In 2001, Sony Pictures Entertainment considered selling off its visual effects facility Sony Pictures Imageworks. After failing to find a suitable buyer, and having been impressed with the CGI sequences created for Stuart Little 2, and seeing the box office success of Shrek and Monsters, Inc., SPI was reconfigured to become an animation studio. Astro Boy, which had been in development at Sony since 1997 as a live-action film, was set to be SPI's first all-CGI film. In May 2002, Sony Pictures Animation was established to develop characters, stories and movies, with SPI taking over the digital production while maintaining its visual effects production. Meanwhile, SPI produced two short films, The ChubbChubbs! and Early Bloomer, as a result of testing its strengths and weakness in producing all-CG animation.
On its first anniversary, Sony Pictures Animation announced a full slate of animated projects in development: Open Season, an adaptation of a Celtic folk ballad Tam Lin, Cloudy with a Chance of Meatballs, Surf's Up, and a feature length version of the short film The ChubbChubbs!.
Its first feature film was Open Season; it was released in September 2006 and it became Sony's second-highest-grossing home entertainment film in 2007 and spawned two direct-to-video sequels. Its second feature film, Surf's Up was released in June 2007, and was nominated for an Academy Award for Best Animated Feature, and won two Annie Awards. A motion captured animated film Neaderthals, written and produced by Jon Favreau, was cancelled sometime in 2008, after four years in development. SPA's first 3D movie since the IMAX 3D release of Open Season, Cloudy with a Chance of Meatballs, was released in September 2009, and was nominated for four Annie Awards including Best Animated Feature. The Smurfs (2011) was the studio's first CGI/live-action hybrid and its most successful release. SPA's parent company Sony Pictures Entertainment has partnered in 2007 with Aardman Animations to finance, co-produce and distribute feature films. Together, they produced a computer-animated film, Arthur Christmas (2011), and The Pirates! Band of Misfits (2012), Sony's first stop-motion film, although made entirely by Aardman. Sony's latest release, Hotel Transylvania, directed by Genndy Tartakovsky, was released in September 2012. SPA has since signed Tartakovsky to a long-term deal with the studio to develop and direct original films.