Not as bad as it's cut out to be.

Rating: 6/10 (11 March 2011)

The Phantom Menace has several dramatic challenges from the start: It needs to re-introduce a universe that the audience already knows about; it needs to establish younger versions of familiar characters; it has to set up the larger story that will be played out in the sequels; and most importantly it has to tell a good, entertaining story on its own. It is marginally successful, and in fact most of its flaws come from trying to simplify things too much.
It gets off to a pretty good start, with the small planet Naboo being invaded by the Trade Federation battleships. Right away we have a wide, space opera canvas and a tense situation that makes the scale smaller and easier to digest. Some people have whined about the "taxation of trade routes" being a mundane sort of conflict, but they're forgetting history: remember "No taxation without representation"? Real- world wars have been fought over less exciting issues. Phantom Menace quickly gets past the specifics and into the adventure anyway, so it hardly matters. There are many complications on the way to the climax, including an exciting futuristic chariot race straight out of Ben Hur, and some subtle political machinations in the galactic senate. The final battle is spectacular, on the ground and in space, wrapping up with a dramatic lightsaber duel.
The movie struggles a little trying to find a protagonist. Liam Neeson's Qui-Gon Jinn is more of a mentor/father figure, and Ewan McGregor's Obi-Wan Kenobi is absent for the second act, so neither one quite measures up; similarly, young Anakin Skywalker is only introduced halfway through. Both Neeson and McGregor do good jobs, even if their characters are very simple, and their presence really carries the whole show. The other lead actors are weaker: Natalie Portman is disappointingly bland as the queen of Naboo, and Jake Lloyd (Anakin) is a typical child actor. Most of the other characters are CGI. The real problem is that the story being told is not a personal one -- unlike the hero's quest of Luke Skywalker -- so each character ends up just serving the plot.
Visually I think Phantom Menace is the best of the series. It uses digital effects, but it's not overwhelmed by CGI like the later movies. The sets and locations are real, and many of the spaceships are actual models. We get the best of both worlds: the broad scope of CGI and the reality of practical effects. The design is a big reverse from the classic films, substituting the gritty, lived-in look for a more polished, Art Deco quality. This makes sense, since the prequels are meant to take place in the galaxy's Golden Age, before the "dark times". The ships, costumes, and creatures are all consistent with the basic style of the earlier movies.
I mentioned oversimplification before. More than any other Star Wars movie, this one seems to have been written for children, maybe because one of its main characters is only ten years old. This makes sense, although it's at odds with Episodes II and III, which were both darker. Ultimately the story doesn't really do much, and it ends up feeling like a frivolous adventure -- it's fun, but it could have been a lot more. The less said about Jar-Jar Binks the better.