If you can't get enough of hobbits, elves, dwarves, and trolls, we have good news for you. A fan site has heard "a report that negotiations are under way for a third film," meaning that The Hobbit, already slated to be released as two separate pictures, may be extended to become a trilogy.
An anonymous source told TheOneRing.net that the main sticking points are the contracts for Peter Jackson and Guillermo del Toro to allow for three more months of principal photography and "temporarily suspending some of their other projects." The same source speculates that the third film would delve "into the back-story of the Istari (Wizards) including Gandalf and Saruman's youth in Valinor." Our own Elisabeth Rappe previously wrote about the desire of seemingly every Lord of the Rings actor to appear in The Hobbit, and this rumor might allow for that.
Del Toro has spoken aboutThe Hobbit as "two episodes, or two parts, as if they were a single piece of narrative," so maybe the story has become so rich and complicated that he and Jackson don't want it to ever end (kind of like the concluding hour of The Return of the King). The original announcement of del Toro as director mentioned that he would be moving to New Zealand for four years to complete The Hobbit and its sequel, so what's another few months? Though I'm not a huge fan of the original LOTR trilogy, I am a huge fan of del Toro, so the more, the better. As it now stands, The Hobbit is due for release in December 2010, with its sequel to follow in December 2011.