I'm a lurker here 99% of the time but I saw my name mentioned so I couldn't resist popping in.
Having discussed this news on a couple different forums and hearing a variety of perspectives, I still think that the most likely scenario is that
Variety and
Deadline are confusing the Estate and Middle-earth Enterprises. It's a pretty common mistake even for people who should know better, though it was even worse back when M-e E was called Tolkien Enterprises. The fact that two reputable trade publications (well, mostly reputable in
Deadline's case) made the same mistake did give me pause, but it's possible that they got the same mistaken information from the same source, or that both of them had mistaken sources, or that
Deadline had incomplete information and just followed
Variety's lead since that was the story already being reposted throughout the entertainment press.
Of course, I'm not an insider and it is possible that the Estate is involved and I'll look like a jackass for mouthing off about this on multiple sites. But I am inclined to think that there is an error being made here somewhere, and that if the Estate
is involved, it's not in the way that's been reported so far. I have no idea as to the exact wording of the contract in which Tolkien sold the adaptation rights to TH and LOTR, but the two Rankin/Bass movies were both originally TV movies, so I think there's a decent chance TV was covered in it. And even if TV wasn't explicitly listed, video games were certainly not (the sale took place in 1969), but Middle-earth Enterprises is the organization that licenses out the rights to make video games based on the books. (The rights to make games using intellectual property from the films are a separate matter but both have been held by Warner Bros. Interactive since ~2010.) So I suspect that the contract speaks of adaptation rights in more general terms, or at least that's the interpretation that Saul Zaentz took (and the only thing the Estate seemed to dispute was slot machines, not games in general).