The Burbank film studio originally planned to release two “Hobbit” movies based on J.R.R. Tolkien’s literary prelude to “The Lord of the Rings” trilogy, and principal photography on those two pictures finished in New Zealand this month. The first is set to come out in December this year, followed by the second in December 2013. The two films combined cost about $500 million.

Jackson has reportedly decided that there is enough unexplored material in the book and the appendices to the Lord of the Rings series for a third movie. New Line Cinema are also said to be keen to see The Hobbit expanded into a trilogy.

It has been claimed that negotiations are now underway with cast and crew members in order to get them on board. Lead Actor Martin Freeman is one of the actors believed to have been in talks in recent weeks.

For Warner Bros., a third "Hobbit" film would also grant the studio another tentpole film at the same time when one of its biggest franchises Christopher Nolan’s “Batman” films concludes. 

In the past two years, Warner Bros. has bid goodbye to two profit-churning franchises “Harry Potter” and Batman. It still has an impressive slate of big-budget films booked for next year, including the third “Hangover” film, “Pacific Rim” and “Man of Steel.”