The film, which opens on December 14, is expected to contribute to the first annual box office increase in North America in three years, a sign that big movie studios have made more films enticing enough to get people into theaters and away from their TVs, games and the Internet.

"The Hobbit" follows this year's other big box office successes "The Avengers," which became the industry's third-largest film with $623 million in U.S. sales, and "The Dark Knight Rises" and "The Hunger Games" which both passed $400 million.

Hollywood analysts predict the two months of the year that include "The Hobbit" and the finale of the "Twilight" vampire series may lift U.S. and Canadian ticket sales above the $10.6 billion record set in 2009.

"The fourth quarter is just gangbusters," said box office watcher Phil Contrino, editor of the boxoffice.com website. "One movie after the other is exceeding expectations."

Annual receipts are on track to end 5 percent above last year at $10.8 billion or more, projects Paul Dergarabedian, box office analyst for Hollywood.com. Ten films have already passed $200 million in ticket sales, compared to seven last year, when no film passed the $400 million mark.

That would be the first yearly box office increase in three years, and would be from a jump in admissions rather than a hike in ticket prices that traditionally fuel box office growth. Ticket prices are averaging $7.94, a penny increase from last year, according to the National Association of Theatre Owners.

Hollywood has raked in $9.7 billion so far in ticket sales and sold more than 1.2 billion tickets in the North American (U.S. and Canadian) market, 5.5 percent up on a year ago.

The industry thought it had a record in sight last year, only to see underwhelming performances from holiday releases such as thriller "The Girl with the Dragon Tattoo" and animated movie "Hugo," which left ticket sales at a three-year low.

OFF THE COUCH

Studios face a difficult entertainment landscape in which consumers have an array of competing outlets for movie watching that includes DVR recordings, game players and movies streamed over computers and mobile phones.

Services like Netflix Inc have also made a dent in trips to the theater by offering cheap monthly rentals that make it easier to stay on the couch.

What has got people out of their homes, Hollywood moguls say, is a rise in the quality and variety of what is on screen.

This year, studios offered up a rush of big-budget blockbusters including "Skyfall," the highest grossing of the 23 James Bond films that is still selling well with $227 million in domestic sales.

"Ted," about a foul-mouthed stuffed bear, was a surprise winner with $219 million. Several mid-sized hits that won critical acclaim, including Steven Spielberg's historical drama "Lincoln" and the Iran hostage thriller "Argo," became box office darlings.

"There is something for everyone," said Chris Aronson, president of domestic distribution at News Corp's 20th Century Fox studio. "When we achieve that as an industry and the movies are of good quality, that's when good things happen."

Sony oiled up its Spider-Man franchise and collected $262 million by rebooting it with new stars Andrew Garfield and Emma Stone in "The Amazing Spider-Man." Disney's Pixar unit struck it big again with the animated movie "Brave."

Hollywood did not escape some box office bombs. Two big-budget bets - board-game inspired thriller "Battleship" and outer space adventure "John Carter" - ranked among the most costly flops in movie history.

The mass killing at a Colorado movie theater in July marred the release of Batman film "The Dark Knight Rises." But the film eventually grossed $448 million domestically, ranking as the year's second-biggest.

Hollywood also overcame summer doldrums. The season that accounts for the bulk of yearly sales slumped 5 percent behind 2011. The second weekend in September produced the lowest-grossing weekend since 2001.

The pace quickened at the start of the holidays - the second-biggest movie going period - with "Twilight" finale "Breaking Dawn - Part 2" and James Bond movie "Skyfall" leading record Thanksgiving sales of $291 million over five days.

"FOUR QUADRANT" FILM

That has got the industry's hopes up for the Christmas season when families gather and shoppers fill malls. Comcast Corp's Universal Pictures is releasing the musical adaptation "Les Miserables," and The Weinstein Company offers up the Leonardo DiCaprio thriller "Django Unchained." A street-brawling Tom Cruise returns in "Jack Reacher" from Viacom Inc's Paramount Pictures.

But it is the dwarves and wizards from "The Hobbit: An Unexpected Journey," that Hollywood is banking on to generate movie going mania. Set 60 years before the Oscar-winning "Lord of the Rings" trilogy, the movie is the kind that studios love - a "four quadrant" film that appeals to male, female, young and old, said Contrino of Boxoffice.com. He projects $137 million in opening weekend domestic sales, rising to $475 million through its theatrical run.

The film, based on the fantasy novel by J.R.R. Tolkien about the travels of hobbit Bilbo Baggins, almost did not make it to the screen at all. Director Peter Jackson made the "Lord of the Rings" trilogy when producers could not get "The Hobbit" rights that were held by MGM's United Artists unit.

"The Hobbit", also a trilogy, has been produced by MGM and Time Warner Inc but only after Jackson settled a lawsuit against Time Warner's New Line Cinema unit in a dispute over profits from the "Rings" trilogy.

Now all the film has to do is delight fans with a new hobbit adventure across Middle Earth and deliver a record year for Hollywood.

(Reporting By Lisa Richwine. Editing by Jane Merriman)

• A Permanent Economic Emergency