In the pitch-black night of the New Zealand winter, Duncan Nimmo, information technology manager of 3Foot6 Ltd., and his two-man crew hoisted heavy equipment—including spools of military-grade fiber-optic cable, a battery pack, wireless computer modem and an eight-foot-high antenna—up Mount Ruapehu in Tongariro National Park. They had followed worn goat tracks up the slope, and were high in the clouds. A snowstorm threatened to blow them off the mountain.

But they had to work fast. In just a few hours, a column of mythical Orcs would pass through the valley gap below, with two disguised Hobbits in their midst. It was Nimmo's job to ensure that the action, a scene from the third installment of the Lord of the Rings movie trilogy, could be seen on a videoconferencing system by director Peter Jackson hundreds of miles away at his command center in Warkworth, New Zealand.

As dawn rose and the storm broke, Nimmo suddenly realized that his crew had stopped just a few yards away from the edge of a sheer cliff. "I've never forgotten that sensation of realizing just how close we came to the edge," Nimmo says.

Pushing the edge became a common theme throughout the production of the blockbuster trilogy, from the beginning of filming in October 1999 through to final editing of the last film, The Return of the King, in 2003. Working under contract for the Time Warner production, Nimmo adapted and stretched standard videoconferencing technology well beyond its traditional office environment to help Jackson maintain control of the monster project as well as lower the expected cost of production by more than $100 million.

The satellite-linked videoconferencing network Nimmo put in place allowed Jackson to manage as many as seven different film crews, shooting at locations scattered across hundreds of miles on both of New Zealand's main islands. The systems could transmit back to Jackson exactly what was being filmed through the lenses of the movie cameras.

In so doing, Jackson was able to artfully direct all three films in the Rings trilogy at once—the first time in cinematic history that such a feat had been undertaken. And in the process bring the project in at $270 million, about $130 million less than if the three films had been shot separately.

Lessons learned on the Rings set are being used in other Hollywood releases, including The Chronicles of Narnia and Jackson's latest blockbuster, King Kong, to allow directors to juggle film crews at multiple locations and ultimately keep a lid on movie budgets.

Advances made on the Rings project in transmitting audio and video over the Internet are also now being applied in a wide range of business areas, including Web-based medical care, the nation's courtrooms and homeland security. Better technology, particularly in the form of software algorithms for compressing and transmitting audio and video streams, means that business-quality conferencing systems can now be purchased for less than $6,000, compared to $20,000 just four years ago.

But deploying the systems can pose challenges, particularly when battling inclement weather and terrain, even for people adept at creating fantastical worlds for Orcs and Hobbits.

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