Kojima Productions' PHYSINT will now be developed and published in partnership with Xbox after Sony ended its collaboration on the project. The change came unexpectedly for Hideo Kojima and his team, who then spent several months looking for a new partner before teaming up with Xbox.

A Bloomberg report later cited several possible factors behind Sony's decision, including the commercial performance of the Death Stranding series, production delays, and budget concerns. According to the report, Sony believed the previous two Death Stranding games had not met its revenue expectations. Bloomberg also reported that missed deadlines and the risk of the project exceeding its budget may have contributed to the decision. The company was reportedly also reluctant to invest in a game that would not remain permanently exclusive to its hardware.

Hideo Kojima commented on the information shared in the report, noting that "aspersions around [the studio's] relationship with PlayStation, the commercial performance of the DEATH STRANDING franchise, and the broader production planning and investment for PHYSINT, have reached beyond the studio and have touched our fans, our creative partners, and colleagues we have worked alongside with for three decades."

"None of the claims written came from any official or on-the-record source and as such we encourage you to take them with a dose of scepticism,​" he said.

Kojima later confirmed the partnership with Xbox and said that the studio was in a "healthy and profitable state":

Read the full announcement below:

In an interview with IGN, Hideo Kojima said that when Sony shared the news on a Zoom call, his first reaction was shock. Kojima said he was assured PHYSINT was safe from the industry shakes and cancellations, so he was surprised but also confused: "We didn't understand the reason. I didn't have any anger or sadness; my first thought was, 'What am I going to do with my studio?'"

Kojima was concerned because the studio had only two projects in development, PHYSINT and OD, and its staffing was based on the number of projects. He said losing PHYSINT could therefore have meant laying off everyone working on it. "If we lose one contract, I thought I might have to cut all the people working on PHYSINT, right? Or our studio could end up collapsing because we'll run out of cashflow."

The developer also said that he didn't want to repeat the case of P.T. and began searching for a new partner who could provide technical and marketing support, pitching PHYSINT as an IP with "movies, dramas, anime, TV, comics, music." Xbox, which had already collaborated with Kojima Productions on OD, was a suitable partner.

Kojima also noted that he doesn't have "bad feelings" with Sony: "I know that it's a tough time in the game industry."

Recently, during the Xbox Tokyo Game Show 2026 Broadcast, Hideo Kojima shared that development on OD and PHYSINT is continuing. The lead actor for the latter has been confirmed: Bill Skarsgård, known for his roles in It, Nosferatu, and Barbarian.

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