This is all I wanted. Honesty about the rationale behind the decisions to expand to 3. Seems so haphazard and pray that it doesn't draw from the quality of two films. Seems like they are stretching footage to make 3, though.

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MGM, however, has the most riding on a third Hobbit film. 

$500 million in debt

The company was on the verge of filing for bankruptcy protection in November 2010, but resurfaced after raising $500 million announcing a plan to wipe out its then $5 billion debt.

In February, MGM announced it obtained a $500 million credit facility to further manage its debt and build up its film and television business.

But according to MGM's Q2 financial report, its first report since it reorganized, the studio's revenue declined by $85.5 million in the first six months of the year, from $393.3 million to $307.8 million. 

It also lost $233.7 million in cash from its balance sheet in the last 6 months, after paying off $311 million in debt and spending another $147.5 million on operations.

That's why MGM needs the Hobbit to do as well as possible, and why fans are being asked to buy tickets for three movies instead of two or one.

From another article:

Jackson has said that he has lots of extra footage that could go to making the story a three-part film, although the cast will have to return for more shooting. The two films were already budgeted at an estimated $500 million. Warner Bros. is going to have to spend more money to make a third.

But the studio likely thinks it’s a gamble worth taking when you consider what The Lord of the Rings did for the studio. The trilogy brought in $3 billion. Adding a third film to The Hobbit wouldn’t cost an extra $250 million if Jackson already has enough footage in the can. That means the studio could make a huge profit on The Hobbit.

If the films prove as popular as the original trilogy. Already J.R.R. Tolkien fans are skeptical. In order to expand the story to fit two movies, Jackson has drawn on Tolkien’s other writing to flesh out characters and add action. According to Entertainment Weekly, Jackson invented new characters, like the elf warrior Tauriel. He also put a lot of effort into giving each of the 13 dwarves who accompany Bilbo on his adventure stories and personalities that weren’t so spelled out in the books.

Either this is going to be great or totally suck.

But hey, at least they're striving for greatness.

I think they're striving for cash.

True. Peter Jackson delivered before, hope he can deliver again.

If not, MGM (or whoever buys them) can just reboot The Hobbit in 10 years (e.g. batman, spiderman)

I trust Peter Jackson after the Lord of the Rings, but I am still worried about this. At first they weren't going to do the Hobbit at all, then it was two movies and now three.

Extra footage is one thing, but there's no extending the story. With the Lord of the Rings, 3 stories, 3 movies. It's going to be interesting to see where they put 3 breaking points in the Hobbit to turn it into 3 stories.

I saw the note about the extra stories they added to make it into 2 and I am concerned about how they may bastardize it in order to make it into 3. Without some new side adventures along the way, it would be quite a long trip...

"HOBBIT PART THREE: THE QUEST FOR MORE REVENUE"

If you've ever watched the Director's Cuts of Lord of the Rings, you know there's enough material in there for six movies -- or an entire Game of Thrones season!

Peter Jackson is a great storyteller. I'm guessing it won't feel like filler at all.

I think one of the three is a movie is about Tom. http://en.wikipedia.org/wiki/Tom_Bombadil

Easily my favorite character from the four principle books. Good call Jared!