Warner Bros. have a lot invested in The Hobbit being a hit. It's not the risky gamble that the original Lord of the Rings trilogy initially was, but it's still such a big investment on a film that they need it to be another LotR-sized hit. The movie is being shot in 3D, that's an extra expense but can be recouped somewhat by the ticket fare bump that comes with 3D presentations.
It's also being shot in 48fps, the increased frame rate (most movies are shot in 24fps) is being championed by tech-heads like Peter Jackson and James Cameron as the future of the medium.
Aside: the last big technological advancement that Cameron pushed was 3D and look at the state of movies now!
The new frame rate was said to bring a greater sense of realism to the screen, creating more like-like motion, something closer to how we perceive action in the real world.
However, when they screened footage at CinemaCon (the big convention designed to sell cinema owners on potential future blockbusters and the latest must-have tech), things did not go so well. The response was said to be largely negative, claiming the enhance clarity only draws attention to the "phoniness" of the world and actually ruins the immersion that made the original Lord of the Rings trilogy so enduring.
If Warner Bros. can't convince exhibitors that this is the way of the future, what hope do they have of getting this in front of audiences? If cinema owners don't like it, they won't stump the cash for any costly upgrades to their projection gear (having already splashed out on 3D projection a few years ago, though I am lead to believe any venues that upgraded to Sony 4k already have the capability to project in 48fps).
This should be considered when reading the news that Warner Bros. have decided to scale back their ambitious plans to make 48fps The Hobbit's primary exhibition mode and will limit it to a handful of cities. In America, that likely means just New York and Los Angeles. In the UK, probably London and Edinburgh or Glasgow. Basically, you're not going to get a chance to see this the way it was intended.
Warner claim this is to test the new tech in smaller markets before deciding on how wide to push it for future releases (such as the second Hobbit movie: There And Back Again, due next December) and whether any extra charges are required, as is the case with 3D.
This will undoubtedly require more spending on the studio's end, forcing them to downgrade the movie to 24fps to cater to non-48fps markets.
In the grand scheme of things, however, this story means very little. Most audience members won't even realise this was ever a concern, they will see The Hobbit this coming December and hopefully get to enjoy a good movie. This is what the likes of Jackson and Cameron need to remember: Nobody cares about the cool little toys you get to play with behind the scenes, they just want a good movie. Focus on that and nothing else matters.
At least, that's the way it should be.