PETER Jackson hasn't finished with Middle-earth just yet.

After wrapping shooting last month, the director dropped heavy hints that he had more than enough material to turn his two Hobbit movies into three.

But his official announcement on Facebook today that The Hobbit was to become a trilogy still caught fans by surprise, more so because unlike The Lord of the Rings, The Hobbit is a little on the short side.

J.R.R. Tolkien's children's book is only 320 pages long and lacks the depth and texture of his follow up so it's worth reading Jackson's statement in full to get an idea how he's going to stretch the tale over three movies.

"It is only at the end of a shoot that you finally get the chance to sit down and have a look at the film you have made. Recently Fran, Phil and I did just this when we watched for the first time an early cut of the first movie - and a large chunk of the second. We were really pleased with the way the story was coming together, in particular, the strength of the characters and the cast who have brought them to life. All of which gave rise to a simple question: do we take this chance to tell more of the tale? And the answer from our perspective as the filmmakers, and as fans, was an unreserved 'yes'.

"We know how much of the story of Bilbo Baggins, the Wizard Gandalf, the Dwarves of Erebor, the rise of the Necromancer, and the Battle of Dol Guldur will remain untold if we do not take this chance. The richness of the story of The Hobbit, as well as some of the related material in the appendices of The Lord of the Rings, allows us to tell the full story of the adventures of Bilbo Baggins and the part he played in the sometimes dangerous, but at all times exciting, history of Middle-earth.

"So, without further ado and on behalf of New Line Cinema, Warner Bros. Pictures, Metro-Goldwyn-Mayer, Wingnut Films, and the entire cast and crew of The Hobbit films, I'd like to announce that two films will become three.

It has been an unexpected journey indeed, and in the words of Professor Tolkien himself, 'a tale that grew in the telling'.

"Cheers, Peter J."

The magic word in Jackson's statement is "appendices".

Tolkien wrote extensive notes on the history of Middle-earth, which he turned into the six appendices that appear at the end of The Lord of the Rings.

These cover many of the events that take place between The Hobbit and The Lord of the Rings and act as a bridge between two stories that are very different in tone and scope.

In The Hobbit, Gandalf's lengthy absences are a literary device to keep the action centred on Bilbo and the dwarves. When he does turn up he is very much a deus ex machina character, someone all powerful who can get the heroes out of trouble.

This worked fine in the confines of a children's novel but when Tolkien went back to the story of Bilbo Baggins and his magic ring, he needed to explain those absences.

In the appendices, it is explained that Gandalf was away battling the Necromancer, an evil force that threatens to unleash an army of darkness from a fortress deep within the forest of Mirkwood.

Tolkien reveals that the Necromancer is none other than Sauron, the chief villain from The Lord of the Rings, and that his forces are desperately searching for the ring of power.

The battle to oust Sauron from his fortress of Dol Guldur will likely form the basis of the new material Jackson plans to shoot, and will offer him the opportunity to connect The Hobbit more closely to his Lord of the Rings trilogy (two Gandalf's main allies in his fight are Galadriel and the wizard Saruman, both of whom featured prominently in the Rings films).

It's also likely that fans will see the fight sooner rather than later. Because The Hobbit already features an epic clash in its closing chapters, Jackson will want to avoid cramming the final film with too many battles.

It's ironic that Jackson is now making three films out of The Hobbit when a complicated fight over the film rights, a fall-out between Jackson and the studio heads, the bankruptcy of MGM and a union dispute almost stopped the book getting to the screen.

Jackson's studio backers will be happy with the result. They have been working frantically in the background to work out the rights issues and draw up new contracts for film's cast and crew.

The heads of all three studios involved, MGM, Warner Bros and New Line, all issued statements soon after Jackson's supporting his creative vision.

The Lord of the Rings franchise is a lucrative one and the studios will want to keep it going as long as possible (Warners' decision to serve up the final Harry Potter book in two chunky installments earned the studio an extra billion dollars at the box office).

The first film in the trilogy, The Hobbit: An Unexpected Journey, will be released as scheduled this December. The second film, which was previously known as The Hobbit: There and Back Again, will be released a year later but under a new title. The third film is scheduled to appear in winter 2014.

Originally published as The Hobbit trilogy - what to expect