Although my first view about a decade ago did not leave much of an impression; I recently rewatched this cartoon Hobbit, and enjoyed it considerably - being very impressed by the seriousness of intent that went into making it.
(Especially by contrast with the unskilled, self-indulgent and irresponsible Peter Jackson Hobbit movies which I find excruciatingly awful - except for the occasional scene such as Bilbo and Gollum.)
Aspiring screenwriter-adaptors could study Romeo Muller's truly masterful reduction of the approx 250 pages of the book into just about 80 minutes of movie; without any rushing or haste, with full value given to the key scenes - and focusing on the most psychologically important moments (e.g. Bilbo's interactions with Gandalf and Gollum, the sunlight on the keyhole, Bilbo's courage in creeping down the tunnel to Smaug, the conversation with Smaug, his scene at Thorin's death bed). This little cartoon gives the heart of the Hobbit.
Why isn't it better known then? The problem is the cartooning - or rather some of it. The backgrounds are very well done, indeed rather beautiful in a Japanese precursor-to-Ghilbli kind of way; but the characterisation of some characters is frankly hideous. To be fair, Gandalf is fine, Gollum is fine... but Bilbo himself is horrible, the dwarves pretty silly, the elves absurd, and Smaug is more like a long-necked fat pussy-cat than a dragon. The 'battle' of the Five Armies is just embarrassing.
Furthermore that actual animation, the movement of the cartoon, is very poor - jerky, insufficient frames, and indeed extremely crude - for instance in the movement of Smaug's jaw which looks like a piece of cut-out card being slid back and forth (rather like Captain Pugwash, which was done by real time filming of actual cut-outs). This was probably not the fault of Rankin/ Bass because animation was at a very low ebb in 1977 (the tide began to turn in 1978 with Watership Down - which is beautifully painted, but - again - jerkily animated).
On the plus side; the voice acting is excellent; for example Thorin is done by the great Hans Conreid, who was the Disney's Captain Hook - perhaps the best ever vocal characterisation?
The songs are good - and even have a touch of magic about them:
I would recommend watching the movie, while doing your best to ignore the crudity of animation - and appreciating some wonderful cinematic story-telling.
Here is the whole movie (albeit with Spanish subtitles)