A Cancellation Sony Called Difficult and Kojima Called Sudden
PlayStation Studios notified Kojima Productions in mid-June 2026 that it was pulling out of PHYSINT, an action-espionage game the two had announced together in January 2024 as a spiritual successor to the Metal Gear Solid series. Kojima later said the notice arrived without warning, ending a working relationship with Sony that had run for three decades.
| Date | Event |
|---|---|
| January 2024 | PHYSINT announced jointly with PlayStation |
| Mid-June 2026 | PlayStation gives notice it is cancelling the project |
| September 9, 2026 | Xbox announces it will publish PHYSINT |
Sony's own statement kept the exit deliberately vague: "After careful consideration, we have made the difficult decision to step away from collaborating with Kojima Productions on its project PHYSINT," the company said, adding it retained "great admiration for Hideo Kojima's vision" and that "our relationship remains strong after three decades." The statement named no financial figure and no missed milestone.
The Reason Sony Would Not Name
Bloomberg reported the actual reasoning within days of the cancellation becoming public: PHYSINT was tracking well over its planned budget despite still being years from release, and PlayStation had grown wary of the commercial return given how Kojima Productions' two prior games, Death Stranding and Death Stranding 2, had performed against Sony's own revenue targets.
Using one game's sales to judge a different game in a different genre is itself a judgment call, and Sony did not explain why a walking-delivery simulator's commercial ceiling should predict an action-espionage title's. What is verifiable is the sequence: Sony kept funding PHYSINT's development for more than two years past its January 2024 announcement before concluding, in June 2026, that the budget and commercial trajectory it had itself allowed to run were no longer acceptable.
Xbox Took the Risk Sony Had Just Priced Out
Xbox Game Studios confirmed on September 9 that it would publish PHYSINT, extending what Xbox Wire called an expanded partnership with Kojima Productions into film and television as well as games. Xbox CEO Asha Sharma framed the deal around the studio's reputation, not its finances: "His ambition to challenge conventions reflects the kind of creativity we want to support at Xbox." Kojima said the team remained "committed to redefining the action-espionage genre for players around the world."
Neither company has disclosed a transfer fee, and nothing in either statement suggests the game restarted, was rescoped or was rebudgeted before changing hands. On the public record, Xbox is taking on the same over-budget, still-years-from-release project that Sony's own account says had become financially unacceptable to Sony three months earlier. For a studio or platform holder evaluating a partner mid-development, PHYSINT shows a real option: a public, reputation-preserving exit can move a project's unresolved financial exposure onto whoever agrees to take it next, without either side ever putting a number on that exposure in the announcement.
Read next: Xbox's U-Turn Was on Marketing, Not the Games | Xbox's Disc-to-Digital Upgrade Only Works Once
