Studio Ghibli
Studio Ghibli announced that Hosoda was to direct the film Howl's Moving Castle in September 2001, which was scheduled for a summer 2003 release. The film production started once in 2000.
At the time, Studio Ghibli was looking for a new talent, as momentum was building to appoint someone other than Hayao Miyazaki and Isao Takahata as director. In this context, Nozomu Takahashi, then a producer at Ghibli, was recommended Hosoda by animation researchers and writers. Toshio Suzuki, then president of Ghibli, showed Hosoda the proposal for Howl's Moving Castle, conceived by Hayao Miyazaki, when Hosoda visited Ghibli, and he readily agreed, so Ghibli seconded him from Toei. Suzuki himself was involved in the film as producer for the first year, but when the project ran into difficulties, Takahashi took over and the team went on location scouting in the United Kingdom. In April 2002, the project was stopped by producer Takahashi.
It has not been officially disclosed what kind of trouble there was. Suzuki said that this may be due to the difference in production styles between Toei Animation and Studio Ghibli, or the pressure caused by the presence of Hayao Miyazaki. Regarding the latter in particular, Suzuki says that Miyazaki often made suggestions about the story and pictures, and that Hosoda may have become exhausted by being told different things on different days, or that Hosoda, who admired Miyazaki, may have listened too seriously to Miyazaki's opinions. According to Hosoda, he "was told to make [the movie] similar to how Miyazaki would have made it, but [he] wanted to make [his] own film the way [he] wanted to make it". On the other hand, Hosoda said that Studio Ghibli was producing Spirited Away, directed by Miyazaki, in parallel at the time, which caused the Howl's Moving Castle team led by Hosoda to be understaffed. In a programme on NHK General TV that closely followed him, Hosoda talks about how he did not consult anyone around him, including Hayao Miyazaki and Isao Takahata, about his worries on what direction to take with his work at the time. He said his "cheap pride" got in the way and he became more and more isolated at Ghibli.