three movies?” Jackson asked.

On that July day in 1998, the films as we know them were born.