Just to be clear, Peter Jackson didn't make up Azog, he was one of the characters from the appendices that played a large part in the Dwarves' history. Peter Jackson did however totally fuck up Azog's backstory by keeping him alive. Tolkien wrote that he was killed in battle, and it was his son Bolg who pursued the Dwarves during the events of The Hobbit, leading up to the big battle at the end.
I know based on behind-the-scenes material that Jackson intends on including Bolg, so... he kind of has to kill Azog at some point or Bolg's character will have no motivation whatsoever to meet Thorin in battle.
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