THE HOBBIT III announced

Peter Jackson and his producing partners have announced that their two-film adaptation of The Hobbit will be stretched to three films. Jackson had filmed a lot of material for the two movies which will have to be cut out due to time. After discussions with the studio, this material will be combined with new material (filmed early next year) to turn The Hobbit into a trilogy.

"Guys, it's the script for The Hobbit III: Fifty Shades of Gandalf the Grey. You do not want to know what Galadriel is doing with that elven rope in this scene."

At the moment it is believed that the first two movies will retain their titles of The Hobbit: An Unexpected Journey and The Hobbit: There and Back Again, and their planned release dates of December 2012 and 2013. The planned third movie will presumably be released in December 2014.

No suggested subtitles for it have appeared (expect fan suggestions such as 'The Search for Plot' and 'There and Back Again and Back Again as Long as They Keep Paying' imminently), but given Jackson's preferences for keeping Tolkien's names, a chapter title from The Hobbit or The Lord of the Rings could be pressed into service. Presumably it won't be The Hobbit: Queer Lodgings though. My preference would be The Shadow of the Past (a chapter title from The Lord of the Rings, used by Christopher Tolkien to title one of his History of Middle-earth books).

At the moment it is not entirely clear how this division would work. Originally Jackson envisaged one movie focusing on The Hobbit in its entirety and a second serving as a 'bridge film' to The Fellowship of the Ring. Later on, the two were combined with much of the bridging material now taking place simultaneously with the action of The Hobbit and the combined action broken across two films. Given the slightness of The Hobbit's plot, as depicted in the book, it would seem improbable that they could extend it across three movies, even if those movies are a lot shorter than the Lord of the Rings trilogy. If the plan is to retain two movies covering The Hobbit with the third film taking place afterwards, this could work better (and would allow sceptics to skip the third film if they really wanted to).

It's worth noting that Peter Jackson only has the rights to The Hobbit and The Lord of the Rings (and its numerous appendices). A great deal of background information fleshing out both The Hobbit and the period between it and The Lord of the Rings appears in the book Unfinished Tales and could be used to build a more comprehensive storyline, but Jackson does not have the rights to this book (or The Silmarillion or any of other post-LotR Middle-earth volume) and Christopher Tolkien has made it clear he will not sell the rights to them at any price. This would seem to somewhat limit the material that Jackson can draw upon for a potential third movie.