Answer by taking a quote from the following article:

Pink Floyd - The Wall is a 1982 British live-action/animated musical drama film directed by Alan Parker with animated segments by political cartoonist Gerald Scarfe, and is based on the 1979 Pink Floyd album of the same name. The film centers around a confined rocker named Pink, who, after being driven into insanity by the death of his father and many depressive moments during his lifetime, constructs a metaphorical (and sometimes physical) wall to be protected from the world and emotional situations around him. When this coping mechanism backfires he puts himself on trial and sets himself free. The screenplay was written by Pink Floyd vocalist and bassist Roger Waters.

Even before the original Pink Floyd album was recorded, a film was intended to be made from it. However, the concept of the film was intended to be live footage from the album's tour, with Scarfe's animation and extra scenes. The film was going to star Waters himself. EMI did not intend to make the film, as they did not understand the concept.  Director Alan Parker, a Pink Floyd fan, asked EMI whether The Wall could be adapted to film. EMI suggested that Parker talk to Waters, who had asked Parker to direct the film. Parker instead suggested that he produce it and give the directing task to Gerald Scarfe and Michael Seresin, a cinematographer. Waters began work on the film's screenplay after studying scriptwriting books. He and Scarfe produced a special-edition book containing the screenplay and art to pitch the project to investors. While the book depicted Waters in the role of Pink, after screen tests, he was removed from the starring role and replaced with punk musician and frontman of the Boomtown Rats, Bob Geldof. In Behind the Wall, both Waters and Geldof later admitted to a story during casting where Geldof and his manager took a taxi to an airport, and Geldof's manager pitched the role to the singer, who continued to reject the offer and express his contempt for the project throughout the fare, unaware that the taxi driver was Waters' brother, who promptly proceeded to tell Waters about Geldof's opinion.  Since Waters was no longer in the starring role, it no longer made sense for the feature to include Pink Floyd footage, so the live film aspect was dropped. The footage culled from the five Wall concerts at Earl's Court from 13-17 June 1981 that were held specifically for filming was deemed unusable also for technical reasons as the fast Panavision lenses needed for the low light levels turned out to have insufficient resolution for the movie screen. Complex parts such as "Hey You" still had not been properly shot by the end of the live shows. Parker also managed to convince Waters and Scarfe that the concert footage was too theatrical and that it would jar with the animation and stage live action. After the concert footage was dropped, Seresin left the project and Parker became the only director connected to The Wall.

When was it decided to animate it instead?
after screen tests, he was removed from the starring role and replaced with punk musician