Sony Ditched Kojima’s PHYSINT Over Ballooning Costs and Missed Deadlines

On September 9, 2026, PlayStation dropped the bombshell that it would cancel Hideo Kojima’s next-generation action-espionage game PHYSINT, without addressing its decision. Minutes later, Xbox CEO Asha Sharma announced that Xbox has partnered with Kojima Productions to produce PHYSINT, thus saving the title from cancellation. However, we now know why Sony took this unexpected decision.

Sony Wasn’t Keen on PHYSINT Being a Timed PlayStation Exclusive, Bloomberg Report Suggests

Thanks to Bloomberg’s new report, it’s now revealed that Sony ultimately stepped away from Kojima’s next Metal Gear Solid-esque title over budget concerns and missed deadlines. According to Bloomberg’s Jason Schreier, Kojima’s PHYSINT “missed deadlines and went well over budget despite being years away from release”.

Additionally, Sony wasn’t willing to pour “hundreds of millions of dollars” into a game that wouldn’t remain exclusive to PlayStation, suggesting PHYSINT could have launched as a timed exclusive, much like Kojima Productions’ Death Stranding games.

However, since Sony pulled out of PS-exclusive releases on PC earlier this year, this report makes complete sense. Furthermore, Schreier also mentions that Kojima’s Death Stranding games didn’t meet PlayStation’s internal sales expectations.

For context, Alinea Analytics’ head of marketing analysis, Rhys Elliott, reported on X that Death Stranding sold 5 million copies by 2021, two years after its 2019 release. By comparison, Death Stranding 2: On the Beach sold 2.5 million copies across PlayStation and Steam over a similar period, where Sony barely made a profit and broke even on both games in front of its massive combined $300 million budget.

Unfortunately, for PlayStation fans, PHYSINT remains with Microsoft and Xbox for the foreseeable future, which all but confirms that it will be an Xbox console exclusive, like Gears of War: E-Day. Of course, now that it’s out of PlayStation’s cage, it will release on PC. But a PS5 release may not be in the cards anymore.

Microsoft also plans to collaborate with Hideo Kojima beyond video games, particularly on films and television. Additionally, they’re also developing Kojima’s upcoming horror game OD: Knock in collaboration with Jordan Peele.

PlayStation has been making questionable decisions for months, and now Hideo Kojima appears to be the latest casualty of Sony’s choices. That said, only time will tell when we’ll see more of PHYSINT.

Now that the game is being developed with Xbox, it’s unclear whether Kojima will be able to use the Decima engine or resort to Unreal Engine, which is also being used to develop OD: Knock. That said, do you think PlayStation made the right move dropping PHYSINT? Tell us in the comments section below.